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Hughes Network Systems, LLC
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In the synergistic cycle we are experiencing in the broadband business, market demand for services drives technology and product development, which in turn fuels demand for ever more bandwidth-hungry services, spurring the next wave of new products to deliver them. That positive feedback cycle has validated our company strategy started some years ago of expanding beyond supplying technologies and products to become a leading broadband services company, yielding more predictable recurring monthly revenue together with equipment sales.
Consider the fact that three years ago, 35 percent of our international revenue came from services. Today that number stands at 60 percent. And companywide, it is approaching 70 percent. Let’s take a look at some of the important trends we’re seeing around the world that are contributing to that change.
Having saturated most high-population markets, many cellular GSM operators are now seeking ways to cost-effectively expand services to rural and more remote areas. Unlike microwave, cable, or fiber backhaul technologies, for which costs are labor intensive and distance-related, satellite backhaul is proving to be an economically feasible answer. Hughes is already delivering these solutions in many countries, including Indonesia, Bolivia, Russia, and Brazil. Some governments—Brazil’s, for example—are tying the deployment of GSM backhaul in rural areas to the granting of licenses. Market estimates exceed 100,000 cell sites globally that can be reached cost-effectively with satellite backhaul, bringing communications to rural and remote populations.
Recognizing the social and economic importance of broadband access, particularly in the area of education, many countries are providing funding to fuel its expansion through the creation of universal service obligations, by which operators are required to provide broadband services to rural areas. For example, Mexico is providing distance learning through its e-Mexico project, which today has over 50,000 points of presence. Another example is in India, where the government is subsidizing communications through HughesNet kiosks, which serve as mini-Internet cafés to provide pay-as-you-go Internet access to the community, as well as eGovernance services such as issuing certificates, deeds, and driver’s licenses.
Starting in the U.S. with our SPACEWAY® 3 satellite system launched over two years ago and spreading to Europe with the launch of Avanti’s HYLAS 1 satellite this summer, Ka-band technology is quickly expanding across the globe. The reason is simple—customers want higher speeds and more sophisticated applications at lower prices. With a larger bandwidth than Ku-band, plus frequency re-use capabilities with spot beams, Ka-band satellite technology enables the delivery of higher speeds at lower costs, creating fertile ground for the expansion of affordable, high-speed broadband communications.
Today, many companies are seeing the benefits of outsourcing their network services. Because their business is to sell products or services not related to networks or communications, they don’t want to spend time and resources focusing on their networks. By providing a value-added managed service that’s both cost-effective and reliable, Hughes is well positioned to assume this role for all corporations, as we are doing today for large enterprises like BP across Europe and Camelot in the U.K.
Hughes is one of the most innovative technology and service providers in the world. As the top broadband satellite service provider, we must not only design for the lowest cost and highest performance, but also constantly provide new features to deliver successful services. That gives us the unique ability to set up any organization with instant service provisioning capability. We can provide market-leading, proven technology together with the required service provisioning, customer care, and back office systems. If someone has the desire and the funding to become a service provider, Hughes can help realize that within months. That’s a unique capability.
Hughes products and services are present in more than 100 countries, and all of our markets are experiencing growth. Hughes do Brasil, our growth superstar, has been growing at an average rate of 35 percent for the past four years, with customers in a variety of markets such as education, banking, and cellular backhaul leading the way. We serve many customers across the Asia/Pacific region, including Indonesia, Malaysia, and Japan. We provide comprehensive system solutions in the Middle East and Africa, including a substantial network that provides voice, video, data, and security observation to embassies in Saudi Arabia. In Russia and the CIS countries we provide a range of broadband satellite solutions to a rapidly growing base of service provider customers, now numbering over 20 with nearly 30,000 broadband sites. And in India and Europe, our service companies are thriving.
Satellite technology has emerged as a vital element of the communications toolbox and we have only begun to scratch the surface of its potential. Our goal is to continually build on its capabilities and to provide the solutions and applications customers need, with the objective of reaching a sustained and profitable growth rate of 20 to 25 percent per year. To help fuel this growth, we are seeking ways to partner with successful service and systems integrator companies where the fit is complementary and increases value for all parties.
How do we succeed? By listening to customers and their needs—and then designing solutions that will serve them economically. If we can do that, our growth can be beyond anyone’s imagination.
Every year, the U.S. Department of Defense hosts a multi-national exercise to test new and emerging technologies against a backdrop of realistic, simulated operational scenarios. Participants in the Coalition Warrior Interoperability Demonstration (CWID) typically include the military services, government agencies, first responders, coalition partners, and U.S. combatant commanders worldwide.
During the 2009 CWID trials, Hughes demonstrated high-definition videoconferencing among multiple sites with terminals designed to operate over its SPACEWAY 3 satellite. Test locations included the U.S. Northern Command, the Naval Surface Warfare Center, Dahlgren Division, Hanscom ESC, and the Space and Naval Warfare Systems Center, San Diego. According to the CWID Final Report, the system established a highly reliable broadband satellite link maintaining 100 percent video connectivity and maximizing bandwidth for Internet, data, Voice over Internet Protocol (VoIP), videoconferencing, and IP-based applications.
The report recommends satellite communications technology to improve commandercentric, net-enabled operations. “It’s better than anything I’ve ever seen,” noted the warfighter assessment. “If you need a semi-portable satellite communications system, this will work as described.”
The SATCOM technology demonstrated all stated capabilities while providing a very effective and reliable communication system.
IP capabilities and packet switching performed by the SPACEWAY 3 satellite mean less administrative paperwork and faster connection speeds, demonstrating that high-capacity Ka-band satellites can further enhance the capabilities of other systems.
Warfighters recommend fielding this technology as demonstrated during CWID 2009 for multiple reasons: commercial availability as an established system; IP capabilities; the ability to support a multitude of technologies and applications over its satellite uplink; ease of use; and ability to enhance mission operations.
Relatively quick to set up, the low complexity and the ability to carry on high-definition, clear, and stable communications with other locations was a valuable attribute.
In the absence of terrestrial communications, satellite communications technology can provide solid, high-speed Internet, voice, data, and video communications, offering first responders and deployed troops several advantages.
“Advanced communications technologies are critical on the battlefield and during crisis response situations,” said Rick Lober, vice president and general manager, Defense and Intelligence Systems Division of Hughes. “It was a privilege for Hughes to participate in the CWID trials and demonstrate the utility and value to the warfighter of SPACEWAY 3, the world’s first commercial satellite system with onboard packet switching and routing, and ten times the capacity of conventional bent-pipe satellites.”
To see the full report, visit: www.cwid.js.mil.
Among those who were fortunate to survive the devastating earthquake of January 2010 were patients at the State University Hospital of Haiti, who were quickly evacuated to tents donated by various organizations. With doctors and nurses flown in to assist in the relief effort, the hospital was soon back up and running, providing basic medical care and performing some surgical procedures. But the facility was still operating without reliable communications to the outside world, which was critical to enable more in-depth care and consultation with outside medical experts.
Enter Eagles Wings Foundation, a Florida-based non-profit agency, which quickly went to work with several other organizations and soon equipped the hospital with broadband Internet access and Voice over IP (VoIP) capability via a Hughes emergency communications satellite system. To this day, the facility continues to use the Hughes telemedicine solution, enabling consultation with specialists around the world and improving the quantity and quality of medical care to its patients.
Established in 1999 after the damage wrought by Hurricane Floyd along the Atlantic coast of the U.S., Eagles Wings Foundation provides short-term, post-disaster relief, organizational leadership, and coordination of volunteer and professional personnel and services in the U.S. and the Caribbean Basin.
Dr. Alex Lassegne, executive director of the hospital, commended the organization’s Haitian relief activities, including its efforts to coordinate and install Hughes satellite technology, “The activation of the satellite [service] will provide communications capabilities that will allow the hospital to provide better care for our patients. Most immediately, it will afford us capability of consulting with other medical experts worldwide.”
Meanwhile, about 15 kilometers east of Port-au-Prince, Mountain Top Ministries, a Haiti-based agency that works closely with Eagles Wings Foundation, was struggling with intermittent communications from its remote location in Tomassin. But with the help of a Hughes satellite broadband system, the non-profit organization is now better able to operate its 1,500-student school and free clinic, as well as provide housing for volunteers aiding the earthquake relief effort.
Mountain Top Ministries assists the people of Haiti by conducting spiritual education, providing quality medical care, and training Haitian ministers. The organization also runs an agricultural training program for local farmers.
Satellite communications plays a critical role in the lives of people affected by disasters such as the one in Haiti. “Because it is robust and easily deployed, satellite technology quickly fills the void and provides instant infrastructure when terrestrial systems have been severely damaged,” said Tony Bardo, assistant vice president of government services at Hughes. “As long as there is a power source, a satellite system can be set up in a matter of hours, restoring communications when it is needed most and serving as a vital tool to assist the organizations that are directly involved in recovery after a disaster.
Fresh out of South Carolina’s Clemson University with a brand-new master’s degree, Devang Bagaria thought he was finished with school when he started work with Hughes as a young engineer in 2007. But, as one of the first of more than 100 engineers to participate in the Hughes Engineering Mentoring Program, Bagaria soon found himself involved in a different kind of learning. Designed to enhance the productivity and assimilation of new college graduates, the mentoring program offers continuous learning, encourages career growth, and provides exposure to senior-level engineers.
The program pairs up teams that consist of several new graduates, two mentor leads, and a representative from human resources. The groups meet twice monthly for approximately one year, both for formal classes and for open discussion forums ranging from engineering challenges, to current assignments, to career development.
Classes address topics such as processes for hardware and software development, system engineering processes, and the use of tools and laboratories. The mentees also see firsthand how a Hughes manufacturing facility and a Hughes network operations center work. To ensure that new engineers quickly find their way around, mentors place a special focus on building a network of contacts within the company. The program also includes a professional development component to focus on career goals and growth strategies. Formal participation in the mentoring program concludes with a graduation ceremony.
“The program was invaluable to me as a new college graduate,” said Bagaria. “Hughes mentors are highly experienced engineers who have pretty much seen everything. I not only learned a great deal, but the exposure to senior engineers also taught me how important it is to speak up about my interests. I was fortunate to receive this input from my mentor, which later led to an opportunity to work in device driver development—an area of special interest to me.” It turned out to be a good direction. In 2009, Bagaria won a Hughes engineering award for his work in the field.
But the mentoring program is hardly one-sided. New engineers, accustomed to the networking environment in college, have also provided useful feedback to Hughes senior engineers, including input which has led to updating of research tools and online resources.
Indeed, the program has turned out to be so successful that today Hughes is taking it to a higher level. Initiated in March 2010, the Advanced Mentor Program focuses on comprehensive training in functional areas and day-to-day, hands-on experience.
The new program provides in-depth training on topics such as international and domestic business processes, hardware design and manufacturing, software design, and network and manufacturing operations. The classes are followed by a direct pairing of each junior engineer with an experienced technical mentor who is working on the same project.
Through on-the-jobtraining, mentees are exposed to the entire product development lifecycle. They learn about design processes, reviews, and analysis, and how to use lab equipment to debug and test products. They gain experience in properly handing off products into the manufacturing and production processes, including how to test a product in the factory and what happens once a product goes out into the field with Hughes customers.
This tag team approach helps to quickly grow the breadth of new employees’ experience and knowledge, ensuring that Hughes has a constantly refreshed engineering workforce. Over the next year or two, Hughes expects to send all its entry-level engineers through the program.
According to Bob Kepley, senior vice president of engineering and one of the founders of the program, “The charter of engineering here at Hughes is to develop leading-edge products, platforms, and services to enable us to advance our leadership position in satellite and wireless communications worldwide. This program helps us to bring some of the best young minds into lockstep with our goals.”
Far more than just being feel-good, the Hughes mentoring program is an important part of an ongoing strategy to ensure that the next generation of engineers is well equipped to develop innovative products and services that enable the next generation of broadband.
We are delighted to announce that the League of American Communications Professionals (LACP) has recognized Hughes Channels with a Gold award in its 2009 Inspire Awards Competition.
Channels ranked among the top 20 of more than 425 entries, including many global blue chip companies from across the business spectrum. Here are just a few of the judges’ comments: “Overall, we find this work to be outstanding;” and “Our belief is this entry has superb variety through the materials … (a) making a truly excellent connection with the primary audience and (b) delivering, in a notably outstanding approach, an applicable and persuasive message.”
The Competition Scorecard awarded Channels a total score of 98 out of 100, with 19 out of 20 points for first impression; and 10 out of 10 points for artwork, readability, message clarity, variety of features, audience focus, perceived relevance, and ease of navigation. “A very nice evolution of Channels… excellent advances in both content and design,” the judges added.
Thank you to our customers, employees, and editorial staff for their contributions in telling the many stories about the benefits of Hughes technologies and services.
In January, as the U.S. government was grappling with the issue of universal broadband connectivity, Hughes sailed past the 500,000 mark of North American subscribers to its HughesNet® high-speed satellite Internet service. HughesNet service is what kept Angie Reinche of Missouri in contact with her husband when he was serving in Iraq. In Wilmore, Kansas, HughesNet Internet access at the local library has enabled the town’s 100 residents to take distance learning classes, conduct research, and shop online, giving them access to stores that are a four-hour car ride away. For farmers like Lee Sherbyn of Pay it Forward Ranch in Bealton, Virginia, and Linda Laney of Laney Honey in North Liberty, Indiana, a HughesNet satellite connection is the only way business can survive. While the government continues to debate the best approach to providing universal broadband access, Hughes is delivering on the promise today, providing high-speed Internet access services to individuals and small businesses in underserved areas throughout North America.
The 2009 COMSYS VSAT Report cited Hughes’ continued global leadership position in the VSAT (very small aperture terminal) market with over 50 percent market share of terminals sold. According to Simon Bull, senior analyst at COMSYS, one of the satellite industry’s leading analyst firms, “Hughes is the 800 pound gorilla of the VSAT market…. The company lives and breathes the technology at all levels from chipsets to installation, not least because it lays claim to having started the industry with its work in the early to late 1980s. As its positive financial results have demonstrated every quarter since it went public in 2006, what sets the company apart today and drives its growth is the service business. Beyond technology and product innovation, over the past several years Hughes has successfully morphed into being the world’s leading broadband satellite service provider.”
Frost & Sullivan named Hughes as the 2009 North American Company of the Year in the Satellite Industry in recognition of the company’s growth strategies, high-quality customer service, and product/service reliability. Frost & Sullivan ranks Hughes’ growth strategies, as demonstrated by its customer expansion, as the highest in the satellite industry. Worldwide, Hughes has shipped over 2.2 million terminals to customers in over 100 countries. In North America, the company’s market-leading HughesNet broadband satellite Internet service has over 500,000 subscribers. “In North America, Hughes has managed to grow revenues significantly year-over-year even during the economic downturn,” said Frost & Sullivan research analyst, Gina Villanueva. “The company’s commitment to enhancing its products and services also places it ahead of the competition.”
The simple cell phone of just a few years ago has come a long way. Today, people across the globe are using a variety of next-generation mobile devices to listen to music, take photographs, browse the Web, play games, and do their banking—not to mention making simple phone calls. The Apple iPhone®, for example, combines three devices in one—a sophisticated mobile phone, a widescreen iPod®, and a breakthrough Internet device that enables users to multitask. The rapidly expanding world of applications such as Facebook and Twitter is fueling mobile user demand for ever more bandwidth and capabilities, which in turn encourages more innovation in products and services, causing demand to grow exponentially.
In response to the soaring need for mobile services, Hughes has introduced new iPhone applications to extend mobility to two of its digital media offerings: the award-winning Hughes Learning Portal service and the Hughes MediaSignage® digital signage solution.
The Hughes Learning Portal provides organizations with a turnkey training and learning system, complete with a private-branded, secure Web site for organizing, managing, and distributing training and presentation content, which can be up and running in less than 48 hours. Now, with the mobile capability of the new iPhone application, users can directly access training material stored on the portal using an iPhone or iPod Touch® device—no matter where they are.
Offering a rich media experience for the user, the new application supports Microsoft® Office and PDF documents, iPhone-ready video, and images in several formats. The portal enables organizations to easily and cost-effectively track student progress, produce custom reports, and administer assessment exams. All progress reporting is stored within the portal system and users can even take assessment exams right from their iPhone or iPod Touch.
“By adding the power of mobility to the Hughes Learning Portal, customers now have access to distance learning and presentation content anytime, anywhere on their iPhones,” said Mike Tippets, vice president, Hughes Solutions Group. “This application is a key next step in the evolution of our solutions that enhance learning systems and communications capabilities for our customers.”
Similarly, a new iPhone application for Hughes MediaSignage enables network administrators to use their iPhone, iPod Touch, or iPad® devices to instantly disseminate critical information and emergency notifications. Hughes MediaSignage is a digital signage solution that provides a method of delivering dynamic, content-rich audio and video, effectively replacing legacy print media such as printed signs and billboards with modern digital display panels.
Hughes MediaSignage can be delivered to multiple sites within a building or to selected sites around the globe, and offers the ability to create unique content tailored for each site via custom channels, programs, and schedules. With the new iPhone application, administrators can pre-define messages and, with a single touch, update their entire Hughes MediaSignage network to display messages for employees or customers.
“Events don’t always happen when administrators are at their desks. This mobile application makes it possible for Hughes MediaSignage network administrators to make critical updates in real time,” added Tippets.
As the need for mobility continues to grow, mobile devices will continue to get smarter and more feature-rich. That’s why at Hughes, communication solutions are continuing to evolve—addressing the needs of tomorrow before we get there.
With an estimated 30 million locations across Europe without access to broadband, many countries are mandating and funding “Broadband Everywhere” initiatives to expand coverage as quickly as possible. In addition, as a further signal of its commitment, the European Commission has announced a target of 100 percent broadband coverage in the European Union by 2013. But in some areas of Europe, satellite is the only solution that can achieve this goal.
Now, thanks to a strategic partnership between Avanti Communications Group plc and Hughes, millions more consumers and businesses in Europe will soon have access to affordable, high-speed broadband communications. The launch in mid-2010 of Avanti’s HYLAS 1 satellite, Europe’s first dedicated, high-throughput, Ka-band broadband satellite, will open the door to the delivery of consumer broadband service on a significant scale. As part of a multi-year agreement valued at over $24 million, Hughes will provide Avanti and its partner channels with eight gateways and 50,000 customer premises terminals to operate over HYLAS 1, paving the way for both companies to participate in the European consumer broadband market for the first time.
The introduction of advanced Ka-band technology in Europe will bring high performance broadcast and data communications services to a wide range of market segments, including broadband Internet access to rural and remote areas underserved by terrestrial networks.
Avanti’s 52 VNO (virtual network operator) customers will deliver broadband services throughout Europe utilizing the advanced Hughes HN System and Ka-band broadband satellite routers. The unique characteristics of HYLAS 1 significantly reduce the overall operating costs of satellite services, both in bandwidth utilization and systems hardware, from that of Ku-band. This gives operators multiple benefits, including greater speeds coupled with a lower upfront investment and reduced bandwidth costs.
The first satellite to incorporate technical advances such as steerable beams and power shifting between beams, HYLAS 1 is expected to serve more than 250,000 consumers, small/medium businesses, and large enterprises across Europe later this year.
In addition to providing the satellite gateway and networking equipment, Hughes has agreed to acquire capacity on the HYLAS 1 satellite to expand the managed services it provides to major enterprises in a variety of market sectors, including oil/gas, lottery, and retail. This builds on the Hughes global strategy to deliver high quality broadband Internet access and managed services on the most advanced platforms around the world, including its successful Ka-band SPACEWAY® 3 satellite in North America and its recently announced Jupiter™ high-throughput satellite system to be launched in 2012.
According to Chris Britton, managing director of Hughes Europe, “As a result of this agreement, Hughes will be able to significantly expand its managed service offerings across Europe, while Avanti will break into this market with a powerful combination of its HYLAS 1 advanced Ka-band satellite and Hughes proven networking technology.”
“HYLAS 1 capacity gives Hughes a competitive advantage to expand its enterprise managed services in Europe as it has using its own satellite in the U.S.,” said David Williams, chief executive, Avanti. “Furthermore, we have secured a supply for our VNOs of the world’s best customer premises router equipment at a market-beating price. This is fundamental in turning HYLAS 1 into a consumer broadband proposition and will have significant impact on our ability to sign more VNO customers leading up to the launch of HYLAS 1.”
With the launch of HYLAS 1, Avanti will focus first on expanding broadband access to areas throughout Europe that are currently underserved such as Poland, Spain, Ireland, and the Czech Republic. But Avanti doesn’t plan to stop there. In 2012, the operator plans to expand its footprint by launching HYLAS 2 to extend services to the Middle East and Africa.
This important introduction of affordable Ka-band services in Europe and beyond will truly transform the way people in many parts of the world communicate, work, live, and play—providing broadband access where it wasn’t previously possible and helping realize the goal of affordable broadband everywhere.
Data security is a hot topic in government, corporate, and news circles today. It’s hard to pick up a newspaper or read an online news feed or blog without encountering a discussion of security concerns, security guidelines, or security breaches. And organizations with databases of confidential customer or patient information need to be especially vigilant of security threats.
But for the retailer, as an example, the task of keeping customer data secure and a corporate network compliant to Payment Card Industry Data Security Standards (PCI DSS) is not an easy one. Since 2004, the PCI standards have required retailers to meet stringent security guidelines, including maintaining a secure network, protecting cardholder data, regularly monitoring networks, and maintaining an information security policy. A retailer who is not compliant may face stiff fines and could even lose the ability to process payment cards.
More recently, the growing popularity and widespread use of wireless Wi-Fi networks has brought new security threats, prompting changes in 2009 to the PCI standards. The guidelines now require retailers to ensure the security of the cardholder data environment by regularly scanning all sites for wireless threats. This means that a sampling of sites is no longer sufficient and that retailers must scan all sites at least once a quarter, whether they use Wi-Fi or not. As a result, many retailers who thought they were compliant are scrambling to address issues they didn’t know they had.
Enter the Hughes PCI Wireless Scanning Service, a new tool to assist retailers to quickly and cost-effectively meet the revised PCI standards. As part of the service, which is an enhancement to the Hughes Security Services suite, Hughes operates a centralized delivery system employing a wireless access point at each retail location, which scans for the presence of unauthorized wireless devices. Any rogue wireless device is detected automatically and the retailer is notified electronically for remediation actions. Optionally, Hughes can dispatch a trained technician to locate and remove the rogue device.
The new wireless PCI scanning service from Hughes is a turnkey, fully managed solution that includes everything a retailer needs for compliance, including software, hardware, and a monitoring system. Supporting the standard Wi-Fi frequencies, including the recently ratified 802.11N, the system exceeds PCI requirements by continuously monitoring all sites. In addition, the service provides automated remote containment of suspected rogue access points for added protection before a security breach can spread.
“By eliminating the costs and complexities of deploying access points at all sites, the Hughes PCI Wireless Scanning Service can help reduce compliance management costs,” said Doug Medina, Hughes senior director of enterprise marketing. “There’s no need to hire additional IT staff to manage and monitor a wireless network or to travel and inspect all sites once a quarter.”
Because the wireless monitoring network seamlessly integrates with a retailer’s existing network, minimal network engineering is needed by internal staff. Hughes supplies quarterly reports and streamlines PCI audits and examinations, making the compliance process as seamless and inexpensive as possible. As an added benefit, the wireless monitoring network can provide services such as private wireless access for employees and public guest Wi-Fi services, helping to improve return on investment.
It may not be a simple task to manage evolving security threats or meet changing PCI standards. But with the Hughes PCI Wireless Scanning Service, retailers can streamline the process—ensuring that they are preserving their PCI certification and, at the same time, safeguarding their customers.
Hughes Communications, Inc. announced record fourth quarter and full year 2009 adjusted EBITDA, with impressive growth in the consumer business and strong growth in enterprise services revenues.
Snapshot of Fourth Quarter 2009 Results
Record fourth quarter adjusted EBITDA of $56 million, an increase of 25% over the fourth quarter of 2008.
Continued solid growth in consumer business: Revenue increased by 15% over the fourth quarter of 2008; record fourth quarter subscriber gross adds of 45,000; net adds of 14,000 for a growth of 18% over the fourth quarter of 2008; consumer ARPU increased to $72 from $68 for the fourth quarter of 2008; churn improved to 2.1% from 2.4% for the fourth quarter of 2008 and 2.3% for the third quarter of 2009.
New orders of $271 million, with major orders from Shell, ConocoPhillips, AGF, Burger King, Barrett Xplore, Rite Aid, Big 5, CSK O’Reilly, Row 44, Realtime, and Comdata in North America broadband business; Avanti Communications, Afsat, Shenzen Securities, Telemar, PT Selindo, and Valuable Media in international business; and STS Romania and Iridium in Telecom Systems business.
Positive net cash from operations of $41 million, a 29% increase over the fourth quarter of 2008.
Snapshot of Full Year 2009 Financial Results
Record adjusted EBITDA of $174 million for a growth of 15% over 2008; excluding the Telematics business, adjusted EBITDA increased by 18% over 2008.
Strong consumer business growth with revenue of $420 million, an increase of 12% over 2008; gross adds of almost 200,000 subscribers resulting in a subscriber base of 504,000 at December 31, 2009, a growth of 17% over the December 31, 2008 subscriber base; net adds of 71,000, a growth of 34% over 2008; consumer ARPU of $70 for 2009 compared to $68 for 2008; churn improved to 2.2% for 2009 from 2.4% for 2008.
Total enterprise revenue of $475 million compared to $529 million in 2008, but enterprise services revenue up 19%.
Telecom Systems revenue down 27% primarily due to completion of mobile satellite development contracts and termination of Telematics contract.
Consolidated revenue of $1,010 million, a decline of 5% from 2008, a 3% decline on a constant dollar basis.
New orders of $1,023 million and a nonconsumer backlog of $835 million as of December 31, 2009.
Positive net cash from operations of $151 million, an increase of 111% over the twelve months ended December 31, 2008.
Please note that Q1 2010 financial results will be released in May 2010.
Large oil rigs in the middle of the ocean typically don’t move around much. Built to withstand the rigors of drilling in choppy waters and rough weather, the rigs, also known as platforms, depend on workboats to run errands for the oil companies. Thousands of these agile workboats travel from shore to platform and back again, ferrying supplies and crew changes—and sometimes serving as transport for engineers and other personnel who need to reach the oil rigs to perform services or repairs.
Both crew and passengers aboard work vessels require high-quality communications to stay connected and to conduct business online, including making day-to-day repairs. For example, a worker may take photographs of a problem area on a rig and send them electronically to an office onshore where they can be analyzed and a determination made on how to fix the problem. But all of this requires advanced, reliable broadband communications both on the rigs and on the workboats that shuttle back and forth.
That’s where Hughes comes in. In January 2009, Hughes launched the Hughes Maritime Broadband Service, a bundled package that provides reliable offshore broadband communications, as well as voice and fax services, to workboats and platforms. Utilizing the advanced Hughes HX200 broadband satellite router, the service offers unlimited Internet access, domestic long distance telephone service via Voice over IP (VoIP), and committed information rates (CIR) for premium service and guaranteed bandwidth.
A fully managed service, the comprehensive Hughes maritime offering also includes network monitoring, proactive alerts, position location update, and monthly reporting. Utilizing the IPoS/DVB-S2 standard with Adaptive Coding & Modulation (ACM), which yields the highest satellite bandwidth efficiency, the Hughes maritime service is available with either fixed or stabilized antennas as small as 60 cm—an industry first. And high service level agreements are made possible with the combination of ACM on the outbound channel and Adaptive Inroute Selection (AIS) on the return channels.
A number of customers are already taking advantage of the Hughes Maritime Broadband Service in the Gulf of Mexico and the western Caribbean. Complementary service is also available from Hughes Europe operations, offering coverage in the North Sea and the Mediterranean. In addition, the service provides Hughes customers with automatic roaming between the U.S. and Europe.
“The Hughes Maritime Broadband Service raises the bar for offshore broadband communications,” said BT Shyamakrishnan, senior director, International Division of Hughes. “In fact, with the excellent satellite footprint coverage in the Gulf of Mexico, as well as coastal U.S. waters, the Hughes Maritime Broadband Service is fast becoming the new standard. Competitively priced service plans, coupled with best-of-breed technology, make this service a highly attractive package for discriminating oil and gas industry customers.”
But workboats and rigs aren’t the only vessels to benefit from the Hughes Maritime Broadband Service. The pioneering use of smaller-footprint, stabilized antennas makes the service a viable option for boats as small as 60 feet long, providing the leisure yacht market and other smaller craft with superior and cost-effective broadband service— whenever they need to communicate from ship to shore and back again.
Nestled deep in Arizona’s Grand Canyon, the land of the Havasupai Indian tribe is home to some of the most spectacular waterfalls in the world. The Havasupai, which translates to “people of the blue-green waters,” have lived in the canyon for centuries and share their name with the region. Known as a hiker’s paradise that attracts thousands of visitors each year, the Havasupai area is one of the most remote in the U.S., accessible only by horseback, helicopter—or an eight mile hike on foot.
In addition to nearly 150 homes, the village of Supai boasts a lodge, a café, a general store, and a tourist office. Not far from the post office is the Havasupai Elementary School, where it has been a major challenge to obtain substitutes when teachers are required to leave the canyon for days at a time to obtain training. But soon teachers and staff will be accessing training and professional development in a thoroughly modern way that belies the remoteness of a village that receives its mail weekly by horse or mule train.
That’s the beauty of distance learning via satellite broadband. The Havasupai Elementary School recently became the 150th member school of the National Indian Programs Training Center’s (NIPTC) Enhanced Learning and Knowledge Network (ELKNet), which delivers interactive distance learning to Tribal Nations across 25 states. ELKNet is a sub-network of the larger Government Education and Training Network (GETN), a group of U.S. federal agencies that use a common satellite carrier for an interoperable network that shares satellite services, facilities, and programs for distance learning.
Through ELKNet’s interactive video distance learning system, teachers and staff members can participate in training programs and workshops that feature live feeds as well as pre-recorded content. In addition to academic training and professional development, sessions may include health-related curricula such as diabetes prevention and flu season preparation. Students also benefit directly from ELKNet through programs such as the “I Care if You Graduate” series, which features prominent Native American speakers who share their experiences and encourage students to stay in school and go on to graduate. Using ELKNet’s interactive push-to-talk system, students can ask questions and interact directly with the speakers.
Serving as prime contractor, system designer, and integrator through the federal government’s SATCOM II contract, Hughes is providing a one-way television (ITV) and two-way audio communications network for interactive training to GETN students, including ELKNet. The one-stop distance learning solution, which includes Convergent Media Systems and Intelsat as part of the Hughes team, incorporates equipment, broadband services, space segment, customer support, course scheduling, and systems integration.
According to the ELKNet project manager, the Hughes distance learning solution significantly increases employee development opportunities across Indian Country.
In total, Hughes is managing the delivery of government education to over 2,200 GETN classrooms throughout the U.S. and the Pacific Rim, including virtual classrooms for Air Force schools in Korea, Japan, and Guam. Other federal agencies that are using GETN include the National Park Service, the Fish and Wildlife Service, the Department of Justice, and the Federal Aviation Administration.
Deployment at more than 200 ELKNet sites, including schools, juvenile correction centers, and administrative offices, began in December 2008, with expected completion by the end of 2010. Ongoing work will include additions, modifications, and support activity.
“As one of the largest suppliers of distance education to the federal government, Hughes is pleased to provide services and equipment to GETN’s 14 member agencies,” said Mike Tippets, vice president, Hughes Solutions Group. “ELKNet is a prime example of how our advanced capabilities in systems integration and satellite technology are helping fulfill GETN’s mission of providing high quality distance education in far-flung areas.”
Indeed, through the power of satellite broadband technology, GETN’s digital campus is able to provide the same level of training and education to urban and rural areas alike—even deep in the Grand Canyon in the land of the blue-green waters.
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