Satellite : EchoStar Seeks To Gain More Leverage From Satellite Assets

[rajuB4U]

EchoStar Seeks To Gain More Leverage From Satellite Assets


Michael A. Taverna/Paris

EchoStar is moving into broadband and Internet television and pondering its next step in mobile satellite services as it seeks to gain maximum leverage from its direct broadcasting and fixed satellite service assets.
The company separated the fixed satellite service (FSS) business in late 2007 from its mainstream direct broadcasting operations—rebranded the Dish Network—but industry insiders wondered how EchoStar could differentiate itself from established FSS operators (AW&ST Mar. 3, 2008, p. 37). The answer has been to combine the business with its mobile satellite service (MSS) holdings and direct broadcasting satellite assets, forming what could become a new business paradigm for the telecom satellite sector.
Other FSS operators are also bundling non-FSS activities into their operations, but so far none on EchoStar’s scale.
The immediate focus of the new entity, dubbed EchoStar Satellite Services, is on developing uses for the FSS fleet, which operates at 121, 105 and 85 deg. W. Long. Although several applications are targeted, including occasional use and full-time third party leasing, the primary objectives are broadband and Internet-based television (IPTV).
Last month, EchoStar submitted a bid for U.S. rural broadband stimulus funding in partnership with WildBlue, with which it already has a distribution agreement (AW&ST Sept. 14, p. 33). The teaming arrangement, dubbed EchoBlue Rural Broadband, is seeking $130 million in grants from the National Telecommunications and Information Administration (NTIA) and $400 million in loans from the Agriculture Dept.’s Rural Utility Service to help cover the estimated $500 million needed to build and launch a high-data-rate Ka-band satellite.
In addition, EchoStar requested $100 million in stimulus funding to launch broadband service with its existing satellites and another $30 million or so to fund customer hardware.
The company is also rolling out an IPTV service, known as VIP-TV, at its 85 deg. W. Long. orbital location that it sees as a possible new “killer application” for the telecom satellite sector. The service offers an MPEG-4 encoded IP stream of about 275 standard and high-definition TV channels, and is aimed at second- and third-tier U.S. cable and telecom operators.
EchoStar CEO Dean Olmstead admits it will be a challenge to make the VIP-TV business case work. SES Americom (now part of SES World Skies) abandoned a similar offering, IP-Prime, citing high costs and insufficient revenues. However, Olmstead, a former Americom chief executive, thinks EchoStar can avoid the pitfalls of the SES service, which was burdened by heavy technical support for the many small users that dominated its customer base. VIP-TV, he says, will be able to take advantage of EchoStar’s experience with set-top boxes to minimize risk. In March, EchoStar began offering a conversion service to lure IP-Prime customers.
Separately, the company is expanding its direct broadcasting fleet. It currently operates spacecraft at 77 and 61.5 deg. W. Long. and in the coming weeks will bring on stream capacity at 72.7 deg. W. Long. provided by Telesat’s Nimiq-5, which was launched by an International Launch Services Proton M on Sept. 20. EchoStar had agreed to lease half of the 32 Ku-band transponders on Nimiq 5, which was built by Thales Alenia Space, and recently decided to lease the other half as well. It also committed to capacity on another spacecraft Telesat plans to order in 2010.
The satellites serve the Dish Network—EchoStar’s biggest user—and are supporting its drive to push into markets outside North America. After establishing a joint venture in Mexico, Dish plans toward year-end to start a venture with Asia Satellite Broadcasting in Taiwan and is also eyeing partnerships in India.
EchoStar’s strategy in mobile satellite services is less clear and for now seems limited to taking strategic shareholdings in leading MSS players. The company owns a share of TU Media of South Korea, which operates MBSat, serving Korea and Japan at 144 deg. E. Long., and TerreStar, which launched its first spacecraft to 111.1 deg. W. Long. on July 1.
EchoStar also owns an MSS spacecraft, CMBSat, which it ordered from Space Systems/Loral for a Chinese operator, China Multimedia Mobile Broadcasting, although work on it has been suspended. Olmstead says no decision has yet been made on what to do with CMBSat, but that EchoStar will definitely hold onto it. “Its a tremendous asset. We aim to keep it for the right opportunity,” he says.