WildBlue On Par with DirecWay in New Customer Sign-Ups

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  Space News Business

WildBlue On Par with DirecWay in New Customer Sign-Ups

By PETER B. de SELDING
Space News Staff Writer
posted: 16 January 2006
02:06 pm ET


Six months after starting commercial operations, the WildBlue consumer satellite-broadband service has matched veteran competitor Hughes Network System s’ DirecWay service in the number of new subscribers, according to estimates from both companies.

Denver-based WildBlue Communications Inc., whose Ka-band service aboard the Telesat Canada Anik F2 satellite started in June, had booked 25,000 subscribers in the United States as of Jan. 1, WildBlue Chief Financial Officer Paul Froelich said in a Jan. 13 interview.

During the same period, the more-established Ku-band DirecWay system reported that its subscriber base grew by about 25,000, according to Germantown, Md.-based Hughes Network Systems (HNS).

HNS said its total consumer and small-business subscriber base grew by 24 percent in 2005 and that churn — a measure of customers that quit the service — was down compared to 2004.

WildBlue announced Jan. 10 that it had secured $218 million in a secured credit facility, a third tranche of financing that brings WildBlue’s total capital raised to about $675 million. WildBlue is 32-percent owned by Liberty Media Corp. of Denver. Another 30 percent is owned by satellite-fleet operator Intelsat of Bermuda and Washington, and 15 percent by the National Rural Telecommunications Cooperative (NRTC) of Herndon, Va. The remaining is divided between investment fund Kleiner, Perkins, Caufield & Byers; WildBlue founder David Drucker; and launch-services company Arianespace of France.

Froelich said that after initial hiccups in the availability of modems and antennae, WildBlue rollout is proceeding smoothly. The company expects to expand the number of venues selling its equipment and service from the current 700 retail outlets to more than 1,000 by the end of March.

As the first mass-market satellite system using Ka-band, industry observers have been watching WildBlue to gauge system performance in rain and snow, which is thought to pose a greater threat of signal interference to Ka-band systems than to Ku-band services such as DirecWay or current direct-broadcast satellite television.

But Froelich said this has proved not to be the case. “Of course we are aware of the concerns about attenuation from rain or snow with Ka-band, but as is often the case, when you are aware of a problem you over-engineer for it. We have been through some pretty heavy rainstorms in several regions since introduction and we have seen no more service interruption than you would see from your satellite-television service.”

That news will also be welcome at DirecWay. The company is preparing to launch the Ka-band Spaceway 3 satellite in early 2007 and ultimately expects to migrate its current customers from their existing gear to hardware compatible with the Spaceway service. The move to Spaceway also ultimately would permit DirecWay owner HNS to save in lease costs for its current satellite capacity.

HNS is 100-percent owned by SkyTerra Communications Inc., an affiliate of private-equity investor Apollo Management L.P. of New York.

As a relatively unused section of the radio spectrum, Ka-band has more bandwidth available for new services than Ku-band. Ka-band spot-beam satellites also are believed to provide less-expensive throughput per megabit than Ku-band.

WildBlue has priced its service at between $50 and $80 per month, depending on the guaranteed throughput speed. The hardware — a rooftop antenna, cabling and a modem — are priced at $299 . The company recently announced price cuts in installation charges, which were reduced to $80.

WildBlue investor NRTC is responsible for retail sales in the cooperative’s membership areas and also is paying part of the subscriber-acquisition costs, including a subsidy for the hardware.

WildBlue is expanding its retail network of sales teams working directly with WildBlue, and part of the $218 million will go toward hardware subsidies for customers in those areas.

Froelich said the new funding also will complete the financing package to launch the WildBlue-1 satellite, dedicated to WildBlue service, in late 2006 at the 109.2 degrees west longitude orbital slot it has reserved with the U.S. Federal Communications Commission (FCC).

The WildBlue-1 spacecraft is completed and has been in storage at manufacturer Space Systems/Loral in Palo Alto, Calif., awaiting a launch decision. The FCC had granted WildBlue an extension of its launch deadline, from 2004 to June 25, 2006.

WildBlue will not make that launch date, but Froelich said the company did not anticipate FCC opposition to a later date.

Comments: pdeselding@compuserve.com