EchoStar Corp. is moving forward with the construction of a next-generation satellite designed for delivering broadband service. The company plans to target remote, unserved areas for new service.
"We've been working on coming up with a design that will take into account costs, speed, data handling capacity, coverage, technology risk and spectrum availability risk," Pradman Kaul, president of the EchoStar subsidiary Hughes Satellite Systems Corp. network systems, said during a recent earnings conference call. After evaluating various proposals, Kaul said the company believes it found "an optimum design for an ultrahigh-density satellite," and thus has awarded the contract for its build. The launch is planned for early 2021.
"This new satellite will provide a dramatic increase in capacity in our key markets in the Americas at a very competitive cost per bit," Kaul said, noting the company will offer speeds of 100 MBps and higher. "The coverage will be optimized to cover where we anticipate demand rather than uniform blanket coverage. All our traditional markets — including consumer, enterprise, aeronautical, cellular [backhaul] and community Wi-Fi — will be served," he said, adding that the company will target the 18 million American households currently unserved by existing broadband solutions.
The new satellite builds on the HughesNet Gen5 consumer service launched in March on another satellite. "We already have over 200,000 Gen5 subscribers currently," Kaul said. "While it's admittedly early, the consumer satisfaction has been very high on the Gen5 service, and churn has been lowered. It is the first ubiquitous coast-to-coast Internet service that meets the FCC 25/3 broadband standard." The Federal Communications Commission in 2015 raised the minimum download speed for the term "broadband" to 25 Mbps from 4 Mbps, while also raising the minimum upload speed to 3 Mbps from 1 Mbps.
During the call, analysts asked whether EchoStar expected to face competition in the broadband market from next-generation wireless offerings, such as 5G. But Kaul said that based on the low-band and high-band spectrum being targeted for 5G use, 5G will target a different consumer base than EchoStar or HughesNet.
"You have the low-frequency stuff, the 600 MHz that was recently auctioned, which will be used in more of our market areas, rural and semi-urban areas, where you can have large cell sizes," he said. The problem with that spectrum, according to Kaul, is that the bandwidth sizes are relatively narrow.
"It's really smaller pieces of bandwidth. So they ... won't be competing with us directly because we're going to be going up to 100 MBps," he said.
As for the high-band spectrum where wide channels are open and available for use, Kaul noted small cell deployment will be necessary, meaning it will be focused in urban areas where light poles and buildings and other structures will support small cell deployment. Those urban areas, he said, "are really not in our unserved and underserved markets."
T-Mobile US Inc. executives, however, indicated they see themselves as having enough low-band spectrum to provide high-speed 5G service in rural markets. "I think to effectively cover a rural market, you really need the low-band spectrum because that gives you much better rural coverage. It's much more efficient," Nils Paellmann, head of investor relations for T-Mobile, said during a recent investor conference, noting that with T-Mobile's recent winning bids from the 600 MHz auction, the company "quadrupled our low-band holdings, so we now have over 40 MHz of low-band" spectrum.
T-Mobile has said it will use a portion of its 600 MHz spectrum to roll out a 5G network in the 2019-2020 time frame.