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Dankberg Seeks Cheap Bandwidth

By | March 8, 2004

      Mark Dankberg, the entrepreneurial engineer who founded and heads Carlsbad, Calif.-based ViaSat [VSAT], offered a bold challenge for the satellite industry to double or triple its available broadband bandwidth and trim its price to half or one-third of current rates.

      Dankberg shared his vision during a speech at Satellite 2004 in Washington Thursday, when he accepted an award from PBI Media’s Via Satellite magazine as “Satellite Executive of the Year.” Such broadband capacity and pricing would not compete with existing satellite broadcast capabilities at all, Dankberg said.

      “I don’t think it would be difficult to sell [broadband services] at such low prices,” Dankberg said. “We’d just have to figure out how to make our money doing it.”

      The right kind of space and ground equipment would help to achieve the goal, Dankberg said. In the past, the he industry has succeeded in doing “phenomenal things” when it has a sense of purpose and confidence, Dankberg told several hundred attendees at a luncheon to present him with the award last Thursday.

      ViaSat and others already have been looking into how to achieve the objectives of doubling or tripling satellite broadband capacity, while at the same time substantially cutting prices, he added.

      “It doesn’t take fundamental scientific breakthroughs, or new laws of physics,” Dankberg said. “What it takes is a different way of looking at the market, the technology and the business.”

      In the world envisioned by Dankberg, individual satellites in geosynchronous orbits would pump through 100 Gbit/s or possibly a terabit per second for certain applications. Small terminals similar in size to current ones would be used but at price points that approach those of highly affordable one-way televisions, Dankberg added.

      “Basically, if broadband equals low-cost bandwidth then pretty much by definition you have to find a way to create it inexpensively,” Dankberg said.

      Dankberg, who has proven to have a knack for forecasting where market trends are heading, said he may sound as though he is “going out on a limb” but he predicted that a 100- Gbit/s geostationary (GEO) satellite would be developed for broadband applications within the next five years.

      If interest develops in certain specialized markets, the bandwidth capacity for satellite broadband could approach 1 terabits in that same time frame, said Dankberg. He also predicted that the progress would occur in the Ku-band and Ka-band, not the V-band or another obscure section of bandwidth.

      Aside from technology, key issues that need to be resolved to make abundant and cheap broadband bandwidth available are size, customer support, product definition, sales channels and service pricing, Dankberg said.

      Those are reasons new broadband customers have close ties to consumer sales channels that are very motivated to have a successful satellite broadband service, Dankberg told the attendees. “Our consumer DOCSIS-based solution, for instance, addresses a lot of issues in scale, equipment pricing, support and open environments in a way that has never been done in the two-way satellite world before.”

      Fierce competition with lower priced cable and DSL competitors should provide satellite companies with all the incentive they need to make themselves viable in the growing broadband market, Dankberg said.

      If satellite companies can deliver a comparable broadband service at a competitive price, they will find a “big opportunity,” Dankberg said.

      One possibility would be to sell broadband to the 21 million satellite TV subscribers who already have a receiving dish. Such a bundled service of video and broadband also likely would boost customer loyalty and reduce subscriber churn for the satellite TV service providers, he added.

      His vision also includes other applications, such as in-flight broadband and mobile ground broadband, that would require partnerships among various companies, Dankberg said. The partnerships would involve ground equipment manufacturers such as ViaSat, satellite operators, service retailers, satellite manufacturers and investors, he added.

      “In some cases, it takes cooperation within and across layers of the value chain to create some standards and drive volumes needed to reduce costs,” Dankberg said. “In some ways, we’re not just competing with each other, we’re trying to create a market.”

      Industry-wide Mission

      Dankberg characterized the need to develop “cheap bandwidth” as an industry-wide cause.

      “Cheap bandwidth might not be a great industry wide rallying cry but I think that the mindset of re-thinking what our value proposition is in a broadband connected world, where the number of bits used to do almost anything is growing exponentially, certainly should be,” Dankberg said. In addition, the challenge of making and operating bandwidth that costs an order of magnitude less than what currently is available is certainly worth seeking, he added.

      There are more opportunities in the market than ViaSat along can pursue, Dankberg said. However, evidence is amassing that the industry overall is on the threshold of some breakthroughs if it has the collective will and insight to adapt and change, he added.

      Satellite broadband offers one of those opportunities, Dankberg concluded. He also acknowledged that his view about broadband likely would be much different from the perspective satellite operators that typically want as much revenue for each of their transponders as possible.

      However, there are other, bigger industries, such as cable, that are not standing still, Dankberg said. To be successful as a broadband competitor, the satellite industry will not be able to stick with the status quo, he added.

      “We’ve got some really expensive assets orbiting and naturally there’s a lot of pressure to figure out ways to put those to use,” Dankberg said. But, a lot of times that’s meant that satellite companies spend a lot of time trying to sell what we already have – when we might be better off trying to figure out how to build what customers want.”

      “We’ve grown ViaSat from a spare bedroom to what it is today by constantly asking, ‘Why can’t someone do this thing that hasn’t been done before?’ That question is programmed into the engineer brain of mine,” Dankberg said.

      When giving his acceptance speech, Dankberg lived up to his reputation as a “true industry leader” who places the end-user above everything else, said D.K. Sachdev, president of the Vienna, Va.-based SpaceTel Consultancy. “Speaking frankly when necessary but always with genuine sincerity, he decried the tendency to build expensive space assets first and then try to sell what we have already created rather than first confirming what the customer wants,” Sachdev said. “He reminded the audience that, contrary to what competition might say, satellite systems have the lowest investment cost per subscriber compared to other media. Furthermore, the retailers can be anywhere, and with a reconfigurable capacity, satellites alone can be where the customers choose to be.”

      Dankberg’s forecast that an appropriate customer-centric approach by the industry, producing satellite capacities as high as 100 Gbit/s with Ku-/Ka-bands alone, would make broadband widely available and at an affordable cost. Sachdev said.

      “The cost of bandwidth for providing broadband is critical,” said W. Neil Bauer, president and CEO of the Acton, Mass.-based satellite consulting firm Orion Associates. “Today that cost as a percent of total revenue is far too high to create a profitable service provider. This cost of bandwidth as a percent of total revenue must decline for service providers to be profitable and sustainable.”

      –Paul Dykewicz

      (Lylia Lucio, ViaSat, 678/924-2464; W. Neil Bauer, Orion Associates, 978/263-1142; D.K. Sachdev, SpaceTel Consultancy, 703/757-5880)

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