ViaSat launch targets rural US web demand

A newly launched $250m satellite will soon start transmitting broadband internet to rural US consumers the latest effort by telecommunications groups to satisfy skyrocketing demand for high speed residential data services.

The new satellite from ViaSat will give the Nasdaq-listed company, based in California, the ability to effectively compete with other non-premium internet providers, which still are the only options for millions of US consumers.

Its bandwidth will also be used to power the in-flight wireless internet service for JetBlue, the US carrier.

The ViaSat launch is likely to be welcomed by the Federal Communications Commission, which is pushing for solutions to the digital divide, especially in rural areas. “If we have a really good service at a reasonable price, we can keep expanding the market,” said Mark Dankberg, ViaSat’s chief executive. “Satellite will be better for a lot of people than DSL, 3G or 4G.”

While most satellites are primarily used for one-way broadcasting, ViaSat-1 will be able to handle the two-way transmission of data at 140 gigabytes per second. That is more bandwidth than the combined capacity of Intelsat and SES, ViaSat’s two largest peers, Mr Dankberg said.

Intelsat, the world’s largest provider of fixed satellite services, recently outlined plans to invest $1.3bn in four new satellite launches by the end of 2012.

ViaSat, in October successfully launched its new ViaSat-1, one of the highest capacity data satellites in the world. Launched with a Proton rocket in Kazakhstan, the satellite is now in geosynchronous orbit 22,500 miles above the earth. It is powered by 100 meter wide solar panels. Including launch costs and insurance, the satellite cost ViaSat $400m.

Mr Dankberg conceded that his industry faces an uphill battle. “Satellite doesn’t have a good reputation for broadband service,” he said.

Moreover, WildBlue, the consumer facing service ViaSat acquired in 2009, has not upgraded its service, even as the use of data intensive services such as Netflix and Hulu has increased. “Wild Blue hasn’t changed its service for six years,” he said. “That isn’t considered a good value anymore.”

ViaSat had revenues of $223m in the most recent quarter with net income of just $8m. Shares in the company are up 16 per cent over the past month to about $47, giving it a market capitalisation of $2bn.

Its Wild Blue service has about 400,000 customers in the US paying about $50 per month for satellite internet services. Mr Dankberg hopes to treble the number of subscribers in the coming year with capacity from the new satellite. The company also makes money by supplying components to other satellite makers, and selling services to companies and the US government.

One of ViaSat’s customers is Dish Networks, the satellite TV provider, which resells its service to US consumers. Earlier this year Dish’s parent company, EchoStar, acquired Hughes Communications, a ViaSat rival, a move that could see Dish drop ViaSat as a supplier.