PARIS — Canadian rural-broadband provider Barrett Xplore Inc., in a forceful demonstration of its belief in the future of satellite-delivered broadband to individual consumers, has agreed to invest at least $250 million to reserve the Canadian capacity on two large all-Ka-band satellites under construction for U.S. satellite-broadband providers and to purchase the necessary ground equipment.
In its latest investment, Woodstock, New Brunswick-based Barrett on Jan. 7 announced it will be purchasing at least half, and possibly 100 percent, of the Canadian capacity on the ViaSat-1 satellite scheduled for launch in early 2011.
The capacity, equivalent to 15 gigabits per second of throughput, is owned by Loral Space and Communications of New York, whosesubsidiary is manufacturing ViaSat-1 for ViaSat Inc. of Carlsbad, Calif.
To secure the manufacturing contract, Loral agreed to prepurchase ViaSat-1’s Canadian-directed beams, or about 15 percent of ViaSat-1’s total capacity. Loral had intended to resell the capacity to Telesat of Ottawa, but the Canadian satellite operator let an Oct. 31 purchase deadline pass without exercising its option.
Barrett is Canada’s biggest rural-broadband provider and is a Telesat customer for Telesat’s Anik F2 and Anik F3 satellites.
In what looked like the defection of a major customer, Barrett on Oct. 29 announced it was purchasing 10 gigabits per second of capacity on the all-Ka-band Jupiter satellite under construction, also at Loral, for Hughes Network Systems of Germantown, Md. Jupiter is scheduled for launch in 2012.
Loral owns none of the Jupiter capacity. Hughes and Barrett did not detail the contract’s financial terms, but said the deal was valued at more than $100 million.
Loral officials at the time had said Barrett’s agreement with Hughes was not the end of the story. On Jan. 7, Loral and Barrett announced that the Canadian provider would book a large amount of the Loral-owned Canadian capacity on ViaSat-1.
In a Jan. 7 filing with the U.S. Securities and Exchange Commission (SEC), Loral said Barrett has committed to paying at least 133 million Canadian dollars ($126 million) for one-half the Canadian capacity over the 15-year life of the ViaSat-1 satellite. If Barrett is successful in winning at least 27 licenses — it has applied for 55 — from the Canadian government under the “Broadband Canada: Connecting Rural Canadians” broadband-stimulus program, it is obliged to pay Loral 262 million Canadian dollars for all the Canadian capacity.
Loral said the arrangement between the two companies assumes that Barrett will purchase the full complement of ViaSat-1’s Canadian beams. Loral said Canadian authorities are expected to announce broadband license winners in the coming weeks, with formal operating licenses issued by March.
The license winners will be eligible for reimbursement by the Canadian government of up to 50 percent of their capital investment in user terminals, satellite capacity leases and other costs of rolling out broadband service to areas not fully served by the terrestrial grid.
Industry Canada said that by the late-October deadline, some 570 applications were received, requesting a total of 974 million Canadian dollars in government broadband-stimulus funding.
Barrett and ViaSat announced Jan. 7 that they had entered a contract, valued at $21 million, under which Barrett will purchase an initial batch of ViaSat-built user terminals and gateway ground hardware.
The Barrett-Loral agreement would appear to validate Loral’s December 2007 decision to commit to an early purchase of ViaSat-1 capacity in return for the contract to build the satellite. ViaSat officials had said at the time that it might have selected a bid from Astrium Satellites of Europe, which competed for the work, had Loral not agreed to the advance purchase.
Loral, which owns a majority economic stake in Telesat, has plans of its own in Ka-band, according to the SEC filing.
The company said the contract with Barrett stipulates that if Barrett purchases all of ViaSat-1’s Canadian capacity, it will offer a reseller agreement to Loral so that Loral could market the capacity to “enterprise and aeronautical markets.”
How much capacity Loral will purchase depends in part on whether ViaSat ultimately is able to increase ViaSat-1 throughput by gaining access to Ka-band spectrum that had been set aside for non-geostationary-orbit satellites.
The U.S. Federal Communications Commission in August approved ViaSat’s request to use this additional spectrum, on condition that ViaSat shut down its use if any of the intended primary users of this spectrum needs it. No such users have appeared.
Mobile applications are also viewed as promising for Ka-band. ViaSat spokesman Bruce Rowe said Jan. 7 that the company is “reserving some ViaSat-1 capacity in all regions … for mobile applications. We think Ka-band has a future for the same type of gains in service for mobile, including our Yonder service for airborne and what we call ‘enterprise defense’ applications for the military.”