PARIS — Satellite consumer broadband service provider ViaSat Inc., saying its Exede service in the United States is already penetrating urban markets once thought impossible for satellites, views its addressable market as including “tens of millions” of U.S. residences, company President Rick Baldridge said.
Some market analyses have concluded that satellite broadband’s total addressable market in the United States is no more than 4 million subscribers.
Baldridge invited investors to view ViaSat’s share of this as ultimately counting several million subscribers in their homes, small offices and on commercial airlines. As of June 30, the ViaSat service counted 630,000 subscribers.
Baldridge also said United Airlines’ ongoing face-off of ViaSat’s Ka-band broadband with Panasonic Avionics’ Ku-band service for passenger in-flight connectivity is likely to determine whether ViaSat’s huge Ka-band capacity or Panasonic’s lower-volume Ku-band satellite system will win the day.
“The real question is: Do 10 people on an aircraft want to use the service, or do 100 people want it?” Baldridge said in a Sept. 16 presentation to investors organized by Bank of America Merrill Lynch. “If 10 people want to use the service, there’s lots of options for the airlines. We can serve everybody on the airline, and there’s no other technology that can do that.”
Carlsbad, California-based ViaSat expects about 400 commercial jets operated by airliners JetBlue and United to be outfitted with the ViaSat service by the end of the year.
Lake Forest, California-based Panasonic has been leasing Ku-band capacity on multiple satellites, most recently the full Ka-band capacity of a satellite over the Asia-Pacific to be built for satellite fleet operator Eutelsat of Paris, to stitch together global coverage.
Panasonic officials have said Ka-band signal attenuation in heavy rain has been one reason for the choice of Ku-band, especially as the company wants its customers to be connected even on runways as they await takeoff.
ViaSat has said its large ViaSat-1 satellite, especially when combined with the larger ViaSat-2 to be launched in 2016, will maximize the availability of Ka-band spectrum to offer multimegabit-per-second links to all aircraft passengers in the satellites’ coverage areas.
Baldridge said that while the jury is still out on how big a success inflight WiFi will be with passengers, and airlines are still tinkering with business models including free access or pay-per-segment charges, the company is getting positive early signs from JetBlue.
“We’ve had as many as 138 people using the service on a JetBlue flight,” Baldridge said. “We see 100 all the time.”
ViaSat and Eutelsat have joined forces in mobile broadband, with Eutelsat using ViaSat’s ground-terminal technology, to offer an unbroken Ka-band broadband coverage area over the United States, the Caribbean, the North Atlantic air and maritime corridor and Europe once ViaSat-2 is in service.
In North America, ViaSat competes directly with Hughes Network Systems, owned by EchoStar Corp. of Englewood, Colorado. The HughesNet service remains the larger of the two, with 935,000 subscribers as of June 30 compared to ViaSat’s 630,000.
Baldridge said Hughes’ recent growth, which like ViaSat’s has slowed, has almost all come from Hughes’ wholesale distribution relationship with EchoStar’s sister company, Dish Network. At ViaSat, he said, the consumer broadband service generates more revenue from retail channels than from wholesale.
Dish also has a wholesale distribution relationship with ViaSat. Baldridge said that while the Dish-EchoStar relationship has “definitely skewed” Dish’s relations with ViaSat, the ViaSat-Dish relationship remains solid.
ViaSat spends around $600 to attract each new retail subscriber to monthly services that generate, on average, slightly more than $55 per subscriber. There are virtually no costs for each wholesale customer as Dish and other distributors handle these charges. ViaSat receives less than $30 per month per wholesale subscriber.
With ViaSat-1 and the coming ViaSat-2 — and Baldridge made several references to a higher-speed ViaSat-2 in the planning stages — ViaSat hopes to extend satellite broadband’s reach into areas dominated by cable and DSL services.
Baldridge said even large, wealthy metropolitan areas are dotted with areas where fiber is not available and where satellite broadband can best other terrestrial offers.
“You should see our subscriber base in LA,” Baldridge said of ViaSat’s success in and around Los Angeles. “You’d be shocked.”
