VSATs Said Finding New Niche in Broadband
Very Small Aperture Terminals (VSATs), long a provider of internal corporate communications systems, have found a new niche in providing rural Internet service and Internet backup for governments and businesses, industry officials said. While terrestrial fiber lines can provide far faster speeds, VSAT offers higher reliability, functioning without costly infrastructure when land lines are down, a major issue during natural disasters, they said.
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Within a year or two, Hughes will have more individual broadband subscribers via VSAT than corporate subscribers, said Arunas Slekys, Hughes vice president of communications, marking a major change for the business. Hughes is seeing fast growth in subscribers around the world and churn remains low despite the economic downturn because broadband subscribers don’t want to get rid of their service, said Slekys. The company added 50,000 broadband subscribers over the past year, and revenue from its broadband subscriptions grew by 3 percent in 2Q this year over the same period last year, while the company’s overall revenue fell by 1 percent.
The largest group of VSAT subscribers is in rural areas, where terrestrial Internet infrastructure is largely unavailable, officials said. “Consumer broadband has in recent years developed very rapidly in rural areas where it has found its best market niche,” said Peggy Slye, chief operating officer of Futron, an aerospace consultant. Also, because individual consumers use far less bandwidth than corporations, satellite can take on more customers than it would be able to otherwise, said Slye.
Another VSAT provider, SkyCasters, offers “Internet insurance” for businesses across the U.S., Canada, Central America and the Caribbean, making sure areas with notoriously temperamental Internet can remain connected. “Basically they want to be ensured against day or week of downtime,” said Gordon Landefeld, a marketing analyst at Skycasters.
Hughes and SkyCasters are also joining terrestrial carriers in going after the $7.2 billion in federal broadband funds meant to extend the reach to rural communities. Hughes submitted several proposals to NTIA and RUS, the agencies giving out the funds, while SkyCasters’ application would help connect the Navajo Nation in northeastern Arizona, said Landefeld.
The shift to broadband consumer services resembles the growth in satellite TV, said David Hartshorn, Global VSAT Forum general secretary. It’s unclear how much VSAT can fill the holes that terrestrial Internet has left behind and whether it can ever be a direct competitor, as DirecTV and Dish Network are to cable, he said. “For years the satellite industry has struggled to crack the consumer VSAT nut. It has only recently started to do so.”
Technological advances have also allowed VSAT private networks to increase capacity, allowing for more users and more data. The company’s government solutions office has been trying to sell new services that would link up government agencies with remote offices. The company successfully sold its service to its first agency, something the company will announce in the near future, said Tony Bardo, Hughes’ assistant vice president of government solutions. While still in the early stages of rolling out the technology, Hughes is also in talks with at least two states to try pilot projects, he said.