Profile: From Skeptic To President and CEO

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Profile: Peter A. Carides, President & CEO of Tachyon Networks Inc.

When representatives from Tachyon Networks Inc. first approached Peter Carides, their aim was to sell the struggling satellite broadband provider to his employer, Equant Inc. Carides, who at the time was vice president of the Amsterdam, The Netherlands-based telecommunications firm and head of its satellite and wireless division, declined, saying he did not like the way Tachyon was run.

Not long afterwards, Erik Anderson, chairman of Tachyon’s board of directors, came back to Carides with another proposal. “He said to me, ‘Well, how about you do it then?'” Carides recalled. “I said, ‘Do what?’ And he said, ‘Run it.'”

Fast-forward to January 2005, and Carides found himself, along with five former members of his management team at Equant, doing just that. Since then they have shifted Tachyon’s focus from developed markets like Western Europe and North America to underserved regions such as Africa, Asia and South America. They also have placed greater emphasis on Tachyon’s high-end services and customers.

The strategy, Carides says, is beginning to pay off. Tachyon will reach the cash flow break-even point before the end of the year and turn a profit for the first time in its eight-year history next year, he said.

Carides, whose out-of-the-office pursuits range from fashion photography to skydiving, spoke recently with with SpaceNews Deputy Editor Warren Ferster and Staff Writer Missy Frederick.

What was the rationale for some of the shifts in Tachyon’s business strategy that you have implemented?

Before I came, Tachyon was focusing on Western Europe and North America. Please find me two places in the world with more fiber in the ground. At Equant, we had started in Africa, which is like the playground for satellites. So now at Tachyon, we’re shifting our focus geographically.

Also, we have something called Tachyon Express, which is a much lower-end service than what our enterprise suite is. The company was trying to push that a lot, and when you’re competing with other companies using our technology, it’s just too expensive. So I’ve moved the focus back to our high-end line. We haven’t dropped Tachyon Express, but we’ve pushed it exclusively into our dealer base.

What other significant changes have you made?

A huge thing I’ve done is actually taken on other people’s technology. For example, if the government wants to send high-quality video images and needs a 6.7-megabit return channel, while we can do it with our technology, it would be really wasteful. It’s much better to do a point-to-point link and put it up with someone else’s equipment.

What is it about Tachyon’s proprietary technology that makes it so appealing to the high end of the satellite broadband solutions market?

In heavy rain, almost every satellite system will shut down, and when the storm clouds go away, it will come back.

But with our system, during a storm we’ll degrade the speed on the return channel, down to 512 or 256 kilobits per second. The terminal never goes off the air; it’s always up. As the network is slowing down, it has more power available. This is a fundamental attraction to our high-end customer base.

We’re the only high-end enterprise grade IP-based satellite network that has been up and running with 99.99 percent availability since April 2001.

You’ve said publicly that you expect the company to break even this year, and to start turning a profit by 2006. Is Tachyon on course to meet this goal?

This year, we’ve made our numbers so far, which has been the only time in our history, so that’s a positive thing. Without doing some sort of amazing deal or doing what I call “shooting an elephant,” rather just taking into account our normal, day-to-day business, we should break even around November or December of this year.

From January 2006 onward, we’ll be taking in more revenue than we spend.

Does the company have any big opportunities on the horizon?

I can’t really discuss the customers, but I can tell you there are opportunities to do things that haven’t been done before which are highly favorable to the satellite communications industry.

For example, the distribution of super high-definition movies to cinemas.

There are also some large customers who want to expand their applications beyond their traditional points of sale.

 Where is Tachyon looking to expand in the near future?

We’re gong to be in China by the fourth quarter of this year. We’re looking at the rest of Africa, rest of Southeast Asia and South America.

Whenever we expand into a new region, we take one or two anchor customers with us. It was GE that allowed us to get into China. We’ve set up an arrangement where if a company guarantees us a minimum amount of revenue per month, we’ll give them service and equipment at cost, and every customer that comes along after that will have to pay premium.

What percentage of your business is made up of government contracts?

Our government business has grown significantly. All of our government business is indirect. A lot of it comes from contracting with companies in the Washington, D.C., area. They make all the connections, so we sell through them. We don’t sell to the military directly, but we are in every branch of the military except the Marines.

Of our indirect business, about 50 percent is government, and 50 percent is enterprise. Of our government business, about 60-70 percent is military. The nonmilitary government business includes things like forestry and land management.

Are you looking to expand that government business any further, or to start pursuing direct business from the government?

We will never ignore the military, because it is a big part of our business. I’d like to see more government business that isn’t just military. I’d like to see perhaps about 40 percent of our government business be military, and for us to concentrate on other things, like homeland defense, or forestry.

We’re not looking to pursue direct government business at this time. Our government partners have been very successful. We don’t have a name out there; we’re a very low-key company. Our partners are doing a great job, and I don’t want to screw with what works.

In June, Tachyon expanded service into Afghanistan. Were there any problems inherent to moving into the troubled area?

Actually, it’s easier going there than into a highly regulated environment like, for example, China, because there is no former telephone entity present there. If the government wants to have any number of sites in operation there, they get it.

What technological developments will be key to the future of satellite broadband?

In my opinion, a big deal for the industry is WiMAX (worldwide interoperability for microwave access), which can reach everywhere from 5 miles (8 kilometers) to 20 miles to supposedly up to 40 miles. You put a satellite terminal in the middle of an area, and share the cost of the access with all subscribers. The same user has the same network at home, at the coffee shop, and at work.

An issue that comes up with WiMax is payment. A big company like GE can afford $600 a month; they know the market, and say, “No problem, I can pay for that.” If you’re working on a Native American reservation in Bishop, Calif., on the other hand, they don’t have the money to pay for that. But if there are 10 of you, and it’s $60 bucks a month — that you can afford.

If this starts taking off, we’re going to get a lot of business from it. It makes sense for places like the San Juan Islands, Wash., where the people are not rich and are not poor, but are sophisticated. They say, “Come on, give us something reliable we can use out there.” And if we tell them, “by the way, you can use that on your boat, and you don’t have to pay any more.” They’ll say to that, “Wow, that’s cool.”

The problem is who’s going to control the billing of everything? We say, “Don’t worry about it, we’ll get $60 from each of you and manage it ourselves.”