Anik F2 Carries Broadband Hope

By | July 12, 2004 | Feature

The world’s largest commercial communications satellite ever built is scheduled to launch today to usher in a new era in satellite broadband services that promises to bridge the digital divide for rural consumers across North America.

The Boeing-built [BA] Anik F2 high-power satellite, scheduled to lift off at 8:43 p.m. EDT (9:43 p.m. Kourou time) from the Guiana Space Center in Kourou, French Guiana, will ride an Ariane V rocket into geostationary orbit, where it would provide innovative services in C-, Ku- and Ka-band. Telesat Canada says it will operate the Anik F2 from 111.1 degrees West longitude to offer cost-effective, two-way, high-speed Internet access to businesses and consumers from the southern continental United States to the northern reaches of Alaska and Canada.

Not only is the Anik F2 going to become the world’s largest commercial satellite, it also would be the highest powered at roughly 18 kilowatts. The satellite is 5.9 metric tons, and it will span more than 55 meters when its solar arrays are deployed in orbit.

A portion of the satellite capacity will be used by Denver-based consumer satellite startup WildBlue to provide broadband services primarily to rural U.S. customers. Anik F2 also will open the door to new government broadband services for such cutting-edge applications as tele-learning, tele-health and e-services.

The Anik F2, first and foremost, will provide services to Canadians as well as serve the U.S. market through the transponder leasing arrangement with WildBlue.

“We are very excited to see the progress that WildBlue has made,” said Paul Bush, vice president of broadcasting and corporate development at Telesat Canada. It has been gratifying to watch WildBlue officials overcome financing obstacles, to pull together an business plan and to prepare to initiate service with the satellite when it become operational during the fourth quarter this year, he added.

The launch of the Anik F2 satellite is a pioneering attempt by Telesat Canada, the world’s oldest commercial satellite operator, to provide commercial Ka-band service. The company also was the first to introduce Ku-band to the commercial market in the late 1970s.

The driving force of the Ka-band rollout is the need for additional capacity to provide broadband access in rural North America. Out of some 10 million to 11 million Canadian homes, roughly 2 million to 2.5 million of them do not have any access to broadband terrestrial technologies, Bush said.

20-Percent Solution

“We will get about 20 percent of the market that will not be served by other technologies,” Bush said. The 20 percent of Canadians who do not live close to the U.S. border are Telesat Canada’s target market, he explained.

Tom Moore, the CEO of WildBlue, said during an exclusive interview with Satellite News that the Anik F2 would contain the world’s largest commercial Ka-band payload.

WildBlue officials are “excited” to have overcome a variety of startup obstacles to reach the stage for its commercial launch, Moore said. However, the challenges of operating a viable satellite broadband service for consumers are just beginning.

“It is highly capital intensive to launch and market a satellite broadband service,” Moore said. Marketing expenses include substantial subscriber acquisition costs (SAC) the company must incur to grow its customer base, he added.

“Over the last five years, we have raised more than $500 million to launch a satellite,” Moore said.

Support from deep-pocketed investors should give WildBlue enough marketing dollars to reach cash flow break even, Moore said. Unlike satellite radio or satellite television, the cost of reaching cash flow breakeven for a satellite broadband venture like WildBlue is “much, much less,” he added.

In addition, satellite broadband offers much higher margins and requires fewer subscribers for a service provider to meet its fixed costs, Moore said. The number of subscribers needed to reach cash flow breakeven is less than 100,000, he added.

“We don’t give any projection or guidance on subscriber forecasts or financial projections,” Moore said.

Moore, who joined WildBlue in late 1998, had the idea to use DOCSIS technology to deliver a broadband service to rural America. (Editor’s note: The DOCSIS technology is a worldwide standard for cable modems. There are almost 30 million DOCIS cable modem customers throughout the world.)

“I helped work on that technology at Cable Labs,” Moore said. “We tried to leverage that technology to provide an affordable broadband service in rural America to customers that can’t get a cable modem or DSL.

The important part about leveraging the DOCSIS technology is that it offers high performance and low-cost pricing of the service to consumers, Moore said.

DOCSIS began as a cable standard but is evolving into the satellite and wireless worlds.

“We have been instrumental in introducing DOCSIS into the satellite world. We definitely have been the leader in bringing DOCSIS into the satellite broadband arena,” Moore said. “We wrote the technical detail about how to use DOCSIS over satellite that the manufacturers, including Viasat and KoSpace, are following in their development of equipment.”

Brad Greenwald, WildBlue’s vice president of sales and marketing, said, “We think it is important that there is a non-propriety standard.”

DOCSIS cable modems significantly drove down costs, and “we think that the same dynamics can happen with satellite equipment,” Greenwald said. Each service provider’s orders combined will add to the volume required to reduce the cost of satellite modem equipment, he said, adding, “We are serving a consumer market and we need to get costs down to a level that will support mass-market adoption.”

When asked about pricing for the service, Greenwald declined to identify a specific level but said his company would be competitive with other technologies and “offer a good value.”

WildBlue’s strategy to cut the price it pays for user equipment involves writing the specification, then buying interoperable equipment meeting that specification from multiple manufacturers, Moore said. “The benefits are lower cost and better innovation,” Moore said.

What Boeing Wants

While WildBlue is focused on making its service affordable for consumers, Boeing is looking at the launch of the Anik F2 as a chance to showcase its technical capabilities and renewed focus on reliability. Jim Simpson, vice president of business development at Boeing Satellite Systems International, said Anik F2 is a reflection of the improvements in quality at the satellite manufacturing company.

The company previously had eight of its powerful Boeing 702 satellite launched successfully into orbit but roughly half of them have incurred a reduced service life due to technical problems. The company has responded by making systemic changes in its processes and quality control in a concerted attempt to ensure on-orbit reliability in the future, he added.

The Anik F2 should display the benefits of rigorous quality initiatives, Simpson said.

“We are excited about showing that this complex system is part of our core competency,” Simpson said. “Anik F2 uses the full capabilities of our Anik F2 system.”

Satellite broadband promises to become an important new application for the Boeing 702 satellite model, Simpson said. The hope is that new orders for such highly capable broadband-oriented satellites will flow to Boeing and other satellite manufacturers worldwide.

“It is the incipient phase that will finally allow us to emerge in the broadband arena as we have been anticipating for a long period of time,” Simpson said. “This is one of the first attempts to deploy the applications that we have been looking forward to implementing.”

If WildBlue turns into the success its management hopes, the company already has plans to deploy a satellite of its own, called WildBlue 1. Satellite manufacturers are eyeing more orders from broadband service providers in the future. –Paul Dykewicz

(Brad Greenwald, WildBlue, 720/554-7403; Paul Bush, Telesat Canada, 613/748-8786; Joe Tedino, Boeing, 202/285 9559)

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