ViaSat on New Trajectory Following Deal to Create Satellite-Based High-Speed Internet

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provide its ISP customers was constrained because the company could only do so much with its ground-based receivers, software, and related equipment to increase the data rates transmitted by orbiting satellites. And as Dankberg puts it, “Broadcast TV is what makes the satellite industry go ’round.” Among the handful of companies such as Hughes Communications and AT&T that own and operate dozens of communications satellites, data bandwidth has been secondary to television service.

“What we saw was an opportunity to make a satellite optimized for unicast—for Internet data” at the extremely high data rate of more than 100 gigabits per second, Dankberg says. “But to do it, we had to basically design and buy our own satellite.” Before making a decision, however, ViaSat had to decide if it could be done, if it was affordable, and whether any alternatives offered a better solution.

“Once we did it—once we said we’re building a 100 gigabit satellite—people didn’t know what that meant,” Dankberg recalls. “So we had to go through and explain all that with our customers and investors. In a ViaSat-1 FAQ fact sheet, the company explains its satellite is “designed to be the highest capacity satellite ever built,” and is projected to operate at 140 Gbps (gigabits per second) total throughput (that’s not the data rate for home satellite Internet users). That’s more total bandwidth capacity than all current Ku-, Ka-, and C-band satellites over North America combined—enough for 1.5 million subscribers—and at a capital cost per bit that is expected to be one-tenth of current Ka-band satellites.

“Now, even if you do all this, and even if you bring it to market,” Dankberg says, “How do you monetize it? How do you distribute the service? So that was when we realized that we could acquire WildBlue and sort of solve all those issues. That was the missing piece.”

WildBlue already was a ViaSat customer, but Dankberg says the buyout was not a foregone conclusion. ViaSat considered other ISP business partners. “It wasn’t totally obvious that [WildBlue] would be the outcome, Dankberg says. “But all that stuff worked out. You could see the forces at work and they were all on our side.”

Before the WildBlue purchase was completed in December, roughly 60 percent of Viasat’s revenues were generated by its defense business, Dankberg says. Since the deal closed, he estimates that commercial customers are now … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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