Aramiska Gets Ready For Italian Broadband Job

Aramiska, the pan-European satellite broadband provider, aims to enter the Italian broadband market in the second half of next year. The operator currently provides satellite broadband services in the UK, France, Spain, Ireland, Holland and Belgium. Italy is on the operator’s radar for 2004.

Philippe Bodart, CEO of Aramiska, explained: “What is missing on our list is definitely Italy. We are not enthusiastic about Germany for obvious reasons. But, Italy is definitely a market that Aramiska is interested in penetrating. Although they are not complete plans, I think by the third and fourth quarters of 2004 we will definitely be operating in the Italian market.”

While Aramiska ponders geographical expansion, it has also recently launched a new community broadband service aimed at providing service to rural communities throughout Europe. The service has already been launched in many of Aramiska’s markets and Bodart is hopeful it can become a significant revenue generator for the company in the next few months. “We [want] to do anywhere between 15 and 20 percent of our business in that segment. But, to give you some idea, it is really tough. If you take the French market where you have roughly 20,000 villages without any broadband infrastructure. That is your potential there. How many customers will take it up next year, the year after, is so hard to tell in the UK, France and Spain. I would assume that in any market, if we see a 5 percent take-up rate from these rural villages in 2004, I would be thrilled and happy, and then may be another 5 percent in 2005.”

The community broadband service, called ARC 2000+, offers rural communities the ability to have a broadband connection regardless of location. The new service can be installed within 30 days and provides unlimited data usage with no limit on the number of PCs connected. While the service has only just been launched, Aramiska is already seeing a healthy take-up from rural communities. Bodart said: “We have had a really good start on these services and I wouldn’t be surprised if we are at that level [15 to 20 percent overall revenues] by at the end of the year, at the latest.”

The new community service will not feature an aggressive marketing and sales campaign. Unlike its business-to-business (B2B) service offerings, Bodart believes the service will be successful without a huge marketing push. “These rural broadband services will be bought from Aramiska, rather than sold by Aramiska. This is what I see, whereas in the B2B market, there is a hefty sales exercise taking place on a daily basis through our direct and indirect channels. I see this more as a buyers market than a sellers market. Even without having the service available, word got out that we had something really unique and specific. Now, that we have built the service around it, I think we will see all the benefits from it.”

The next year is shaping up to be a key one for the operator. It hopes to be EBITDA (earnings before interest, taxes, depreciation and amortization) in three to four months and it expects to be net income positive in the later part of 2004. According to Bodart, Aramiska is financially on track in terms of all key parameters such as capital expenditure, customer acquisition and gross margins.

The operator now has around 2,000 customers on its network. In terms of the satellite broadband space in Europe, Bodart believes the operator has a number of competitive advantages. “If you look at our service, you have mail, storage so any local operator can benefit from all the ISP services. Most of our competitors are not doing this, or they are doing this through partnerships. From a robustness, scalability, reliability angle, we are much further along than most of our competitors as well. I think the local communities will benefit from that. There is also the manageability of our network. It is far ahead of our competitors.”

Yet, challenges remain. Satellite broadband still suffers from a perception problem. It is still seen as expensive. Bodart believes Aramiska’s toughest challenge is to educate the market about the benefits of satellite broadband services. “The main challenge is still the unknown of satellite broadband communication. It is still perceived as a technology that is only feasible or doable in rural areas where there is no terrestrial infrastructure in place. The main challenge for us and the satellite community is to prove to the business community that satellite broadband is a solid, valid alternative to terrestrial broadband, not only in the middle of nowhere, but in more dense geographical areas, and even in cities. We are proving that because 20 percent of our B2B sales are in ADSL-enabled areas.”

He concluded: “It still a relatively unknown alternative from a technology and business perspective. We know that we have to cross that barrier and make sure the whole business community knows about, not only Aramiska, about the viability of satellite broadband communications. That is still a challenge. Sometimes, I wish there were more people preaching in the desert alongside Aramiska.”

–Mark Holmes

(Peter Gumm, Aramiska, e-mail: [email protected] )