ViaSat-1 Satellite Could Reach Spot Capacities By Year-End, CEO Says

The Ku-band satellite, at 115 degrees west, had 295,00-297,000 customers as of late March, including those subscribing to Exede as well as Dish Network’s dishNet, which uses it in areas where it doesn’t have access to EchoStar’s EchoStar-17. The majority were Exede customers and some DirecTV subscribers, who get the broadband service as part of a bundling deal that pairs it with DirecTV video, Dankberg said. ViaSat had a total of 512,000 satellite broadband customers as of March, including those receiving it from WildBlue-1 and Telesat Canada’s Anik F2 satellites at 111.1 degrees west. The number of WildBlue-1 and Anik-based subscribers have been dropping by 30,000-35,000 per quarter, analysts have said. Those customers will likely end up in the 100,000-200,000 range, ViaSat executives have said.

ViaSat-1, which went into service last year, has capacity for about 1 million subscribers and throughput of 140 Gbps. It will be more than half full by year-end, Dankberg said. It will be supplemented by the Boeing-built Ka-band ViaSat-2, which is expected to launch in 2016 with double the capacity and a coverage area that includes the Atlantic Ocean between North America and Europe as well as parts of the Caribbean, Gulf of Mexico and northern South America, company executives said. About 90 percent of Exede subscribers get the 12 Mbps/3 Mbps download/upload service that starts with a $49 monthly fee and 12 GB usage cap, Dankberg said.

"We will start running into some capacity limitations” on ViaSat-1 in some markets that will be eased with the introduction of ViaSat-2, Dankberg said. In addition to rural areas, ViaSat is seeking to sell the service in larger markets where prospective customers get broadband, but the level of service, including speeds, isn’t what they want, Dankberg said.

While Dish Network has ties to EchoStar’s HughesNet satellite broadband service, it likely will continue also selling Exede because “right now there is more demand than supply,” Dankberg said. Dish has accounted for 100,000 of ViaSat’s subscribers in the past. While analysts have maintained DirecTV-related Exede subscribers carry $100 more in subscriber acquisition costs (SACs), the bundle works well with video, Dankberg said. DirecTV customers are more expensive to acquire, said Dankberg, declining comment on SACs.

ViaSat is targeting non-consumer business to account for 10 percent of its services revenue before the launch of ViaSat-2, with airplane-based broadband among the new offerings, Dankberg said. JetBlue, which doesn’t offer Internet access on its flights, is working with Live TV to introduce satellite broadband service by mid-year using ViaSat-1 and starting with 1-2 planes, Dankberg said. While in-flight Internet service can cost $14 or more depending on the airline, JetBlue will provide a subsidy so it’s largely free, analysts have said. United Airlines, which inherited a ViaSat agreement in buying Continental Airlines, is expected to follow “right behind” JetBlue in offering satellite broadband, Dankberg said. Service revenue from the JetBlue pact will start arriving in the second half, he said. ViaSat has already recorded hardware revenue from the JetBlue deal, he said.

Meanwhile, ViaSat’s patent infringement and breach of contract lawsuit against Space Systems/Loral is likely to “go to trial or very close to it” before any potential resolution, Dankberg said. The case, which involves allegations Space Systems/Loral used confidential information gained from building a satellite for ViaSat to make a similar one for Hughes Communications, is scheduled for trial in mid-2014. The ViaSat-1 satellite, made by Space Systems/Loral using patents it is alleged to have infringed, was launched in October.