ViaSat wants to go small on gateways, not on satellites
WASHINGTON — Satellite broadband hardware and service provider ViaSat continues to invest in shrinking satellite gateway sites down from buildings to the size of closets in order to achieve its goal of getting a terabit of throughput from each ViaSat-3 satellite.
The three-satellite system will require more access points than the company’s other satellites in order to maximize bandwidth potential of each spacecraft, ViaSat CEO Mark Dankberg told investors Feb. 10.
Dankberg said that before settling on building three relatively large ViaSat-3 satellites to take its business global, the company considered deploying smaller satellites in a non-geosynchronous orbit. ViaSat did file with the Federal Communications Commission to operate 24 satellites in medium-Earth orbit at 8,200 kilometers, but when weighing a low Earth orbit system, which would result in lower latency, decided the trade-offs weren’t worth it.
But that doesn’t mean Dankberg dismisses OneWeb, the well-capitalized startup gearing up to deploy 648-satellites in low Earth orbit to blanket the globe with broadband. As Dankberg sees it, the market is big enough for the new constellations underway from both companies.
A different kind of small
ViaSat’s work to reduce the size of gateway sites, commonly referred to as teleports, is already underway with its soon to launch ViaSat-2 satellite, which will directly benefit the ViaSat-3 series of satellites, Dankberg said.
“ViaSat 2 gateways are much smaller [than typical satellite gateways],” he explained. “They only require utility cabinets instead of dedicated buildings for their local hardware, they support more spectrum, and are much less expensive to maintain and operate. They are also designed for high reliability and tolerance to terrestrial network outages and weather effects.”
After switching the launch from a SpaceX Falcon Heavy to an Ariane 5, ViaSat-2 is slated to launch April 25 from Kourou. The 6,400-kilogram Boeing-built satellite has more than twice ViaSat-1’s 140 gigabits of total throughput and seven times the coverage area. Along with providing much needed growth capacity, the satellite paves the way for the ViaSat-3 trio of even higher capacity satellites.
ViaSat didn’t break out how much R&D funding is going toward teleport optimization. The company disclosed in its third quarter 2017 earnings report that R&D expenses were up 93 percent year-over-year, with most of that spending devoted to building ViaSat-3 payloads in-house, next-generation networks, and creating new aeronautical connectivity products. R&D spending grew by $34.2 million year-over-year.
Dankberg said miniaturization on the teleport side is similar to cellular service providers building greater numbers of small cell sites to achieve better coverage and speed.
“Just as mobile operators are driving to smaller, less expensive cells to improve coverage, total capacity, and capacity density, satellite systems must do the same thing with gateways,” he said. “There is no way to get terabits per second throughput from a broadband satellite without also multiplying the gateway access network. Current gateway architectures make that prohibitively expensive. That’s an example of one of the system problems we’ve addressed with ViaSat-2, and that we are extending with ViaSat-3.”
Shawn Duffy, ViaSat’s chief financial officer, said total spending on ViaSat-3 was about $209 million this year. The company ordered the first two ViaSat-3 spacecraft from Boeing in February 2016.
Not against OneWeb, but not for smallsats
Dankberg said ViaSat has been involved in one way or another with “every flavor of non-geosynchronous satellite system,” and therefore had a good understanding of them in deciding on ViaSat-3’s architecture.
“I think OneWeb faces a bunch of challenges, but they are not insurmountable,” he said.
Dankberg gave two big reservations against low-Earth orbit, specifically: geographic distribution of bandwidth and the limited value of low latency for ViaSat’s customers. With a LEO system, he said, lots of capacity would end up pooled at the poles where the satellites’ orbits cross, and might not place enough usable capacity where demand is greatest. Dankberg said ViaSat consumer broadband customers rank speed and volume above low latency.
ViaSat expects to have the first ViaSat-3 satellites ready for launch in 2019 to cover the Americas. The second will launch in 2020 to cover Europe, the Middle East and Africa. A third satellite, which ViaSat has yet to order, would launch in 2020 or 2021 to cover the Asia-Pacific.
OneWeb has its first launch planned for 2018, with service starting in 2019 as it builds up a constellation of 648 satellites. Dankberg said he is not betting against OneWeb’s success, and foresees a market that could support both OneWeb and ViaSat.
“In 2020, we are looking at probably well over a thousand terabits per second of access bandwidth demand globally, and both we and OneWeb would have single digit amounts of terabits, so I don’t think it’s a fight to the death between us,” he said.
Targeting high ARPU subscribers
ViaSat had 675,000 subscribers for its consumer broadband service as of Dec. 31, down 12,000 compared to the same three month period the prior year. Average Revenue Per User (ARPU), however, reached a new high of $63.11 as ViaSat subscribers continue to upgrade to higher-bandwith plans.
“Our focus on providing better service to fewer customers increases our confidence that we can use ViaSat-2 to drive attractive net subscriber growth when that enters service,” Dankberg said.
ViaSat is offering 25Mbps plans in limited areas until ViaSat-2 begins operations toward the end of the year. Once in service, Dankberg said the satellite will enable speeds of 50, 75 and 100 Mbps — download speeds comparable to those popular with cable Internet subscribers.
Outside of consumer broadband, ViaSat counted 555 commercial aircraft using the company’s satellite-based in-flight connectivity service, and more than 750 aircraft in backlog. Government services revenue also grew 10 percent to $166 million for the quarter, compared to last year’s quarter.
ViaSat raised $503.1 million through the Nov. 23 sale of nearly 7.5 million shares of common stock in an underwritten public offering. Duffy said the company used $225 million from the proceeds to cover an outstanding revolving credit balance. The remainder, she said, remains fully available to fund projects such as the yet-to-be-ordered Asia-Pacific ViaSat-3 satellite, and the company’s joint venture with French satellite operator Eutelsat.
ViaSat generated $380.6 million in revenue for the third quarter 2017, which ended Dec. 31, 2016, up 9 percent year over year. Net income however, was only $4.2 million — essentially flat due to the company’s increase in R&D spending.