ViaSat Willing To Bet Big on Super-high-throughput Satellites

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PARIS — Satellite broadband hardware and service provider ViaSat Inc. on Nov. 9 said it is likely to order the first of what is intended as a three-satellite constellation of ViaSat-3 Ka-band broadband satellites covering the globe with throughput capacity of 1 terabit per second each.

Mark Dankberg
“We kind of wonder: Why wouldn’t everybody want to do this?” ViaSat CEO Mark Dankberg told analysts during a Nov. 9 earnings call. “You should ask them why they don’t.” Credit: ViaSat

ViaSat said that while it would be preferable to have partners for the system, especially for coverage outside North America, the company would not wait for partners to manifest themselves before moving forward on ViaSat-3.

Carlsbad, California-based ViaSat said demand from the U.S. government for mobile broadband, coupled with growing commercial market demand, especially among commercial airlines, justifies the ViaSat-3 investment.

In releasing financial results for the three months ending Sept. 30, ViaSat again demonstrated its ability to grow its U.S. military business at a time when many other defense suppliers are reporting flat to declining revenue in a budget-constrained market.

Government demand for broadband has enabled ViaSat to slip into U.S. Defense Department contracts outside the usual legacy-program format to win business.

The company’s new, lightweight Ku-/Ka-band terminal – ViaSat leases capacity on other fleets in addition to providing its own Ka-band capacity over North America – offers to the U.S. military broadband performance similar to what commercial airliner JetBlue is already providing its passengers.

In a conference call with investors, ViaSat Chief Executive Mark D. Dankberg said the company has been surprised that no one else appears to be moving to the kind of super-high-throughput satellite technology in which ViaSat has been investing for several years.

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ViaSat-1, now in orbit, has a capacity of about 140 gigabits per second. ViaSat-2, a joint ViaSat-Boeing design, is scheduled for launch in late 2016 aboard a yet-untested SpaceX Falcon Heavy rocket, and is expected to offer 350 gigabits per second of throughput.

ViaSat-2 is expected to cost around $650 million including the satellite’s construction — by Boeing Space and Intelligence Systems of El Segundo, California – its launch, insurance and the associated ground infrastructure.

Dankberg said ViaSat’s in-house investment of “tens of millions of dollars” in research and development over the past five years has yielded a payload design that will permit ViaSat-3 to offer four times the bandwidth efficiency of ViaSat-2 when measured in the system’s cost per delivered gigabit per second.

“We kind of wonder: Why wouldn’t everybody want to do this?” Dankberg said. “You should ask them why they don’t.

“A lot of satellite operators are not motivated to undermine business models that have worked for them for a long time. Satellite manufacturers have been responding mostly to demands by satellite operators and haven’t really been motivated to work on the technologies we’ve been working on,” Dankberg said.

Some investors may fear that every opportunity cited by Dankberg, a ViaSat co-founder, carries with it still more investment. Dankberg and ViaSat Chief Financial Officer Sean Lynn Duffy did not challenge that assumption during the conference call.

Duffy said research spending, which has recently trended up, would not be going down. Dankberg did allow as how more spending on upstream research would lead to lower capital investment in the ViaSat-3 satellite, which he said would cost less than ViaSat-2.

Dankberg did not commit to a contract date for the first ViaSat-3-series satellite, which would cover the Americas, but his remarks suggested that will occur long before ViaSat-2 is launched.

He said there could be a four-year lag between the contract and the first ViaSat-3 launch, but that the second and third ViaSat-3-series satellites could be launched at one-year intervals after that by standardizing the platform and part of the payload.

The principal characteristic of ViaSat-3, aside from tripling the throughput of ViaSat-2, is greater bandwidth-allocation flexibility and bandwidth economics.

The ViaSat-3 system will also accelerate the existing trend of using the Internet Cloud for some ground teleport functions, simplifying gateway Earth station construction.

ViaSat’s current U.S. consumer satellite broadband business is increasingly bifurcated between its household users and its airline passenger-connectivity business, plus government aeronautical demand. The trick for the company is to manage the demand of these three customer sets so that all are getting what ViaSat advertises as performance.

ViaSat’s Exede service reported adding just 2,000 net new subscribers to its service in the three months ending Sept. 30, for a total of 687,000. Per-subscriber revenue was up, however, and the company added 35 Jet Blue and other commercial aircraft, bringing the total to 419 planes.

Duffy said ViaSat has been managing capacity on ViaSat-1’s high-demand beams, turning away Exede customers to permit airlines and the U.S. government to maintain quality-of-service levels.

“We chose to closely manage distribution channels to bound in, or in some cases reduce, the net subscribers on as many as two-thirds of our ViaSat-1 beams,” Duffy said. “This is a conscious decision on our part to help capture fast-growing commercial and government mobility markets… and at the same time to protect the Exede brand — all in anticipation of the launch of ViaSat-2.”