Satellite internet giant on the brink of collapse: massive debts and competition from Elon Musk

The veteran satellite internet provider Hughesnet has filed an official request for receivership and protection from creditors, following fierce competition from the Starlink satellite internet service operated by SpaceX. Since Starlink began operations in 2020, Hughesnet has suffered a mass exodus of customers, with its subscriber base plummeting from 1.56 million to approximately 641,000.

The primary reason for this collapse lies in the significant technological gap between the two companies. While Starlink satellites operate in low Earth orbit (LEO) at an altitude of about 342 miles, Hughesnet's satellites are located in geostationary orbit (GEO) at an altitude of over 22,000 miles.

This gap allows Starlink to provide much higher speeds and significantly lower latency. According to a recent report by Ookla, Starlink shows a median download speed of 127 Mbps and a latency of 39 milliseconds, compared to 49 Mbps and a high latency of 674 milliseconds for Hughesnet—a figure that renders activities like video calls or online gaming virtually impossible.

Hughesnet's parent company, EchoStar, had already filed for the liquidation of two other subsidiaries in June. Although it sold wireless frequencies to SpaceX last September for $17 billion, Hughesnet remains burdened with $1.5 billion in debt due for repayment in August, with no ability to cover the costs.

The company clarified that at this stage, no service interruptions are expected for existing private customers, but it intends to gradually shift its future focus toward the business, government, and security sectors.