PARIS — Satellite broadband hardware and services provider ViaSat Inc. told investors it will not systematically replace subscribers leaving the WildBlue consumer broadband service in certain densely populated regions of the United States, but instead will reposition WildBlue as a higher-quality service as it prepares for a big satellite scheduled for launch in 2011.
ViaSat Chief Executive Mark D. Dankberg in the past has criticized consumer broadband efforts for short-term thinking, saying they have tried to stuff as many subscribers as possible onto a given amount of satellite bandwidth, often resulting in mediocre service. He has said satellite broadband will carve out a sizable market niche only if it approaches the bandwidth and price levels of today’s DSL service.
For Dankberg and ViaSat, the question since their purchase of WildBlue in late 2009 was whether they were willing to risk the revenue hit that would follow an attempt to give each subscriber more bandwidth by reducing WildBlue subscriptions in high-demand regions.
In a May 14 conference call with investors, Dankberg said ViaSat would be doing exactly that as it prepares the market for its large ViaSat-1 Ka-band broadband satellite designed to provide much more bandwidth than that currently offered by WildBlue.
Dankberg said Carlsbad, Calif.-based ViaSat, at the same time as it lets the subscriber count in the eastern United States drop with customer attrition, will be redoubling efforts to lure subscribers in the western U.S. states, where the WildBlue satellites have plenty of available capacity.
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“Growth there would mostly offset reductions in the subscriber count in the eastern half of the U.S., as we aim to reduce network loading that we inherited from the prior management in those beams,” Dankberg said. “Demand [in the east] is still high, but we are trying to change the perception of satellite broadband. One of the factors is loading on the network. We have a different view of how that should be, compared to how it was with WildBlue when we acquired it.”
ViaSat-1 is scheduled for launch in February or March 2011. If ViaSat is correct in its analysis of the demand for low-cost, high-bandwidth satellite broadband, it will need a backup satellite. But the company is already testing the nerves of its investors with ViaSat-1, and Dankberg said a ViaSat-1 satellite would await the arrival of co-investors.
“There’s a pretty good chance this could come together in this calendar year,” Dankberg said. “But we’ll be pretty clear when that point occurs, and it hasn’t quite yet.”
He said a ViaSat-2 satellite, if ordered in late 2010, could be in orbit in 2013.
ViaSat’s principal U.S. competitor, Hughes Communications of Germantown, Md., has a similarly large-throughput satellite, called Jupiter, under construction and scheduled for launch in 2012.
Hughes and ViaSat are extending their broadband competition into Europe, with ViaSat allied with satellite fleet operator Eutelsat of Paris and Hughes allied with startup satellite broadband provider Avanti Communications of London.
Avanti’s first dedicated satellite, Hylas, is scheduled for launch late this year, as is the larger Ka-Sat under construction for Eutelsat.
Dankberg said Eutelsat’s vision of satellite broadband for consumers is similar to ViaSat’s. He said Eutelsat has indicated it would load no more than 1 million subscribers onto Ka-Sat, which has 70 gigabits per second of throughput capacity. He said Avanti’s plans have also referenced 1 million subscribers to be fitted onto two satellites with a combined capacity of around 10 gigabits per second.
Eutelsat spokeswoman Vanessa O’Connor said May 19 that the company has referred to a subscriber base of between 1 million and 2 million for Ka-Sat. Avanti has said its Hylas 1 and Hylas 2 satellites, with a combined 11.3 gigabits per second of throughput, can accommodate up to 1.35 million subscribers.
Beyond North America and Europe, Hughes and ViaSat are struggling to establish positions with several Ka-band consumer broadband satellites that several governments are considering to provide broadband to rural regions.
ViaSat has lined up Yahsat of the United Arab Emirates as a partner. Yahsat is launching two satellites in 2011.
The Australian government is weighing a private-public partnership to launch two Ka-band satellites to cover Australia’s territory as part of the National Broadband Network. A decision to proceed with construction of the satellites has not been made, but both ViaSat and Hughes are primed to enter the market.
Hughes on May 13 announced the formation of a Hughes Australia subsidiary, “demonstrating the company’s commitment to serve this strategic and rapidly growing market, particularly in the area of Ka-band satellite technology and services.”
Dankberg said ViaSat expects the Australian project to move forward this year. Other, similar networks are being debated in Latin America, Russia, parts of Asia and Africa, he said.
ViaSat is also seeing increased government, especially military, demand for airborne broadband to deliver intelligence, surveillance and reconnaissance (ISR) data over the Middle East using ViaSat’s ArcLight modem technology developed for commercial markets.
“Our success [in airborne ISR] has made it evident how applying advanced commercial satellite technologies can really outperform existing government organic capabilities,” Dankberg said. “That’s an important theme for us, especially as these new commercial Ka-band satellite platforms are being launched in the next year or so in Europe, the United States and then the Middle East.”
