Viasat expects to file an insurance claim soon for an antenna glitch that reduced the performance of its newest satellite by around 15 percent, CEO Mark Dankberg said May 24.
The antenna malfunction on ViaSat-2, revealed in January some seven months after the satellite’s launch, specifically affects a set of antennas designed to target pockets of high-demand customers, he said. As a result, some areas are already experiencing bandwidth shortages, he said.
The Boeing-built ViaSat-2 has an estimated maximum capacity of 260 Gbps, revised down from 300 Gbps because of the malfunction. An accelerated activation schedule for ViaSat-2 ground stations and some reprogramming of the satellite has mitigated the impact, Dankberg said.
Dankberg said Carlsbad, California-based Viasat would submit a proof of loss within the next month and does not expect to receive any of the insurance money before next quarter at the earliest.
“It’s a big claim and we’ve not been through the process before,” he said.
Modeling of the satellite’s performance has predicted how different antenna configurations affect the corresponding beams, he said. ViaSat-2 still has contiguous coverage of North America and nearby regions, he said, but with only 98 to 99 percent of its beams. The last 1 to 2 percent of beams Viasat may keep permanently shut off, he said.
Dankberg said Viasat does not have a final estimate of ViaSat-2’s total capacity, noting that ViaSat-1 was estimated to be a 100 Gbps satellite, but ultimately reached 140 Gbps.
Despite the antenna issue, Dankberg said Viasat still considers ViaSat-2 to be “the most capable broadband satellite ever.”
Ramping ViaSat-2 business
After launching ViaSat-2 service late last year, Viasat is loading customers in its three main business areas of aviation, government and consumer broadband onto the satellite. Compared to ViaSat-1, which was roughly 90 percent consumer broadband, Dankberg said ViaSat-2’s largest customer set will likely be aviation, with inflight connectivity accounting for around half its capacity.
Commercial aircraft using Viasat connectivity and hardware numbered 635 as of March 31. Dankberg said that number could top 1,000 by the end of next March. Viasat-connected aircraft increased by 46 over the past three months, which was a larger increase than the past nine months combined, he said.
“The combination of equipment sales and new inflight connectivity service revenues are anticipated to be the greatest contributor to year-over-year revenue growth,” Dankberg said.
Government services, an area of strength for Viasat despite being sluggish for most operators, increased 13 percent to $772 million for the company’s fiscal 2018, which concluded March 31. Viasat Chief Financial Officer Shawn Duffy said the company will further increase research and development spending on government products with a heavy focus on mobile platforms.
Consumer broadband shifts
Viasat shed 83,000 consumer broadband subscribers from last fiscal year, tallying 576,000 overall. Customers choosing more expensive service plans covered the loss, however, according to Viasat.
Dankberg said Viasat is now able to offer services plans of 100 Mbps with ViaSat-2. New subscribers to the higher-throughput plans on ViaSat-2 should outpace losses on ViaSat-1, Dankberg said.
Regarding Europe, Dankberg didn’t express the same frustration as Viasat’s joint venture partner Eutelsat of Paris on consumer broadband market strategies. Earlier this month, Eutelsat CEO Rodolphe Belmer expressed disappointment with RetailCo, a direct-to-consumer broadband business Viasat leads using Eutelsat’s KA-SAT satellite. Belmer blamed a nearly 8 percent decline in Eutelsat’s fixed broadband business on RetailCo and used it as an example of why Eutelsat thinks a wholesale model is a better approach. Dankberg dismissed this reasoning.
“We don’t think that’s the best long-term approach,” Dankberg said of the wholesale model. Viasat is happy with RetailCo’s progress, he added.
“Eutelsat’s existing wholesale approach has basically sold out most of their bandwidth in what are the easiest markets,” he said. “The objective for [RetailCo] was to go into these markets that hadn’t sold in some period of time. Those were clearly the most difficult markets.”
A second joint venture run by Eutelsat is focused on wholesale capacity leases.
Eutelsat ditched an investment in a 1 Tbps ViaSat-3 satellite for Europe, the Middle East and Africa in favor of a solo satellite from Thales Alenia Space that has 500 Gbps concentrated over Europe. Dankberg said Viasat will likely find other partners for its European broadband initiatives, but didn’t give specifics. ViaSat-3 EMEA is still on track for service six months after ViaSat-3 Americas, which starts service in 2020. Viasat has a launch contract for an Ariane 5 mission with an unspecified ViaSat-3 satellite in late 2019 or early 2020, and has yet to announce other launch arrangements.
Viasat reported full-year revenue of $1.6 billion and a net income of $23.8 million.