ViaSat Gathering Technical Info for Second Satellite

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PARIS — Satellite broadband terminal and services provider ViaSat Inc. on Nov. 4 said it is soliciting preliminary technical proposals from manufacturers for a ViaSat-2 Ka-band satellite to complement the ViaSat-1 spacecraft set for launch in the first half of 2011.

In a conference call with investors, ViaSat Chief Executive Mark Dankberg said perhaps 10 percent of the capacity of ViaSat-1, which when launched will be the highest-throughput commercial satellite on orbit, is likely to be leased to commercial and business-jet fleets. Another 10 percent likely will be sold to government users.

Some 15 percent of ViaSat-1 has been prepurchased by Loral Space and Communications of New York, whose Space Systems/Loral subsidiary is building ViaSat-1. Loral has in turn sold most of that capacity to Canadian broadband service provider Barrett Xplore.

ViaSat-1 is expected to deliver about 140 gigabits per second of throughput. To put that in perspective, Dankberg said, the entire current U.S. Defense Department’s use of conventional Ku-band satellite bandwidth today in the U.S. is equivalent to no more than 3 percent of ViaSat-1’s total capacity.

U.S. government use of the equivalent of 10 percent of ViaSat-1, he said, “would represent solid growth of the total amount of demand” from government agencies.

Carlsbad, Calif.-based ViaSat is betting much of its future financial health on the idea that Ka-band will become immensely popular with commercial and business aircraft, maritime shipping, and military and other government users in addition to a growing population of individual |consumers.

The next 24 months therefore will be crucial for the company. Paris-based Eutelsat in December is scheduled to launch is Ka-Sat Ka-band satellite, for which ViaSat is providing ground hardware. Much of that hardware will not be ordered until Ka-Sat is launched and declared operational in orbit.

With an estimated 70 gigabits per second of throughput, Ka-Sat has less capacity than ViaSat-1 but still many times more than most commercial satellites in orbit.

 Following Ka-Sat, ViaSat-1 is scheduled for launch next spring, an event that will enable ViaSat to throttle up sales of its WildBlue consumer broadband service in the United States after two years in which WildBlue subscriber growth has been stunted because of a lack of in-orbit capacity.

Finally, the Yahsat-1B satellite owned by startup satellite operator Yahsat of the United Arab Emirates is scheduled for launch in late 2011. There too, ViaSat is the provider of ground gear.

ViaSat’s investors were lukewarm in their initial reaction to the company’s decision to launch the $400 million ViaSat-1 project. How they will react once the company announces a second, similar investment can only be guessed.

But from Dankberg’s perspective, one either believes in the business model, or one does not. He clearly does, and he said during the conference call that the decision to contract for ViaSat-2 likely would occur before ViaSat-1 has proved its commercial potential.

“We want to avoid a repeat of the WildBlue situation, where for 1.5 years or so, they have had more demand than they have capacity,” Dankberg said. “That’s probably what’s driving our thinking the most.”

It would take at least two years, and possibly longer, to build and launch a ViaSat-2 satellite once a firm order is made.

WildBlue, which has been trying to encourage demand in areas under their still-available satellite beams, added about 2,000 net subscribers in the three months ending Sept. 30, bringing the total to 416,000 customers, Ronald G. Wangerin, ViaSat vice president and chief financial officer, said during the call.

ViaSat and WildBlue will benefit from two grants, totaling $33.5 million, from the U.S. Department of Agriculture’s Rural Utilities Service as part of the U.S. broadband stimulus financial package. Wild Blue won a $19.5 million grant to expand consumer broadband in 24 Western and Midwestern U.S. states. Dish Network of Englewood, Colo., which is a WildBlue distributor, won a separate $14 million grant to expand WildBlue into rural areas in the Eastern United States.

Dankberg said it remains unclear how the money will be spent, and on what schedule. The government sponsors have yet to detail the criteria to be used to determine eligible customers in the assigned underserved regions.

ViaSat is also awaiting clarity on what Defense Department programs will be maintained, cut, delayed or canceled outright. The company’s product line — gear for airborne intelligence, surveillance and reconnaissance; broadband communications hardware; and so-called Blue Force Tracking systems — all would appear to be protected even in an environment of defense-budget cutbacks, Dankberg said.

ViaSat recently won a contract valued at up to $477 million to provide the U.S. Army’s next-generation Blue Force Tracking equipment and has received an initial order valued at $37.7 million. Blue Force Tracking systems are intended to reduce battlefield fratricide incidents by enabling commanders to keep better tabs on friendly forces.

Dankberg said ViaSat intends to leverage its work, notably with JetBlue Airways, in developing broadband satellite links to commercial airlines as it seeks to supply similar equipment — preferably in Ka-band — to the Defense Department for manned and unmanned aircraft.

He said the company has recently demonstrated a system that takes data from an aircraft at 4 megabits per second for delivery to a 30-centimeter-diameter ground antenna. That is in Ku-band. Ka-band can provide higher speeds, Dankberg said.