We have often wondered what would have happened if Dish Networks and its technology sister company EchoStar had spent all of the money that it has lost and is likely to lose on the TiVo case, on developing a new triple play technology. Well we may have a chance to find out, because it was revealed this week that it has asked for around $1.2 billion from the broadband stimulus funding provided by the NTIA and the RUS in the US. EchoStar has at least 4 applications that we can find in the database.
We were alerted to this when the major application was noticed by various blogs this week, filed under the ViaSat name and the joint venture name of Satellite Broadband ARRA Application LLC. It requests $207 million in grants and a further $276 million in loans to offer broadband from a satellite.
The idea is to add another satellite to one that has already been commissioned by satellite equipment maker ViaSat (not to be confused with the satellite operator in Northern Europe of the same name) and use them both to provide download broadband speeds of up to 8 Mbps to some 20 US states. They plan to bring broadband to an area where 4.6 million households have no broadband, in the Plains, the Rocky Mountains, Great Basin and Desert Southwest states, as well as interior parts of California, Oregon and Washington.
ViaSat and EchoStar have already formed a joint venture and say they will reach vulnerable populations and critical institutional sites supporting remote, rural, unserved, underserved, fixed and mobile users.
This takes us back into the realm of Mobile Satellite Services, with their massively sensitive satellite antenna, and hugely boosted off world, spot beams, if they are going to address the mobile user, as well as offer broadband over a traditional fixed satellite receiver.
ViaSat and EchoStar say they will offer a ‘Lifeline’ service of just 1 Mbps at just $8.75 a month so that local homes and businesses could at least join the internet world and download html pages (about as well as everyone else did 10 years ago).
While it fits many of the criteria for getting funding under the Broadband stimulus program, this type of approach is not going to make broadband form a satellite any more sustainable globally. In effect the US government would subsidize the acquisition of specialist reception antennas for fixed broadband, and the modern powerful antennas on the new satellites would mean that the signals themselves could come down the scale from the $100 a month level they are today, to something closer to existing $40 a month broadband charges. Once the stimulus funds ran out new satellite antenna costs would come back into the equation (up above $500). As for mobile connectivity, that could potentially trigger the delivery of cheaper volume portable devices which have the right technology to reach the satellite with a return signal.
The thing is that many satellite applications for mobile are really broadcast applications, so the idea of two way broadband is unlikely really to be part of the remit for this funding, even though it suggests it will. It is more likely that it is broadcast with a minimal return path, and if that’s so, it would likely not fall within the definition of services for the stimulus funds. However that doesn’t stop the satellite going up on the basis of serving fixed broadband lines and then serving mobile as well. Our only problem with this application is the fact that there is already one satellite planned, and this is merely extending an existing business model over a second satellite. If it’s profitable why do they need the government?
ViaSat already has a broadband Internet satellite under construction at Space Systems Loral in the Bay Area. Called ViaSat 1, scheduled for a 2012 launch, aimed at offering coverage along the US West Coast. This second satellite would provide service to other nearby rural regions not covered by that satellite.
Interestingly EchoStar has also put in an application with Wildblue Communications, calling it EchoBlue, which itself already offers satellite broadband which is resold by AT&T and others. This application calls for the use of spot beams from existing satellites, and asks for $130 million in grants and $400 million in loans, using both companies’ existing satellite capacity to create an affordably priced satellite broadband service offering a downlink of 10Mbps, which would reach 1.5 million potential consumers within the contiguous 48 states. Again no exact pricing on the service was announced.
Echostar has another couple of applications in under its own name using existing satellite capacity targeting 100,000 and 563,000 homes in two chunks, with subsidized CPE and training, and a further $28 million requested to pay for CPE through a Coupon Program to encourage wider adoption of broadband service. All of which takes the funding requests to $1.2 billion.
In our opinion this all comes three years too late for EchoStar. There was a moment in perhaps 2006, when we calculated that a spend of something like a one or two $billion, would create a return path for both Dish Networks and for DirecTV, and they both would have been in a position to offer triple play services on the back of it. This is not such a move, but had the broadband stimulus come back then, it would have been likely that it could have used it to create something like Clearwire, especially had it partnered with DirecTV for the privilege.
Of course offering triple play on the back of a satellite service would lead to poor voice services due to the propagation delay on satellite voice, however back then it was considering the use of WiMAX base stations through a company called WiNetworks, which had invented a way of placing a WiMAX antenna and the satellite TV receiver on the roof, and feeding their signals down the same cable.
That might still work for EchoStar and its Dish associate, if it was not for the fact that the only national WiMAX network in the US, Clearwire, is tied in investment terms to the US cable operators, and so would never agree to work with EchoStar or Dish.
Which is perhaps why WiNetworks and its range of WiMAX equipment recently found itself sold to RuggedCom a provider of rugged communication systems.
Meanwhile DISH Network said this week that it would offer $400 million debt securities as 7.875% Senior Notes due 2019, in a debt offering that should close on October 5, and which have been privately placed.