ViaSat is gearing up to launch its latest high-speed broadband satellite next year on SpaceX’s new Falcon Heavy rocket. SatelliteFinance talks to COO Rick Baldridge to find out how the US operator is positioning itself ahead of ViaSat-2, which promises to more than double the capacity of its previous HTS bird.
ViaSat is gearing up to launch its latest high-speed broadband satellite next year on SpaceX’s new Falcon Heavy rocket. SatelliteFinance talks to COO Rick Baldridge to find out how the US operator is positioning itself ahead of ViaSat-2, which promises to more than double the capacity of its previous HTS bird.
Jason Rainbow: ViaSat has been making a number of small, bolt-on acquisitions in recent years across the US and Europe. Could you explain the overall rational behind this strategy?
Rick Baldridge: The main reason we do acquisitions is because we see an area that needs to be improved on, or there’s not a public offering in – in other words, it’s not a commodity that’s making the right kind of progress.
So, we’ll find a technology company that’s focused on an area that we think is critical to advancing really high capacity satellites and the kind of performance that we need to do.
Most of our acquisitions have been technology-focused, and either we want to control that from a proprietary standpoint or the commodity markets just don’t supply it and we think advances have to be made. A good example is we acquired a company in Switzerland a few years ago that was very focused on advanced antenna technology. We don’t really want to sell advanced antennas but we need them to make sure our services get to more and more platforms.
That’s one example. We acquired another company called Engreen in the Bay area that was focused on virtualising components of an IP network in the cloud. We think that’s absolutely critical to advancing next generation satellite technology and will put us on a peer with terrestrial internet service providers.
JR: So it’s less about building a geographical presence at the moment and more about building out your technical expertise?
RB: Right, we like the geographical diversity but it’s more about filling in technical holes.
JR: Are there any technical gaps that you’re looking to fill in at the moment? Are you still on the hunt for acquisitions?
RB: Almost every single one of these acquisitions has happened because we’ve been working with that company to advance the area that they are focused on, and it has just naturally occurred. We don’t go out on a regular basis and seek acquisitions.
JR: Is ViaSat now positioned where it wants to be ahead of the launch of ViaSat-2 next year then?
RB: I think we’re happy with where we are. We will have to either make partnerships or make acquisitions in more diverse geographical locations as time goes by, but right now we’re in pretty good shape.
JR: It had been suggested that ViaSat could have been interested in Comtech’s recent sale process. Could you have made a larger acquisition like that?
RB: Comtech for us just wasn’t focused in an area we felt there would be alignment to our business or where we were looking to advance the technology space. They were pretty much focused on satellite networks built on teleports. We think the future of these broadband, really high capacity satellite networks are not going to be based on these historical teleports. They are going to look a lot more like cellular companies.
JR: What led the company to choose SpaceX’s Falcon Heavy to launch ViaSat-2 next year, despite it being set to be only the rocket’s second commercial missions? What other options do you have if you decide not to use the launch provider?
RB: We’re confident that the Falcon Heavy is going to be ready to go.
We continue to be impressed with SpaceX. Even when they’ve had a failure they’ve been incredibly transparent and open in the review process, and they’re data-focused in their approach which fits us very well. So we have a lot of confidence and if they miss the schedule we don’t think it’s going to be by much.
We do think that over time, as we’re launching multiple satellites, we probably won’t put all of our money on red or black, and perhaps will spread it around a little bit. We do support a larger industrial base of launch vehicles, and will work with others, like Arianespace, which has a fantastic track record. We’d prefer to have a long term relationship with both.
JR: HTS presents a lot of opportunities and potential challenges for satellite business models – how can providers keep profitable as some areas face the possibility of being oversupplied with capacity?
RB: We definitely don’t think there’s an oversupply of cheap bandwidth. We think there’s an oversupply of expensive bandwidth. They are two different things. We have yet to have a customer come up and tell us that they would like to have less bandwidth.
We’re in the business of inventing, developing and delivering much cheaper bits in space to provide an internet experience that feels, looks and is priced at something very close to cable.
JR: And you see demand for that continuing to rise across the board around the world?
RB: Yes, we have yet to hear of any single circumstance where people say that they have enough capacity, that speeds are high enough, or that they have enough bandwidth. There’s an insatiable demand for more bandwidth. It’s really just a matter of pricing, and the only way to get there and compete is to develop a much more cost-effective and better way to provide more bits in space.
JR: Do you see HTS more about opening new markets or complementing existing satellite markets?
RB: I think people pursued other technologies that would have been happy with satellite, which would have delivered what they needed at a price point. There are so many places in the world where a true satellite network would be by far the lowest cost for a home or business from a capital spend point.
JR: How does satellite remain competitive alongside other high-speed technologies such as fibre?
RB: We’ve been very public that cable is going to be on top of the pile; they will win that war. We believe we can be the next best solution to that. And in some cases where people just don’t like their cable company then we can be a good alternative.
There’s a huge market, if you think about the availability of high-speed broadband. If you just take North America, one of the best developed spaces in the world, 80% of people have one or less choices for broadband speeds above 25 Mb/s. To the extent where we can drive speeds well and beyond that range, we can compete in 80% of the market.
If you think of what that looks like globally, there’s a tremendous opportunity for the long term growth of satellite broadband.
JR: What about the potential for growth in the inflight broadband market? Are there too many satellite operators trying to play a role? How important is it to your future growth plans?
RB: We believe on a global basis it’s a tremendous opportunity. Our view is passengers should have a similar level of performance that they get at home. Right now we’re the only one offering that. We think we can definitely roll that out globally.
It’s a business that a few years ago didn’t exist and now it’s growing. If what they really want to have is just fundamental connectivity then there are multiple other options. But if you want to stream video such as on Netflix, Amazon Prime and others – then it’s only us.
JR: What are your plans to expand this service internationally?
RB: When ViaSat-2 comes up you’ll be able to fly from Guatemala to the Western part of the Middle East through high capacity Ka-band coverage, and certainly around Australia. We definitely have a mission to try to expand that footprint, but that coverage area includes a very high percentage of global flights.
Asia is obviously a very strong market and we don’t have a product there today, but we think that’s only a matter of time.
JR: How much time? When will we see ViaSat-3?
RB: Well, we’ve said we’d like to get started this year and we’re working really hard to do that, although there are no guarantees. We have a lot of technology breakthroughs that will go on our ViaSat-3 product. We think that technology is certainly applicable on a very long and global basis so the real issue is how much money can we afford to spend, and that’s going to govern our global expansion for the near-term.
JR: With Boeing-built ViaSat-2 being supported by a US$525m loan that was secured last year from the US Export Import Bank, how much access to capital do you have for ViaSat-3?
RB: I think we’re in pretty good shape. If money wasn’t an object we’d go faster.
JR: Could you send out an open tender to find a manufacturer sometime this year?
RB: We’re already working very hard from a technology standpoint on our next-generation product roadmap.
JR: ViaSat-2 is set to more than double the capacity of ViaSat-1’s 140 Gb/s link. What kind of step up are you looking at for ViaSat-3 – what’s possible?
RB: A more significant change than ViaSat-2 was to ViaSat-1.
JR: In ten years, will we all be using high throughput satellites exclusively?
RB: I think there will be a long term role for what we would consider to be broadcast satellites. But if it’s really about cost per bit delivered then I think it’s all about high throughput satellites. When we talk about high throughput satellites we don’t include a lot of what we think the industry includes in that group. It’s hard for us to put ViaSat-2 in the same class that other people call high throughput satellites, so it will really be ultra high speed satellites that will drive down the cost per bit.
They will be able to serve many, many markets, and certainly the big FSS markets will have a challenge to meet the cost that we’re able to deliver.
