ViaSat Sees Falcon Heavy as Pacing Item in Growth Plans

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TOULOUSE, France – Satellite broadband hardware and service provider ViaSat Inc. on May 19 said it is facing capacity limits on more than half the beams on its ViaSat-1 satellite and that the situation will worsen until ViaSat-2 is in orbit.

The company reported much higher per-subscriber monthly revenue in the three months ending April 3 compared to the previous three-month period, but slowing subscriber growth – up 1.6 percent, to 686,000 from where it stood as of Jan. 2. The slowing growth is directly attributable to the dwindling capacity aboard the ViaSat-1 satellite’s high-demand beams.

In a conference call with investors, ViaSat Chief Executive Mark. D. Dankberg said ViaSat-2 construction at Boeing Space and Intelligence Systems of El Segundo, California, is on schedule and that the satellite will move into final testing sometime this summer.

ViaSat-2’s launch, aboard a Falcon Heavy rocket built by SpaceX of Hawthorne, California, is scheduled to occur no later than September 2016. A SpaceX spokesman said May 21 that the company still expects to conduct the vehicle’s inaugural flight by the end of this year. ViaSat expects to be the third or fourth customer for the Falcon Heavy.

Dankberg said ViaSat’s contract with SpaceX gives ViaSat a seat at SpaceX Falcon Heavy design reviews as the vehicle completes its flight certification milestones.

“We have pretty current information and if we believe that [the late-summer 2016 launch] moves materially, we’ll disclose that,” Dankberg said, adding that ViaSat “will have some contingency plans” in the event the SpaceX launch is delayed beyond an acceptable date.

He declined to specify the alternatives. ViaSat has an option with European launch-service provider Arianespace, but whether that could be exercised to provide for a launch in 2016 is unclear. Evry, France-based Arianespace has said its Ariane 5 heavy-lift rocket is fully booked into 2017.

ViaSat-2 is designed as a new-generation satellite that will give ViaSat much more flexibility in allocating bandwidth to demand. He said it was not impossible that Boeing may face delays in testing, but that so far the satellite’s construction is keeping to schedule.

“Right now people ought to be a little more focused just on the launch vehicle” rather than the satellite’s construction, Dankberg said, referring to risk of Viasat-2 delays.

ViaSat-1 provides a total throughput of well over 100 gigabits per second, but as is the case with other Ka-band high-throughput satellites of its generation – competitor Hughes in the United States and partner Eutelsat in Europe operate similar satellites – capacity cannot be moved from low-to high-demand regaions.

Dankberg reiterated the company’s policy of not compromising on average user bandwidth availability by loading more customers onto the high-demand beams. So supply limits will slow growth in these areas until fresh capacity is launched.

One mitigating factor for ViaSat is the company’s effort in spreading satellite broadband to commercial airlines, notably JetBlue of the United States for now, with United Airlines on the way.

As of April 3, Carlsbad, California-based ViaSat had equipped 338 commercial jets with its Exede in the Air service, versus 276 aircraft three months earlier.

A total of 519 commercial airline terminals had been delivered – including the 338 in operation — compared to 447 at the end of December.

Airline demand growth is Important to ViaSat especially because airline connectivity demand is naturally spread evenly over multiple geographic regions, easing the strain on the high-demand beams.

Dankberg said Exede in the Air can support “dozens of simultaneous streaming users on a single airplane,” a claim he said has recently been put to the test by JetBlue and Amazon, which have reached an agreement on Amazon’s Prime service access on JetBlue flights.

Thirty smartphones, tablets, Amazon Kindles and other devices were placed on a JetBlue flight over the East Coast of the United States, all at once in video streaming mode.

“Well, obviously it worked,” Dankberg said, adding that despite this one jet’s heavy demand, none of the other 300-plus aircraft flying the same route that day suffered a loss of bandwidth.

“We’re confident that no other in-flight WiFi could do that even years from now without creating a black hole of bandwidth that would cut off dozens or hundreds of other aircraft from getting any service at all,” Dankberg said.

ViaSat-2 will add capacity and extend the current Exede in the Air coverage to air routes to Mexico, the Caribbean and Mexico.

In recent months ViaSat has said its consumer satellite broadband business would focus on filtering prospective subscribers before they end up being disconnected for nonpayment. A parallel effort has been made to educate service centers so that they do not lure customers accustomed to unlimited bandwidth. These customers, too, are more likely to quit the service.