The timing of the American Recovery and Reinvestment Act’s passage in February could not have been better for the satellite industry. After months of panicked discussion among analysts and executives over a devastated economy and which financial institutions would be willing to invest in the next-generation broadband projects — let alone survive the recession — the U.S. government put $7.2 billion up for grabs in a battle between telecoms, WiMax providers and satellite companies to propose the most efficient and job-creating solutions to close the digital divide and connect underserved areas with modern Internet service.
At the time, of any news of available credit was good news and if satellite companies could get even a small piece of the pot, the government work could provide the extra padding that would bring the satellite industry through the recession unscathed if a prolonged crisis became reality. But the satellite sector’s optimism was short-lived. From nearly the start of the process, the broadband stimulus program was plagued with problems —from a lack of program leadership on the government side to rampant analyst assumptions declaring WiMax the dominant future provider of government-issued broadband services.
For some satellite companies, the government investment became less attractive as the program’s details became more vague and disheartening, but others, like Hughes Network Systems, SkyCasters and WildBlue, invested time and energy lobbying congress on behalf of promoting satellite as a viable source of technology. Hughes and WildBlue felt so strong about the prospects that the fierce U.S. broadband satellite services market competitors cooperated to produce joint-promotional advertising campaigns and initiatives on the broadband stimulus bill. “We’ve briefed many in congress and have had meetings with the administration. I think everyone in Washington understands that there is no single solution for the rural broadband connectivity problems. Satellites, cable and fiber all have a role to play in providing to served and unserved areas and we will see what that role will be at the end of the year,” says Hughes CEO Pradman Kaul.
Fast forwarding through months of government scrambling to organize the application process, new and largely misunderstood funding requirements and the surprise withdrawal of the WiMax players, the satellite sector finds itself at the close of the first funding window and the beginning of the second in a process where there is no such thing as a veteran. Everyone involved, including the U.S. Department of Agriculture’s Rural Utilities Service (RUS) and the U.S. National Telecommunications and Information Administration (NTIA), named the responsible parties to issue out the funds, is new to it all.
What lessons were learned and what is the satellite strategy of the future? If the last few months are any indication, no one really knows.
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