Embarq announced that they will become a reseller of HughesNet, a broadband satellite service of Hughes Network Systems. Embarq intends to target business customers with the broadband satellite service. They will offer download speeds ranging from 700 Kbps to 2Mbps and a price range of $59.99 per month to $179.99 per month. Embarq joins Wal-Mart who has also signed on to resell HughesNet. HughesNet competes mainly with WildBlue, a Colorado based satellite broadband provider. WildBlue has NRTC and AT&T as distribution partners.
Satellite broadband represents an interesting business. It targets rural areas that have limited to no broadband access. It’s priced somewhat higher than other broadband options, and generally includes significant equipment and installation costs (when compared with other broadband options). That might explain a recent report by SNL Kagan, featured in today’s Sky Report, which says satellite broadband is struggling somewhat. SNL Kagan reports that satellite broadband has only achieved a 6.2% penetration of the 10.8 million rural satellite broadband household footprint. That represents about 670K subscribers’ total. These numbers are relative though. If you talk to WildBlue, those somewhat low numbers have more to do with challenges of keeping up with demand than with a poor business model. WildBlue has had the unfortunate challenge in the past of having to selectively retard new subscriber acquisition, because their satellites (or certain “beams”) have reached capacity, and simply can’t serve any new customers. It looks like they may now have some competitive company trying to meet that capacity challenge.