PARIS — A U.S.-headquartered company that has secured the rights to use the Ka-band capacity on a Japanese satellite already in orbit expects to begin offering consumer-broadband service late this year and is counting on a strategic partner to turn a 30,000-subscriber trial into a 250,000-subscriber business, the company’s chief executive said.
James G. “Buzz” Beitchman, a satellite telecommunications veteran and a former chief engineer at Japan’s JSat satellite operator, now called SkyPerfect JSat, said his company, BB Sat, has spent some three years fulfilling Japan’s often complex regulatory requirements for a two-way satellite business. He said BB Sat has ordered its first 500 Surfbeam two-way satellite terminals from partner ViaSat Inc. of Carlsbad, Calif.
The last regulatory hurdle, he said, was cleared Sept. 17, when BB Sat received a blanket network-operations license. The company is now concluding agreements with Japanese Internet service providers (ISPs) and expects to take delivery of the ViaSat hardware starting in December.
Beitchman founded BB Sat with partners Dean A. Olmstead — also a JSat veteran and now chief executive of EchoStar Satellite Services of Colorado — and Michael F. McAllister, a former Comsat general counsel. The company’s key acquisition was to secure most of the Ka-band capacity on Sky Perfect JSat’s Superbird-B2 satellite at 162 degrees east.
In an Oct. 7 interview, Beitchman said Superbird-B2’s Ka-band payload under lease to BB Sat will be able to serve between 30,000 and 50,000 consumer broadband subscribers, depending on the kind of bandwidth-limited subscription packages prove the most popular.
The basic service is a downlink of 2.5 megabits per second, with uplink at 512 kilobits per second. BB Sat’s initial service will include an initial fee of 30,000 yen ($334), a service fee of 5,000 yen per month and a terminal-rental charge of 1,382 yen per month.
Japan’s Internet service providers handle sales, billing and customer service. BB Sat is responsible for terminal installation.
Beitchman said BB Sat will receive more than 80 percent of each subscription fee because the Japanese ISPs’ involvement will be limited to the initial sale and billing. A customer in a given area calls one of several locally active ISPs and requests broadband service. If the customer is located outside of areas reached by fiber or DSL, the ISP will propose the satellite option, which leads to BB Sat.
Beitchman said he and eight other individuals, including his two founding partners, have together invested around $1 million in the business. A partner Beitchman declined to name — “a third party who believes in us here” — has pitched in by financing the purchase of the first 500 ViaSat terminals.
Beitchman declined to detail the satellite capacity lease arrangement, but said SkyPerfect JSat was not using the Ka-band capacity and was only too happy to strike a deal with BB Sat as a way to generate at least some revenue from a dormant asset.
Given BB Sat’s current cost basis, he said, it would be nicely profitable with 30,000 subscribers. The Superbird-B2 satellite, a Boeing 601HP platform, was launched in February 2000 and has a contracted in-orbit service life of 13 years. Beitchman said current estimates are that the satellite will remain fully operational until 2016.
Beitchman acknowledged that BB Sat will need a hefty investment from a strategic partner to go beyond the 500-unit terminal order now in place, assuming demand is as great as BB Sat believes. Some 1 million Japanese households have no broadband access, and more than 1 million more have access to what BB Sat terms “severely degraded” broadband.
To fully serve the Japanese market, and to demonstrate in Japan what Ka-band broadband might do for other nations in Asia, BB Sat needs a strategic partner, and soon, Beitchman said. With fresh investment, the company would begin negotiations with satellite operators planning replacement C- and Ku-band satellites about hosting a BB Sat-financed Ka-band payload on one of their spacecraft.
“Right now we are a small but interesting business for a strategic partner that would use us as a laboratory to test Ka-band consumer broadband in an Asian market,” Beitchman said. “Given the regulatory and other unique aspects of the Japanese market, if we can make it work here, we can make it work anywhere else in Asia.”
