Satellite Broadband Finally Appears on Right Track

Satellite players are confident they can play a pivotal role in reducing the broadband divide in the United States and Europe, according to the “Satellite Broadband: Finally a Credible Competitor in the Marketplace,” session.
    However, while satellite players have more confidence in the technology, broadband will still be a potentially tough market, as throughout the last 12 months, U.S. government and European Union efforts to bring broadband to rural and remote areas seem to be largely ignoring satellite in favor of wireless and telecoms alternatives. Maury Mechanick, counsel, White & Case, said earlier of the U.S. government’s position, “Satellites seem to have second class status. We don’t get respect (from U.S. policymakers).”
    Despite this, satellite operators are beginning to see some impressive growth, as users in rural and non-urban areas look to satellite. In the United States, Erwin Hudson, executive vice president and CTO, WildBlue Communications, said there is “huge pent-up demand for satellite broadband services.” WildBlue ended 2009 with around 420,000 subscribers, adding 50,000 subscribers in 2009. Hughes and WildBlue ended 2009 with nearly 1 million combined subscribers in the United States.
    Mark Dankberg, chairman and CEO of ViaSat, which recently completed the acquisition of WildBlue, said satellite players such as WildBlue and Hughes can extend satellite’s reach still further in the United States. “We see WildBlue as a fantastic brand. The greatest demand is where there are already terrestrial markets. Next year, our satellite (ViaSat-1) will have launched and the satellite will be in service. We think 1.5 million subscribers will be a home run for us. Over the last three years, satellite has been the fastest growing broadband service in the United States. We have one million subscribers out of 70 million. I think ultimately we can reach 10 percent of the broadband market here,” he said.
    Dankberg said it was important that the satellite industry learn from mistakes of the past and, in particular, not get fixated about the speed of service. “We have this common theme, that broadband is about bandwidth rather than speed. We don’t plan a 100 [megabits per second] service. Satellite has had a poor reputation for broadband. We, as an industry, are still suffering from strategies such as putting as many subscribers on one transponder as we can. There has created a poor perception (for satellite broadband). If we can drive the costs of bandwidth down, we can undo that. We see services with a lot of bandwidth as very exciting. If you look at the value of broadband as low-cost bandwidth, there should be multiple markets there.”
    Paul Gaske, executive vice president and general manager, Hughes Network Systems, North America, agreed that speed was not a key barometer for a satellite broadband service. “We feel like we have to optimize the experience (for users). 100 [megabits per second] is not the metric for the satellite industry. Fundamentally, the industry does need more bandwidth as well as more usability. You are still going to have 10 million to 15 million homes that will need to be served,” he said.
    “We are moving up the chain, and with ViaSat-1, we can bring the same kind of Internet that cable, fiber and WiMax can bring to the urban areas,” Hudson said. “We are trying to hard to eliminate the myth of satellite as a last resort. We think of our customer base being exurban, so outside of the dense cities. We do have a lot of demand outside of the cities,” he said.
While satellite is set to make more of an impact in broadband, the sector will need continual investment to keep up with terrestrial competitors, Gaske said.

Europe
In Europe, both SES Astra and Eutelsat Communications are looking to monetize broadband markets across the region. Eutelsat is scheduled to launch a dedicated Ka-band satellite, Ka-Sat, later this year.
    SES Astra is adopting a wait-and-see approach before securing a dedicated Ka-band satellite. “From our experience, we are still cautious about a single purpose broadband satellite,” said Norbert Willems, managing director, Astra Broadband Services.
    SES Astra launched its broadband service, Astra2Connect, nearly two years ago and now has around 60,000 subscribers. Willems admits the biggest surprise for the service is that the demand has not come from low broadband penetration markets in Eastern Europe but rather in established markets. “The majority (of demand) is coming from saturated markets such as France and Germany, which is not what we initially thought,” he said.
    Arduino Patacchini, director of multimedia and value-added services, Eutelsat, said he thought Eutelsat was a pioneer in terms of satellite broadband in Europe. “We know we are taking a risk, but we think it is worthwhile taking a risk. We will be the pioneer. I am sure if we are successful, others will follow. In Europe, excluding Russia, the number of households not covered by ADSL or by broadband is in the order of 13 million. You also have 15 million underserved households. It is important to make people understand you can have a quality that is comparable to DSL, which is the reference standard for Internet.”
    Both Willems and Patacchini spoke about gaining access to stimulus-type money in Europe to help boost broadband across Europe. Willems said of the situation, “There is some stimulus money, but the situation is very complex. It is not a centralized cash point to access money. It has been mandated to the national governments. Firstly, they send the money down to their regional governments, and then it is being mandated by agricultural ministries (in many cases). There is a lot of money, but it is difficult to get access to it,” he said.
     Some countries are more open to satellite than others. “There is, in Europe, stimulus money for broadband, however, Europe has 38 countries and things change from country to country. There is funding available for satellite terminals. There are good countries and less good countries (in terms of their attitudes towards satellite). The EU is trying to stimulate broadband everywhere. An example of a good country for satellite broadband is Ireland, where the government there has shown a willingness to embrace a satellite solution to reduce the broadband divide,” said Patacchini.