Clash of Satellite Internet Giants in North America: HughesNet vs Starlink

In an increasingly connected world, a reliable satellite internet connection is becoming a necessity for those residing in remote or rural areas where traditional terrestrial broadband options are often limited. The North American (NAM) region has been at the forefront of satellite internet adoption with HughesNet and ViaSat driving growth for years. But the landscape is changing rapidly. Starlink services have witnessed accelerated growth over the past two years, positioning itself as one of the major consumer broadband market shareholders in North America. The recent Viasat-3 Americas satellite failure has forced Viasat to rethink its positioning in the consumer broadband market, at least in the near term. Will it be a two-horse race between HughesNet and Starlink in North America?

NSR’s Consumer and Enterprise Broadband via Satellite, 22^nd Edition report critically analyses the changing market dynamics in the NAM region. It forecasts Non-GEO-HTS to surpass GEO-HTS service revenues by 2025. The top reasons are Starlink’s growth momentum and Viasat’s change in market positioning:

• By May 2023, Starlink has acquired 1.5 million subscribers and NSR estimates >50% of these are in NAM.

• According to Viasat’s 2023 annual report, purposefully & systematically, the company will derive lower revenues from the US residential broadband market and increase focus on mobile services.

Undoubtedly, traditional GEO-HTS satellite internet providers have been facing challenges with capacity constraints, which in turn have led to a growing customer migration to Starlink. The recent setback involving the Viasat-3 satellite failure has only compounded these challenges. However, Hughes Jupiter-3 can signify as the GEO player's strategic response to the relentless competition posed by Starlink. The Non-GEO HTS market is projected to exceed USD 5.0 billion in annual revenue by 2032, exhibiting an impressive CAGR of 30.2%. Meanwhile, the GEO-HTS market is anticipated to remain relatively stagnant between 2023 and 2025, largely due to the continuous decline in Viasat's subscriber base. Also, Hughes in their 2022 annual report, disclosed a service revenue decline of approximately USD 100 million. A significant portion of this decline can be attributed to their NAM consumer broadband services business. Nevertheless, this landscape is expected to undergo transformation as the capacity of Jupiter-3 is deployed to meet the increasing demands in various regions.

NSR envisions a competitive clash between Hughes and Starlink in the near and midterm as Viasat repositions itself and Hughes deploys its Jupiter-3 services in NAM. Pricing and bandwidth will be the top attributes to determine the pace of service penetration. Starlink’s typical service pricing ranges from USD50 to USD120 globally and USD100-USD120 in NAM per month for ~100 Mbps connection whereas typical GEO service pricing is ~$50 or higher for 15-25 Mbps connection and >$150 for 50-100Mbps connection. The equipment pricing for Starlink at USD500 is on the higher side but better bandwidth & service pricing is driving growth. Moreover, it is evident from the trends in other regions that Starlink will offer aggressive pricing as part of its customer acquisition strategy as well as to compete with existing players. In some regions, it has lowered starter kit prices to around USD99 – USD199. On the other hand, Hughes is preparing to counter the competition by offering new broadband plans. Recently, it has introduced HughesNet Fusion service plans, combining GEO service with the fixed wireless service to offer low-latency satellite internet. The company has also announced internet plans for small businesses to compete with the Starlink premium plan. The plan will include HughesNet Fusion and business-grade support, faster issue resolution and free installation. For improved probability of success, the company will utilize Jupiter-3's capabilities to offer competitive bandwidth and pricing offerings.

The Bottom Line

The prevailing market dynamics are driving heightened competition between Hughes and Starlink, leading to enhanced satellite internet service offerings and an accelerated overall market growth trajectory. Who wins this clash, Hughes or Starlink? Clearly both players have the potential to remain as the top two market leaders in the NAM consumer broadband market. Starlink is winning at the moment as it has growth momentum resulting in Hughes’ subscribers churn. But with the Jupiter-3 services roll-out, a certain and stronger fightback can be expected from Hughes in the coming years.

Ultimately, North American consumers will be the clear winners as better cost structures and higher bandwidth provisioning will be part of the benefits borne out of the evolving competitive dynamics.