EchoStar Plans LEO Constellation Using Contested 2 GHz Spectrum
Under fire from FCC Chairman Brendan Carr for it's supposed warehousing of its AWS-4 spectrum, EchoStar unveiled a $5 billion plan Friday for a direct-to-device satellite constellation using that spectrum. CEO Hamid Akhavan said the low earth orbit (LEO) constellation would start commercial service in 2029 and provide a 5G level of service to mobile devices.
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Space and spectrum experts told us the LEO system announcement is a clear sign that EchoStar is not acquiescing in the face of reports that the FCC demanded it sell at least some of its AWS-4 spectrum holdings. Carr's office didn't comment.
Pointing to the open FCC proceedings on EchoStar's use of the 2 GHz band and on whether it's meeting its commitments in its 5G network buildout (see 2505130003), Akhavan told analysts Friday that the company is struggling with a “considerable amount of uncertainty” over its spectrum rights. The proceedings have "effectively frozen our ability to make decisions" regarding 5G network buildout, so EchoStar has suspended any further work on it, he said.
Carr said last month that he remained "open-minded on a path forward,” but the status quo was “unacceptable" as EchoStar was “sitting on [a] tremendous amount of spectrum” that isn’t being used effectively (see 2507240042).
CFO Paul Orban said EchoStar provides 5G broadband coverage to more than 80% of the U.S. population -- and more than 99% when factoring in partner networks. “We believe we are standing tall” on every obligation made to the FCC, Akhavan added.
EchoStar said its most recent fiscal quarter saw revenues of $3.7 billion, down $230 million from the same quarter a year earlier, in large part due to shrinking pay-TV and broadband subscriber numbers. It ended the quarter with 7.1 million pay-TV subscribers and 819,000 broadband subscribers, compared with 8.1 million and 955,000, respectively, in Q2 2024. Q2 also ended with 7.4 million wireless subscribers, up year over year from 7.3 million. Akhavan noted that Sling viewership was up 18% year over year in a highly competitive streaming market.
EchoStar stock plunged Friday, closing at $26.93, down $5.66.
MoffettNathanson's Craig Moffett said Friday that the company remains headed toward some kind of liquidation, "the only question is when." Its quarterly results "missed expectations on almost every important financial metric." He added that the reports of FCC pressure on EchoStar to sell AWS-4 spectrum likely mean that the agency would also let the Big Three wireless carriers participate in that sale. SpaceX has petitioned the agency for 2 GHz access (see 2402230027) and argued that EchoStar is underutilizing its assets there (see 2505070012).
The LEO constellation announcement is a rejection of any FCC demand for a 2 GHz spectrum sale, satellite and spectrum consultant Tim Farrar told us, with EchoStar making clear it intends to use that spectrum. That's not surprising, as it was unlikely that a buyer like SpaceX would reach a deal with EchoStar for AWS-4 spectrum at the prices EchoStar would demand, Farrar said. Now EchoStar has to reassure investors that President Donald Trump has the company's back, he added. Akhavan said Trump had encouraged the FCC and EchoStar "to reach a positive resolution."
It remains to be seen whether the FCC next issues a 2 GHz NPRM about opening the band to new entrants, Farrar said. He also suggested that EchoStar could instead raise money to pay down its debt by selling pieces of terrestrial spectrum, like the 700 E block, that aren't important to its terrestrial operations.
Akhavan said commercial launches of the LEO constellation would commence in 2028. The company said it hired MDA Space to design and manufacture the first tranche of 100 LEOs for $1.3 billion, and the full initial configuration of the system would be 200 satellites, growing to thousands over time. Akhavan didn’t specify if the anticipated spending by 2028 was just $1.3 billion or the full $5 billion, only that the system would be self-funded by EchoStar.
In addition, the company said it's offering a testing service in Europe using its 2 GHz spectrum there, and it plans on launching a similar service in the first half of 2026 using its geostationary orbit satellites.
Akhavan said the EchoStar LEO system and its wideband service would leapfrog the existing narrowband direct-to-device capabilities of other constellations.
Frank Rayal of telecom advisory firm Xona Partners said the wideband D2D space is getting crowded quickly, with companies like AST SpaceMobile and SpaceX also proposing high data rates in coming years. “Definitely, there will be competitors.”