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February 24, 2016updated 31 Aug 2016 12:45pm

Satellite broadband: Last resort or a serious contender to mobile and fixed?

Analysis: With ViaSat-3 set to offer terabit internet capacity, perhaps it is time to address the stigma over the technology.

By Alexander Sword

Proponents of satellite broadband could be forgiven for thinking that they are fighting a losing battle.

The business record for satellite broadband is intimidating to say the least. SkyBridge, an Alcatel project, went bankrupt in 2000 while Microsoft-backed Teledesic halted work in 2002.

Even if the trials and tribulations of satellite had not been played out so openly, the technology suffers from a reputation problem.

It is often seen as expensive, slow and providing poor bandwidth.

Andrew Ferguson, editor at broadband comparison website Thinkbroadband.com, says that these perceptions are not entirely undeserved:

"The usage allowances are such that even an average household needs to be on the more expensive packages," he explains, adding that satellite users are advised to keep an ADSL line for larger downloads.

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This is also true in the business market. An unlimited broadband connection for a business can cost as little as £10 per month, while for satellite the costs vary between around £30 per month to over £100 depending on the amount of data required.

There is also a built-in lag with satellite that means it can be unsuitable for many applications. 800ms doesn’t sound like a lot, but for an online gamer it could be the difference between winning or losing.

"For current satellite services [latency] is the major problem, i.e. the 800ms ping versus the 10 to 50ms of most terrestrial solutions," says Ferguson.

In order to boost low take-up of satellite broadband, the Government launched a scheme in December, intended to subsidise efforts by Avanti and BT to bring satellite broadband to a possible 300,000 properties in the UK.

However, take-up of the scheme has been disappointing, with Labour MP Chi Onwurah publicly castigating the Government last month when only an alleged 24 people had signed up.

The role of satellite in supplying those parts of the world that can’t be profitably served by other networks, including the maritime and aviation industries and remote rural areas, has been widely accepted.

As the fortunes of the satellite giants cited above show, this is not enough to sustain an entire market.

The challenge for the satellite industry, then, is to shift the boundaries, and extend satellite’s role from the connector of last resort to a recognised contender to cellular and fixed networks.

One provider that is trying to do so is California-based ViaSat, which is in the midst of a mission to "build satellites that would not just be based on providing a service of last resort," according to EVP of Space & Satellite Systems Keven Lippert.

ViaSat has launched one broadband satellite already, and plans to launch two more in the next few years.

"With this, you will see quality of service on the satellite that is on a par with most cable-type services," Lippert claims.

So has ViaSat got a formula for success that will prevent it slipping out of orbit like some of its compatriots mentioned above? Well, Lippert claims that these companies were not really its compatriots.

"I don’t think anyone else really is doing satellite broadband. What you see is companies [that fail] trying to be a service of last resort, meaning that when there is no other service buy this."

Lippert argues that this is a "shrinking market and a hard market to operate in."

Certainly the former statement is being borne out in recent years. Terrestrial networks are pushing the boundaries back further and further, so that the "last resort" option is gradually fading out of existence. In the UK, for example, the Broadband Delivery UK scheme plans to provide superfast broadband coverage to 90 percent of the UK by early 2016 and 95 percent by December 2017.

So if satellite is to be viable, it needs to reach beyond this shrinking market.

"We’re targeting the whole market. We feel our technology is growing faster in terms of capacity compared to lots of other technologies. We feel like we have a lot of cost benefits in terms of covering areas that a lot of other companies don’t have.

"For sure, we’re the cheapest way to do the last five percent but that is a very small market for us. We wouldn’t be investing in all of these technologies if that was our only target."

ViaSat accordingly doesn’t view itself as a satellite company, but simply as an ISP that happens to use satellite as the best way to deliver a competitive service in the market.

Lippert explains that he believes that satellite companies have failed because they have lacked the "right economics", meaning that they do not provide enough capacity compared to the cost required to launch.

"What we’re focused on is getting a lot of capacity of our networks at the same cost as building other satellites, which allows us to compete in the bigger broadband market," says Lippert.

The recently announced ViaSat-3 satellite will accordingly provide capacity of 1 Tbps. This has apparently led to raised eyebrows from satellite companies.

"The reason we want that is because we’re aiming at providing services that are competitive with cable and fibre and wireless and that’s what you need to be able to do that. We understand that customers need and want higher speeds and more video streaming."

As Lippert explains, regardless of the way that they are connected, people’s expectations of the internet are fairly similar: they want lots of data.

Of course, any network provider will admit that one network doesn’t suit every single circumstance, which is why many mobile companies are getting into fixed broadband (Vodafone) or why broadband companies are getting into mobile (BT).

According to Lippert, the sweet spot for satellite is not city centres, but slightly further out in the suburbs.

"If you think about the way both cellular and terrestrial technologies work, their costs tend to be very incremental by area. The higher the population density of an area, the cheaper it is for the fibre and cellular companies to provide service."

"There’s a point where our service is more economical."

For companies with bad satellites, the cut-off point is probably the final 5 percent. But with a better satellite, Lippert argues that right outside of the city centres is the inflection point.

As the coverage doesn’t extend there yet, UK businesses and consumers will have to wait a few years for the upcoming satellite launches to see whether ViaSat will deliver on these promises of more affordable satellite broadband.

However, thinkbroadband.com‘s Andrew Ferguson agrees that increasing capacity will be key to the industry achieving commercial success.

"Usage allowances need to increase and the stability of speeds as take-up increases needs to improve.

"Alas with satellites this usually means putting more satellites into orbit which is not quick or cheap," says Ferguson, suggesting that cheaper launches could make the service more economical.

Ferguson also argues that there are already some cases where satellite broadband is useful to businesses.

"It means if your Internet needs are not too onerous you can locate your business anywhere you like.

He adds that a satellite connection powered by a business’s own power generator could be useful for business continuity purposes if other networks were somehow disabled.

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