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Across the globe, customers rely on Hughes products, services, and technology for a broad range of important applications, such as distance learning and rural education in India and Ethiopia, Internet access in classrooms in Mexico and Russia, and lottery systems in the U.K., Portugal, Colombia, and Argentina. Our solutions provide connectivity to rural ATMs across India, Internet access to small and medium enterprise (SME) customers in sub-Saharan Africa and India, and connectivity to retail stores in Europe, Mexico, Brazil, and India. They also power movie distribution to theaters in India and across Europe, and support national defense communication networks, corporate training centers, and mobile applications such as Internet service on commercial planes and other vehicles. Let’s take a look at some of the key trends driving the international marketplace.
An important trend in the world of satellite technology is a move towards high-throughput Ka-band satellites (HTS). We saw this first in North America, then Europe, Africa, the Middle East, Latin America, and now in Russia. Why is this?
One key catalyst sparking this trend is the availability of orbital slots for Ka-band systems, as traditional Ku-band and C-band slots have become congested and difficult to find. Secondly, unlike most Ku-band and C-band satellites, which are optimized for broadcast coverage, HTS systems are optimized for data traffic. Frequency reuse and multiple spot beams allow HTS systems to carry 100 to 200 times the data traffic of a legacy system. For example, a traditional Ku-band satellite normally has a capacity of a few Gbps, whereas today’s large HTS satellites typically support well over 100 Gbps. Since the total cost of the satellite, including launch and insurance, is similar, the cost per bit of data transmitted is proportionately reduced. And lastly, judicious use of spot beams allows coverage to be optimized for specific geographical areas of interest.
All these factors add up to lower cost, higher throughput, and better coverage for users—as evidenced by the EchoStar® XVII satellite powered by JUPITERTM high-throughput technology with well over 100 Gbps capacity, the cornerstone of our HughesNet® Gen4 high-speed satellite Internet service in North America.
Meanwhile, other parts of the world, such as Africa and Brazil, are trending towards smaller Ka-band payloads, ranging from a few to several tens of Gbps capacity, sometimes shared on a replacement satellite with Ku-band and C-band transponders. With this approach, operators are able to seize regional target opportunities with relatively smaller investment, and Hughes has been successful in supplying this marketplace with cost-effective and scalable networking solutions. Our platform is particularly well suited to deliver a full range of applications and services for consumer to medium- and large-enterprise markets.
While Ka-band continues its global explosion, Ku-band, C-band, and L-band systems still play a key role in certain regions. In heavy rain zone regions, such as Indonesia and Malaysia, preference continues for C-band and Ku-band systems. Similarly, L-band continues to be used for mobility and similar applications. For example, last year Mexico inaugurated its new L-band MEXSAT satellite system for which Hughes developed the ground system and mobile terminals. In addition, Intelsat has announced plans for a new “EPIC” HTS system, which is based upon frequency reuse and spot beams in both C-band and Ku-band.
As cellular communications continue to expand in rural and remote areas around the world, cellular backhaul via satellite provides a proven and relatively inexpensive solution. We see strong potential for satellite backhaul of 2.5G and 3G data traffic, and have developed specific solutions with low latency and jitter; e.g., industry-leading performance of roundtrip latency of 625 ms and one-way jitter of 25 ms. In addition, Hughes has worked successfully with leading cellular system manufacturers such as Erickson, Nokia Siemens Networks, Alcatel-Lucent, and others to verify interoperability of our systems. Today, we provide systems to customers in Indonesia, Malaysia, Russia, India, and Bolivia, and we see emerging opportunities in Latin America, Africa, and the Middle East.
At Hughes, we continue to look for ways to increase recurring service revenues throughout all our entities, and internationally overall in 2013 achieved a revenue mix of 65 percent service and 35 percent hardware. An important part of that revenue comes from providing managed services to global organizations such as ministries of foreign affairs, connecting embassies to their home country. Such networks and services are also used to provide business continuity and Internet connectivity services across large and diverse geographical regions for financial institutions and banks, such as for Africa Development Bank (ADB). In addition, many non-governmental organizations (NGOs) rely on these networks and services to provide uniform communications across remote locations.
Looking forward, I believe we’ll see more and more satellite operators offering managed bandwidth at a wholesale level. Building on our success in North America, we’re now bringing to market an extensive virtual network operator (VNO) capability with our JUPITER System, which will enable satellite operators to include VNO services as part of their distribution strategy. Much as in the cellular marketplace, this approach will expand overall business growth by enabling retailers to effectively manage their own customers and service plans, with satellite operators focusing on what they do best, and leaving retail distribution to ISPs and other providers.
As Internet usage continues its rapid growth worldwide, new HTS systems are well positioned to help meet the demand—especially in the huge rural and even ex-urban regions unserved or underserved by terrestrial broadband. Hughes looks forward to continuing our role as a dominant provider of HTS systems across the globe, as well as expanding service opportunities in our owned and operated businesses in the U.S., Europe, India, and Brazil. This includes the growing mobility applications—on land, at sea, and in the air—that keep customers connected no matter where they live, work, or travel.