Satellite-Delivered Broadband Increasingly a LEO Market

Satellite-delivered consumer broadband is increasingly concentrating in low earth orbit (LEO), with SpaceX's growth expected to start facing competition from Amazon's Kuiper within months, satellite industry experts tell us. Geostationary orbit (GSO) providers continue losing residential broadband subscribers, though EchoStar says it sees a slower decline. Viasat has begun redirecting residential broadband spectrum capacity to other uses.

Amazon's Kuiper is slated to offer limited services by year's end, and the design of its satellites and terminals and a vertically integrated business model should put it in a strong position to service consumers and enterprise customers, ABI Research Senior Analyst Andrew Cavalier said in an email. SpaceX will likely continue gaining market share, he said. Starlink posted on X last week that it has more than 3 million users worldwide.

Viasat and EchoStar's HughesNet service have shed subscribers for multiple quarters "and there is no sign of this stopping," Cavalier said. While the GSO operators' high-throughput satellites can achieve good cost per Gbps, "Space X has been aggressive with its pricing and service offerings and has been consistently upgrading the network," he said. SpaceX's Starship heavy launch vehicle will augment the company's launch capacity, and in turn SpaceX "will ... further solidify its position by adding larger and more capable satellites into LEO," Cavalier said.

Beyond Kuiper, don't expect other consumer broadband competition from LEO, Cavalier said. Eutelsat's OneWeb primarily sells connectivity to enterprises or capacity to communications service providers such as a local CSP reseller or another satcom operator that wants a multi-orbit service, he said.

With additional capacity, such as EchoStar's high-throughput Jupiter 3, GSO residential broadband operators could retain or even hope to attract new customers if they can relent a bit on the throttling their capacity limits have required, satellite consultant Patricia Cooper told us. At the same time, both seem to be pivoting from residential broadband as an important part of their revenue stream but are still searching for applications where GSOs have a clear and compelling advantage over the new LEO competitors, she said.

Cooper said Amazon's deep experience in developing consumer electronics, such as Alexa, and its ecosystem of customers, commercial partners and vendors, will give it a go-to-market advantage in residential broadband and enterprise markets over LEO constellations such as OneWeb and Telesat's Lightspeed. SpaceX has been using its considerable first-mover advantage to shape the market, and it continues to hold it, she said, adding that it also has an advantage in owning its launch capacity that lets it expedite Starlink satellite deployments. Kuiper has contracted with several launch providers, including SpaceX, to orbit its satellites (see 2312010053). The company said last week it was deorbiting its two Kuiper prototypes over the next few months as it scales production at its two satellite manufacturing facilities.

Viasat is shifting bandwidth from its consumer business to mobility as it plans to be part of a multisystem launch of a direct-to-device service on five continents sometime this fiscal year, Chairman/CEO Mark Dankberg told analysts in an earnings call last week. He said its consumer business is seeing "a relatively steady" decline, but the company sees "opportunistic uses in residential" down the road. Viasat President Guru Gowrappan said fewer residential subs drove a decline in U.S. fixed broadband revenue in the company's most-recent quarter. The company is deprioritizing U.S. fixed broadband to support in-flight connectivity, which is growing rapidly and has higher margins, he said.

EchoStar's Jupiter 3 satellite, which went into service late last year, is adding consumer subscribers due to new service plans that the additional Jupiter 3 capacity enables, Chief Operating Officer Paul Gaske said during an earnings call this month. He said EchoStar also has upgraded HughesNet residential broadband subscribers on the Jupiters 1 and 2, giving them higher speeds. He said the 26,000 subscribers lost in the quarter were the smallest reduction in 10 quarters, and the company ended the quarter with about 978,000 satellite broadband subscribers. At the same time, enterprise is a focus, with HughesNet expecting more than 50% of its revenue coming from enterprises this year, Gaske said.

HughesNet subscriber growth peaked in 2020 at 1.6 million, before a sharp decline that started about the time SpaceX began ramping up deployment of Starlink and opening its subscription preorders to the public, Payload Space blogged. The slowed decline of HughesNet subscribers is likely due to it having a higher proportion of enterprise customers, as those tend to be stickier, it said.