EchoStar unveiled a bold multibillion-dollar satellite telecom plan that adds a layer of spectral intrigue and potential distraction from its ongoing ground-based operational troubles.

The new satellite initiative is for a new low-Earth orbit (LEO) constellation to provide direct-to-device communications. The work is being done through a deal with MDA Space, which will provide its MDA Aurora D2D satellites.

EchoStar is plunging $1.3 billion into the initial tranches of 100 LEO satellites, with ambitious plans to eventually have 200 satellites in orbit and a total investment of up to $5 billion. Commercial services are scheduled to begin in 2029.

CEO Hamid Akhavan explained to investors during the company’s latest earnings call that the service is aimed at the heart of the satellite communication market that is currently bereft of competitors.

The executive pointed on one side of competitive spectrum to the equipment-heavy satellite broadband space as being dominated by players like Starlink; and on the other side by limited bandwidth “SOS” and “text messaging” service that includes Apple through its work with Globalstar, operators working with AST SpaceMobile, and also Starlink.

“And then you've got something in between that is ours and we call that wideband, and that is the natural use case of your mobile phone the way you use it today,” Akhavan said, before further reiterating, “I want to be very clear about that, and so there may be a lot of confusion about this marketplace is crowded. Perhaps crowded in the broadband space, maybe crowded at some point in the narrowband space, but nobody in the LEO crowd right now is in where we call wideband and we are doing it.”

Satellite spectrum in play

EchoStar’s latest satellite play notably includes use of its 2 GHz spectrum licenses (AWS-4) that appears central to an ongoing feud with the Federal Communications Commission (FCC). The company currently holds rights to spectrum in that band throughout the world, including up to 40 megahertz covering the United States.

EchoStar’s Dish subsidiary initially acquired those spectrum licenses more than a decade ago from financially strapped would-be satellite communication provider TerreStar Networks and its acquisition of DBSD North America.

However, spectrum licenses have FCC-mandated buildout requirements designed to ensure that a license owner is putting those licenses to work for the common good and not just sitting on those licenses to sell at a later date. EchoStar has received a handful of FCC extensions on some of its licenses as it has attempted to launch commercial services and has used some of its 2 GHz spectrum to support its terrestrial-based 5G network.

This notion came to a head earlier this year when the FCC’s Wireless Telecommunications Bureau (WTB) opened comments on EchoStar's spectrum license management. FCC Chairman Brendan Carr has openly questioned EchoStar’s management of those spectrum licenses and validity of the extensions granted last year.

Bloomberg noted in a recent story that questioning has reportedly become more pointed. This resulted in EchoStar Chairman Charlie Ergen meeting with Carr in June in an attempt to negotiate a solution, a plan that later received support from President Donald Trump, who EchoStar noted in a Securities and Exchange Commission (SEC) filing “encouraged the parties involved to reach an amicable resolution.”

Akhavan during the earnings call refused to provide any comment on that most recent report, only allowing that there are options on the table.

“The FCC would like to see more spectrum in use. They’d like to see the market become more efficient in a number of ways. And I think we understand that,” Akhavan said. “There's a million ways that can happen. Those million ways have not yet landed in a way that I can give you a full picture. We have not eliminated any options from the table. FCC has not necessarily given us a very, very detailed mandate of a certain thing or another. I think we're still in collaboration with FCC and other entities to see what might be a good solution that everyone is happy with. So I honestly would not build any more on what Bloomberg has reported than another piece of information to market that may or may not be true.”

The FCC moves have had a direct financial impact on EchoStar. The company last week said it would make a delayed payment on outstanding debt notes, the second time EchoStar has made such delayed payments.

EchoStar had previously noted that the delayed payments were due to FCC investigation, which harmed its ongoing deployment and "threatens its viability as a wireless provider as well as endangers the video and broadband satellite services upon which millions of consumers rely."

New Street Research U.S. policy and regulation analyst Blair Levin told SDxCentral in an interview that Carr’s moves are about putting pressure on EchoStar and Ergan to sell its licenses to the market’s already established telecom players.

“If you don't know what they want, that either means you're not listening or they're not saying. I know where I bet,” Levin said. “Carr is not saying what Carr wants … we know what Carr wants … he wants them to sell everything. We know what Ergan wants. He wants another year, that's it. So the question is: is there a compromise between those two things? There may be, there may not be. I don't know that part. I can't tell.”

Levin, who had previously served as chief of staff to former FCC Chairman Reed Hundt, added that Carr’s stance is also ironic as “Carr is saying we want to build, build, build, and yet the only entity that is building a new competitive network with new technology that undercuts the Chinese technology, he's saying I don't want you to build.”

Investment shift

Operationally, EchoStar continued its bi-polar ways during the second quarter. The firm’s Boost Mobile wireless business showed customer and revenue growth tempered by ongoing high costs of operations, while its satellite and pay-TV services continued to lose customers and revenue momentum though maintained profitability.

That Boost Mobile boost could wane moving forward, however, as company management said it was slashing expansion investments due to the ongoing regulatory uncertainty.

Boost Mobile’s current open radio access network (RAN)-based 5G network reaches more than 223 million potential customers, a reach that is augmented by a pair of roaming agreements the carrier has with AT&T and T-Mobile US that extends terrestrial coverage to around 280 million potential customers.

Akhavan explained that EchoStar’s position in investing more into future satellite plans while cutting investments into its current wireless business was tied to its current predicament.

“The terrestrial, I can slow down to get more clarity and I don't lose a lot of market opportunity. … I have national roaming, we already have a great, great coverage – 280 million-plus consumers are covered – I have perfect experience with my consumers. … I'm winning,” Akhavan boasted. “As comes to space, I don't have that luxury to wait. The opportunity is here now, and if I wait a few more months, my business model gets impacted negatively. Europe is in the process of asking us and everybody else how we are going to get to space. I need to have a definitive answer in Europe. I want to have this American leadership, and I don't want to lose it in Europe. … If I wait to resolve this, that opportunity for the U.S. and us is lost and so we have decided to continue on the path we have been on – the direct-to-satellite – because we cannot wait. That is critical time.”