Satellite Broadband Market Beginning To Show Signs Of Strength

[Satellite News – 3-4-08] Satellite broadband has finally found market success, with offerings by WildBlue and Hughes reaching thousands of customers in North America and a recent deal struck between ViaSat and Eutelsat to launch an all Ka-band satellite over Europe.
    Satellite executives whose companies have pioneered the use of satellite broadband say this is just the beginning, and advances in technology and expansion around the world are going to build the industry to greater heights.
“There are two promising market perspectives — commercial broadband market access and institutional/military broadband,” Blaise Jaeger, executive vice president for Thales Alenia Space, said Feb. 27 during SATELLITE 2008’s “Satellite Broadband: Is Ka-Band the Way to Grow?” panel. “Commercial [service] is price sensitive, and you have to think about capacity, multi-spot frequency reuse and the antenna pointing system. Satellite broadband will be a compliment, not a substitution, to wired and wireless terrestrial. Institutional [service] can be a complement, not a substitution, to protected anti-jamming services. Instead of being price sensitive, institutional broadband is more performance demanding, you have to think about mesh, flexibility and on board processing.”
    Jaeger pointed to the satellite Thales is building for Yahsat as an example of a satellite being built for commercial use but which could be used by the defense industry as well. “Yahsat is a dual-use system addressing both the defense and communications market,” he said. “The defense is more in the Ka-band. We also see communications applications as a complement to terrestrial solutions. Broadband can serve as a complement to anti-jam. The satellite meets some defense requirements as well.”
   Phillipe Saint-Aubert, senior vice president for EADS Astrium, agreed that the military segment will play a large part in the future growth of the satellite broadband market but also said not to overlook other markets.
“I do not believe that satellite broadband will compete head to head against terrestrial solutions, but I do believe that it can complement terrestrial solutions,” Saint-Aubert said. “Europe is a much more fragmented market. We see a strong prospect for business success there.
“Another segment is the military,” he said. “Yahsat is one example of how we can produce Ka-band for that market. We can do Internet, intranet and send video to troops in theater. It may call for different solutions than we use in the commercial sector.”
    One of the biggest problems facing satellite companies who want to work in Ka-band is the lack of capacity. WildBlue, which provides broadband Internet access for customers in the rural United States and Canada, announced last year that it had sold out capacity in some regions, a nice problem to have, according to John Celli, president and CEO of Space Systems/Loral, but one which presents its own problems to the industry.
“I was very proud to see the words sold out applied to the satellite [WildBlue-1], and I believe WildBlue will overcome that,” Celli said. “[Shin Satellite‘s] IPStar is the largest commercial satellite up in space, and it has been very successful in certain areas. The industry is facing internal dropping in prices as well as some difficulties such as regulatory issues. Business is increasing but it’s increasing slowly, and I hope they can overcome that.
“One of the issues that this industry still faces is that once the satellite is in the air, you still have to have equipment that you can distribute fast enough to keep the interest high,” he said. “Demand is going to grow. In some cases it’s not just an appetite for browsing but for culture.”
    One of the most pervasive attitudes about satellite broadband Internet is that it can only serve as a complement to terrestrial options like cable, fiber or DSL. Mark Dankberg, chairman of ViaSat, said that attitude might be worth revisiting. “With [us] and Eutelsat, one of key issues was flexibility and capacity,” he said. “We thought, ‘It is absolutely crazy to try to sell to the urban market that has access to cable or modem.’ Go for the unserved market. What we think is that we can put up a satellite that can serve a million or two. We created awareness and the market grew. What we also think is that one of the things we can offer is higher speeds. One of the things we hope to learn with Ka-Sat is whether people who have poor cable or DSL would sign up for satellite broadband. That market would be 20 or 30 million customers.”
    Even with the planned launch of several more Ka-band satellites in the coming years, each satellite has a somewhat limited lifespan. Panel moderator D.K. Sachdev asked the executives about the future, when subscriber numbers hopefully will be higher but capacity and orbital space more limited.
“You can say, ‘It’s impossible. I give up.’ and hold your level of service for n years as customers become less happy and your service becomes less effective,” said Dankberg. “Another way is to think of satellites another way. Think of what is the life of your assets? Is the life of a satellite 15 years? You have to have a business plan that takes into account that you’re not going to have the same amount of customers 15 years from now.”   
    Paul Gaske, Hughes Network Systems executive vice president, said the satellite industry has proven that it knows how to think ahead.
“If you start thinking about how 10 years ago we didn’t think we could do that,” Gaske said, “10 years from now we’ll do better.”