Benefits to Abound From ViaSat’s New Boeing-Built Satellite, CEO Says

The satellite, which will be based on Boeing’s 702HP platform, will have a capacity 2.5 times greater than the 140 Gbps ViaSat-1, which provides the company’s Exede broadband service. ViaSat-1 ended fiscal Q4 with about 295,000-297,000 subscribers or 58 percent of the services total of 512,000. Other ViaSat customers get service from WildBlue-1 and Anik F2 satellites. The new satellite, expected to launch by mid-2016, also will enable a much broader coverage area including the Atlantic Ocean between North America and Europe as well as parts of the Caribbean, Gulf of Mexico and northern South America, company officials said. It also will cover commercial routes along the East Coast of the U.S., Dankberg said.

ViaSat-2 is “the first of its kind in terms of capacity and geographic coverage” and will boost ViaSat’s position in residential, in-flight, maritime, LAN mobile, enterprise and government markets, Dankberg said. ViaSat didn’t release details of ViaSat-1 including power and orbital, but it apparently does away with the Ka-band spot beam design, company officials said.

"This is not a steerable-beam, spot-beam satellite that offers service anywhere” in its coverage area, Dankberg said. “Ours is an everywhere satellite that offers an orders-of-magnitude improvement.” Boeing and ViaSat will partner in versions of ViaSat-2 in other markets using technology developed by the two companies, Dankberg said.

ViaSat-2 system costs, including the satellite, launch, launch insurance and ground network, will be 25 percent higher than for ViaSat-1. But the launch cost itself is expected to be similar to that of ViaSat-1 and the new satellite will weigh only a little more than the 6,740-kilogram ViaSat-1, company officials said. The satellite itself will cost about 40 percent more than ViaSat-1, Dankberg said. The increased throughput capacity will mean ViaSat-2 can serve 2.5 million customers at ViaSat Exede 12 service against the one million that can be handled by ViaSat-1, Dankberg said. Exede 12 supplies a 12 Mbps/3 Mbps downlink/uplink and has a usage cap between 5 a.m. and midnight of 12, 15 or 25 GB per month at $49, $79 and $129 monthly fees. ViaSat-2 will enable ViaSat to increase broadband transmission speeds by “multiples” of those provided by Exede 12, Dankberg said.

The new satellite will have a “very significant impact on our ability to address increasingly larger markets and offer great value to potential distribution partners,” Dankberg said. ViaSat-2 will help ViaSat “better manage” monthly churn, which ran 2.9 percent in Q4 driven largely by the loss of wholesale customers, many of whom got service through Dish Network. Dish’s wholesale agreement originally was for customers getting service from WildBlue-1 and Anik F2 satellites. Dish has since launched its own dishNet broadband service that partly uses ViaSat-1.

ViaSat also plans to launch an in-flight broadband service with JetBlue by mid-summer with revenue stemming from bandwidth consumption. The companies will seek to drive high penetration of the service with airline passengers by essentially offering a free service that will be enabled by lower costs driven by “bandwidth effectiveness,” Dankberg said. ViaSat also has a similar agreement with United Airlines, which inherited it in merging with Continental Airlines.

ViaSat’s ongoing patent infringement suit against Space Systems/Loral also is expected to come to trial in February 2014, analysts said. Loral has countersued ViaSat for patent infringement and ViaSat is seeking a court injunction barring further violations of its patents.

ViaSat swung to a $1.9 million Q4 profit from a $7.4 million loss a year earlier despite a sharp rise of revenue costs and selling, general and administrative expenses to $232 million and $68.1 million from $185 million and $50 million, the company said. ViaSat’s Q4 sales rose to $309 million from $241 million as product and service revenues grew to $103.6 million and $42.8 million from $75.8 million and $28.9 million a year earlier. ViaSat completed 98,000 Exede installations in the quarter and added a net 46,000 subscribers as its average revenue per user for WildBlue and Exede service increased to about $49 from $47. Per-subscriber acquisition costs were around $700 in Q4. ViaSat also is preparing for added competition from EchoStar’s Hughes Communications, which offers a competing HughesNet Gen4 broadband service. DirecTV, which signed on as a Exede partner last fall to bundle its video service with broadband, also will start selling HughesNet Gen4 by mid-summer, a DirecTV spokesman said.