Satellite internet provider Hughesnet filed for Chapter 11 bankruptcy Sunday night as the company struggles with falling subscriber numbers, growing competition from Starlink and more than $1 billion in upcoming debt obligations.
Hughesnet, which has long provided satellite internet service to rural areas where traditional broadband options are limited, has lost more than half of its subscribers since SpaceX’s Starlink entered the market.
Hughesnet had approximately 1.56 million subscribers in 2020. That number has since fallen to about 641,000.
The company pointed directly to the growth of low-Earth-orbit satellite internet systems such as Starlink as a major factor in its financial difficulties.
Traditional Hughesnet satellites operate in geostationary orbit more than 22,000 miles above Earth. Starlink satellites orbit much closer to the planet, at roughly 342 miles above the surface.
That difference allows Starlink to offer significantly lower latency and, in many cases, faster internet speeds.
“As LEO constellations have expanded and reduced costs for consumers, the Company’s competitors have directly entered markets that it historically served — offering a product that exceeds GEO broadband on the performance metrics that matter most to consumers: speed and latency,” Hughesnet Chief Restructuring Officer Robert Del Genio said in a court filing Sunday.
Recent testing from internet analytics company Ookla illustrated the performance gap between the two services.
Starlink recorded median download speeds of approximately 127 Mbps, upload speeds of 21 Mbps and latency of 39 milliseconds. Hughesnet recorded median speeds of about 49 Mbps down and 4 Mbps up, with latency of approximately 674 milliseconds.
High latency can create significant delays during activities that require a rapid connection between a user’s device and the internet, including video calls and online gaming.
Hughesnet’s bankruptcy is the latest financial restructuring involving companies under parent company EchoStar.
EchoStar filed bankruptcy cases involving Dish Wireless, which operates Boost Mobile, and Dish DBS, which operates Dish Network, in June.
The financial difficulties come despite EchoStar’s agreement last year to sell approximately $17 billion worth of wireless spectrum to SpaceX, the company that operates Starlink.
Hughesnet said it still faces approximately $1.5 billion in debt that matures in August and that the company will be unable to repay under its existing financial structure.
What does the bankruptcy mean for Hughesnet customers?
Hughesnet says residential customers should not experience an immediate disruption in service because of the Chapter 11 filing.
“There is no impact to customers. Hughes[net] is operating as usual, and we expect no disruption to your service as a result of this process,” a Hughesnet representative said.
Chapter 11 bankruptcy generally allows a company to continue operating while restructuring its finances and debts rather than immediately shutting down.
Hughesnet said it intends to continue serving residential customers during the restructuring process while increasingly focusing its business on enterprise, government and defense customers.
For customers in rural areas, the satellite internet market has changed considerably since Hughesnet dominated areas without access to cable or fiber broadband. Starlink now competes directly for many of those customers, while expanding 5G home internet services have provided another option in some communities.
For now, however, Hughesnet says its customers should expect their internet service to continue normally while the company works through the bankruptcy process.
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