Viasat says ViaSat-2 business plan intact despite antenna glitch

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WASHINGTON — Fleet operator Viasat’s newest satellite could lose around 15 percent of its intended throughput due to an antenna problem discovered after launch.

Mark Dankberg, Viasat’s Chairman and CEO, told investors Feb. 8 that the 6,400-kilogram ViaSat-2 satellite launched in June on an Ariane 5 rocket will likely have a maximum capacity of 260 gigabits per second, rather than 300 Gbps or more as initially hoped.

Viasat and satellite manufacturer Boeing are continuing to work on solutions to the antenna problem, Dankberg said, but cannot conclude whether any prospective fixes will help or hinder the satellite’s performance. Insurers are involved to determine the impact, which could entitle Viasat to a partial-loss claim, he said.

Dankberg said ViaSat-2 will still be a very capable satellite regardless of whether the handicap can be fixed. Other parts of the ViaSat-2 system, like its ground network, are performing better than expected, he said, mitigating the impact of the antenna malfunction.

“We didn’t base our business plans on perfection,” he said. “We had margins in there for problems.”

ViaSat-2 is readying for service now and will be nationwide over the United States by the end of February, he said. Once fully active, the satellite will cover most of North America, along with the Caribbean and a swath of the North Atlantic Ocean out to the United Kingdom.

A different customer spread

Between 90 and 95 percent of the capacity on Viasat’s older fleet — ViaSat-1, WildBlue-1 and broadband offered through Telesat’s Anik-F2 satellite — is dedicated to residential internet access for homes across the United States and Canada. Dankberg said residential broadband subscribers will form an appreciably smaller chunk of ViaSat-2 customers, though he didn’t give a percentage.

Aviation and government connectivity are expected to take a larger role on ViaSat-2. Viasat’s government revenue grew 9 percent year over year to $182 million for the three months ended Dec. 31, and reached a backlog of $702 million, forming the majority of Viasat’s $1.1 billion total business backlog. That backlog doesn’t include a $350 million Defense Department indefinite-delivery, indefinite-quantity contract won last year for satellite and terrestrial telecommunications services and equipment.

Dankberg said the U.S. government’s use of stop-gap spending measures, known as continuing resolutions, made it difficult to contract for new services or enter discussions with different branches of the federal government. He nonetheless highlighted the Army’s Warfighter Information Network-Tactical, or WIN-T communications system, which has come under scrutiny for being overly costly and susceptible to security weaknesses, as an area Viasat would like to disrupt.

“It has very large terminals and not a lot of bandwidth,” Dankberg said of WIN-T. “It’s a really good example application for us to go into.”

In aviation, 589 commercial aircraft were using Viasat connectivity systems as of as of Dec. 31, and 912 were in backlog. A Feb. 8 contract with United Airlines for another 70 aircraft adds to that tally. Inflight connectivity could triple in size as a business segment based on Viasat’s current backlog, Dankberg said.

French satellite operator Eutelsat and Viasat are continuing their legal challenge to Inmarsat’s European Aviation Network (EAN), arguing that the system, which pairs an air-to-ground network of cell towers with an S-band satellite payload, violates the spectrum license Inmarsat received from the European Commission. London-based Inmarsat and its terrestrial telecom partner Deutsche Telekom of Germany said Feb. 5 that EAN reached completion and will start service in the first half of this year.

Not dissuaded by EAN’s progress, Dankberg said Viasat believes “something like 99-percent of the bandwidth that’s delivered to passengers” will come from the 300-tower ground network, with the S-band satellite in place as little more than an excuse to use satellite spectrum for a terrestrial network.  

“The [license] intent was that the ground network augment the satellite, not that it basically be the network, with the satellite providing a tiny part,” he said. “That’s our position. I think it will be resolved on the merits of the argument, probably on a jurisdiction by jurisdiction basis.”

Inmarsat describes Viasat and Eutelsat’s claims as a flawed, last-ditch attempt to halt the now-completed network.

ViaSat-3 service start in 2020 or 2021

The first of Viasat’s trio of 1-terabit-per-second-throughput ViaSat-3 satellites should enter commercial service in 2020 or 2021, Dankberg said. Viasat hopes to have used up most to all of the bandwidth on ViaSat-2 by the time the first ViaSat-3 launches service, he said.

ViaSat-3’s global coverage is intended to grow Viasat into a worldwide broadband services provider, though only two have been ordered so far, the first for the Americas, and the second for Europe, the Middle East and Africa.

Boeing is building the first two ViaSat-3 spacecraft, but Viasat is handling large parts of the construction itself, including crafting the payloads. Shawn Duffy, Viasat’s chief financial officer, said research and development expenses are coming down for ViaSat-3 as the program transitions to payload production.

Now that ViaSat-3 is transitioning from prototyping and engineering tests to production of flight hardware, Dankberg said integrating the payloads into the satellite bus will be the “largest source of uncertainty” in ViaSat-3’s schedule.

“That’s still ahead of us, and that’s where we will really figure out what the deployment schedule is,” he said.

Dankberg added that Viasat is considering launch campaign options that could reduce the orbit raising time for ViaSat-3 satellites. The first satellite is scheduled to launch in the second half of 2020, he said. Viasat signed a launch contract in 2016 for a ViaSat-3 satellite to launch with Arianespace on an Ariane 5, but did not specify which satellite. Viasat spokesperson Chris Phillips declined to say which ViaSat-3 satellite will launch on the Ariane 5 mission.