How much is too much?EchoStar could end up controlling the Ka-band as well as the Ku-band 11/18/2001 07:00:00 PM Eastern
The Ka-band, at a higher frequency than the Ku-band used for fixed and DBS services, is the new frontier of satellite communications. Satellites operating in the band may one day provide high-speed Internet access, data transfers for pagers and cell phones, or even interactivity for DBS.
Acquiring DirecTV, EchoStar would end up controlling not only most of the Ku-band DBS spectrum but virtually all the Ka-band spectrum as well.
EchoStar has licenses to operate in the Ka-band, chiefly through investments it has made in Wild Blue Communications and StarBand Communications.
EchoStar has a major stake in Denver-based Wild Blue, which will launch two Ka-band satellites, one next May and a second in 2003. It will begin offering service to any home or small office in the U.S. by the third quarter of that year.
"At this early stage, it's unclear how we will be affected," said Brad Greenwald, vice president of marketing for Wild Blue. "We have a distribution agreement with EchoStar and are moving forward with our business plan. We've had no indication from EchoStar or anyone else that our agreement will change in any way."
McLean, Va.-based StarBand is jointly owned by Gilat Satellite Networks, Microsoft and EchoStar, which has invested more than $50 million in it. Launching its service in April 2000, StarBand was the first to deliver two-way, high-speed access in the Ku-band.
Along with the assets of DirecTV, EchoStar will acquire Hughes Network Systems' Directway Ku-band two-way Internet-access service and its newer Spaceway Project Ka-band service. HNS has invested about $1 billion in these projects and plans to introduce the Ka-band high-speed broadband data service—for Internet access, telephony and interactive TV—by the second quarter next year.
And HNS's partly owned Vision Star Communications, Live Oak, Calif., will launch a Ka-band high-speed service from a satellite at 113 west longitude by May.
"This is one of the issues with the proposed merger that could cause the most concern at the FCC, because [EchoStar Chairman Charlie] Ergen would own a controlling interest in all of the satellite-based broadband access providers," said Jimmy Schaeffler, an analyst at The Carmel Group. "This gets into the antitrust area because two-way interactivity is the future and everybody knows that."
Since the merger was announced, EchoStar has been touting the fact that its combined Ka-band resources will help close the "digital divide" by enabling it to bring two-way connectivity to rural America at a faster pace.
Richard Dalvello, executive director of the Satellite Industry Association, said the industry is generally supportive of the Hughes-EchoStar merger but noted that it will be looked at closely by the government. "The consolidation of these resources would combine a number of Ka-band projects into one."
Other companies, he added, have applied for and plan to launch competing Ka-band services in the future.