ViaSat Plans to Boost Fast Growth with Second Internet Satellite

5/20/13Follow @bvbigelow

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the point where it can be free to the subscribers. And so JetBlue has said that’s what they want to try…If it costs the same to give people in-flight connectivity as it costs to give them a coke and a bag of peanuts, that’s a great way to drive customer satisfaction, and we think that if you get high penetration, that’s a really good model for us.”

Dankberg estimated the cost for building, insuring, and launching ViaSat-2 would be 25 to 30 percent higher than the budget for the ViaSat-1 project, which was about $500 million. The company plans to fund the project with cash from operations and existing lines of credit, he added.

With the new satellite, ViaSat hopes to capitalize on its first-mover advantage as a provider of space-based Internet service for a market that Oppenheimer analyst Yair Reiner describes as “a vast and profitable opportunity”—the roughly 20 million U.S. households with substandard (less than 5 megabits per second) Internet service. (In addition, Reiner notes there are 5 million U.S. households that lack access to any ground-based option for Internet service.)

It’s worth noting that while ViaSat’s standing in telecommunications has been overshadowed by Qualcomm (NASDAQ: QCOM), the San Diego wireless technology giant, both companies share the same roots in Linkabit, the technology company that Irwin Jacobs, Andy Viterbi, and Leonard Kleinrock founded in 1968. Jacobs and Viterbi left Linkabit to start Qualcomm in 1985, about five years after selling Linkabit to Boston-based M/A Com. ViaSat’s three founders—Dankberg, Steve Hart, and Mark Miller—left the following year to start ViaSat.

During last week’s conference call, Dankberg also noted that ViaSat’s expanded partnership with Boeing builds on a long-term working relationship the two companies have had in a variety of defense and intelligence projects. In other words, Boeing represents a more … 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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