WildBlue Sticks to Its Strategy Despite Likely New Competitor

by












  Space News Business

WildBlue Sticks to Its Strategy Despite Likely New Competitor

By PETER B. de SELDING
Space News Staff Writer
posted: 17 January 2008
09:11 am ET





PARIS —


WildBlue Communications Chief Executive David Leonard said his company is not going to change strategy despite the fact that its ground-hardware supplier, ViaSat, has ordered its own satellite that starting in 2011 may be a direct threat to WildBlue’s consumer-broadband service.

In a Jan. 9 interview, Leonard expressed irritation at ViaSat’s move and said WildBlue does not fully share ViaSat’s enthusiasm for the potential of satellite broadband to compete in areas served by DSL. But he said the company continues to investigate ways to increase its own capacity through ground-based alternatives, and ultimately will order a new satellite as well.

“They certainly have an expansive vision of the future of the business,” Leonard said of Carlsbad, Calif.-based ViaSat Inc.’s decision to purchase a large all-Ka-band satellite to provide consumer broadband service. “The question is: Is there room for a third satellite-broadband supplier? That is tricky. It’s a calculated risk they’ve taken.”

WildBlue
and Germantown, Md.-based Hughes Network Systems (HNS) are the principal consumer-broadband providers in the United States. Both continue to grow. WildBlue had some 285,000 subscribers as of Dec. 31, while HNS had about 365,000.

WildBlue
uses ViaSat’sSurfBeam broadband ground terminals. Since the service was introduced




in mid-2005, the company has seen demand grow faster than expected and it




now is nearing the




limits of its satellite capacity in several geographic areas.

WildBlue’s
satellite beams evenly distribute coverage over the United States. Coverage in underused areas cannot be reallocated to regions where demand is strong. As a result,




WildBlue has been forced to turn away potential customers in those areas.

ViaSat
is under contract to develop new software that will increase WildBlue’s capacity, permitting the company to add between 30 percent and 50 percent to its capacity, according to rough estimates provided by WildBlue and ViaSat.

ViaSat
has been urging WildBlue for more than a year to move more quickly to secure additional satellite capacity, and in September Leonard said a new order was imminent. But in what industry officials said reflects continuing debate among the company’s shareholders about




WildBlue’s mission and future,




the order has yet to come.

Leonard said WildBlue is “actively investigating a number of alternatives” to boost its capacity, including terrestrial technologies. “In the longer term, we will need new capacity in orbit,” Leonard said. “I have to be ambivalent about the time frame.”

Leonard said WildBlue’s growth since last




fall has slowed because it has been unable to match demand in certain high-population areas of the U.S. East and West Coasts.



He expressed concern that ViaSat, now with its own project under way, may give less attention to its contract to use new software to increase WildBlue’s capacity. “As a major customer of ViaSat’s, I want to make sure they stay focused” on WildBlue

In a Jan. 10 interview, ViaSat Chief Executive Mark Dankberg said his company is fully engaged with the WildBlue contract. “We are absolutely motivated to see that they get as many subscribers as possible,” Dankberg said. “WildBlue gave us opportunities to test this market. So despite being frustrated by the capacity issues, we are committed” to assuring that WildBlue gets the most out of ViaSat’s technology.



Leonard said it is possible that WildBlue could be a customer of the ViaSat-1 satellite, which will be 10 times as powerful as the WildBlue-1 satellite now in orbit. But he said it is just as likely that WildBlue ultimately will face ViaSat as a threat to WildBlue’s business. “I always take potential competitors quite seriously, but our core business is to provide service to our customers and we are going to continue to focus on that.”

Dankberg
said the ViaSat-1 satellite is being designed to focus bandwidth capacity on those geographic areas where WildBlue is running out of capacity. The ViaSat project, he said,




basically will overlay maps of where HNS and WildBlue have seen the greatest demand, and focus ViaSat-1 there.

Leonard said WildBlue is less bullish than ViaSat on the prospects for satellite broadband in suburban areas where DSL is readily available, even if the speed is not as fast as some customers would like.

“You certainly can compete with them,” Leonard said of the telecommunications companies that provide DSL services. “But they have the balance sheet” and the financial resources that satellite broadband companies cannot match. “It makes it difficult.”