The battle to be the market leader in satellite communications is hotting up. Evan Dixon, Viasat’s head of Europe, talks to James Pearce about the rise of satcoms, in-flight connectivity and an industry having ‘an identity crisis’
With connected, automated vehicles coming down the road very soon, and demand for ubiquitous connectivity growing, the telecoms industry is facing a challenge – how do you connect those areas where fibre does not reach?
People have suggested numerous solutions: point-to-point microwave connections, 5G balloons and small cells are just some of the more interesting ideas that have been floated over the last few years.
Another growing – but certainly not new – sector is satellite. Emerging data use cases, such as mobility, cellular backhaul and broadband connectivity, will propel the next wave of satcom growth. A report by Northern Sky Research (NSR) on satellite capacity supply and demand says satellite capacity revenues will grow by an annual 6.8% over the next decade.
"The history of satellite communications shows that costs were pretty high for the kind of service that was being delivered," explains Evan Dixon, CEO of European broadband retail at Viasat. By that, he means it was seen as slow, expensive and often came with data caps, meaning it wasn’t a good option when compared with terrestrial solutions.
"Where we’ve moved is that our satellite technology now has a significant cost advantage over terrestrial delivery methods outside of urban areas," he says – meaning not just rural areas but also "outside the perimeter of what you’d class as major cities".
I ask how this is possible, and Dixon says that Viasat can "deliver internet to somebody’s home at a cost less than passing fibre by their home. That’s our sweet spot."
In the past, it cost so much just to build and launch a satellite (the ViaSat-2 system, just two years old, cost the company around $625 million) that the services offered did not always match up with the necessary costs. ViaSat-2 is a 300GB satellite, but the next generation of satellites – due to launch in 2020 – will offer more than 1Tb of capacity, but cost a similar price to develop and launch.
So who is Viasat? The US-based company was founded in 1986, offering high-speed broadband services to the commercial, government, military, maritime and aviation sectors. It launched ViaSat-1 in 2011 and ViaSat-2 in 2017, and it has plans to launch its third series in 2020.
ViaSat-1, launched in October 2011 aboard a Proton rocket, held the Guinness record for the world’s highest capacity communications satellite. It has a total capacity in excess of 140Gbps, more than all the satellites combined then covering North America.
The company’s mission, says Dixon, is to become "world’s first truly global ISP, in that we provide internet services in people’s homes, in the air, no matter what continent you’re on". That means that investments will be put into making sure "connectivity is available no matter the location or situation".
This plan will come into full fruition with the launch of the ViaSat-3 constellation of three satellites in 2020. The first will cover the Americas and the second EMEA and most of India, with the third completing Viasat’s global coverage by covering Asia and the Asia-Pacific region.
"Once all three of those are in the sky, the vision becomes a reality and it will give us complete blanket coverage of the globe for mobility and from a residential standpoint," adds Dixon.
We are speaking at an interesting time for the satellite industry. With 5G on the horizon, plans for more satellite launches are being discussed, and a number of new entrants are involved in those talks. The likes of OneWeb and Sky and Space Global are all hoping to take advantage of the demand for more satellite services, but, according to Dixon, the industry itself is facing "a bit of an identity crisis".
The identity crisis includes a raft of speculation about mergers and acquisitions. Inmarsat recently stated it is not for sale, rejecting a second offer from EchoStar Global, which had reportedly bid around $4.25 billion to buy the UK-based satellite operator. Last year, OneWeb’s bid to buy Intelsat fell apart. And Yahsat recently bought rival Middle-Eastern operator Thuraya.
All of these movements, he explains, are down to an acceleration in technological developments in the aerospace industry, claiming boldly that "Viasat has led the way".
He says: "This really started when we announced ViaSat-3 because we were putting a satellite in the sky with 1Tbps. It’s more than 10 times what any other satellite had put up in the year, with speeds similar to fibre, offering unlimited packages. Many of our rivals were planning to put far inferior satellites up at a similar cost, but they went back to the drawing board."
It’s a bold claim, but Dixon says the company wants the satellite industry to thrive overall as it helps to drive down costs and offer better economies of scale. "That’s been an unintended consequence of ViaSat-3. Some of those M&A rumours stem from people having difficulties seeing where other companies fit into an industry that is advancing this quickly."
The satellite industry involves a lot of cooperation and Viasat has a long-running joint venture with Eutelsat that covers Europe through its KaSat satellite. But it is also fiercely competitive and it has been locked in a long-running dispute with Inmarsat.
The dispute harks back to the launch of Inmarsat’s European Aviation Network (EAN) – a joint venture with Deutsche Telekom started last year that provides connectivity for passengers on aircraft. The EAN combines high capacity satellite coverage with a complementary 4G ground-based network to provide high-speed connectivity across 30 European nations - competing with Viasat’s own airline offering.
Earlier this year a Belgian court revoked approval for the EAN in the country after Viasat challenged the legality of its authorisation. Viasat and Paris-based satellite operator Eutelsat challenged Inmarsat’s use of a European Commission S-band spectrum licence, arguing that what should be a predominantly satellite system supported by ground towers is in fact the opposite – a terrestrial connectivity system that uses a satellite component to justify its existence. Inmarsat disagrees.
In fact, when I sat down with Inmarsat CEO Rupert Pearce for an interview last year, he was scathing in his dismissal of Viasat’s appeal to regulators. At the time, Pearce told me: "The motivations of our rivals are to stop us or slow us down. We find I strange that when asked about competing with the EAN they dismissed it completely. I say ‘bring it on’ – competition is good. They are trying to stop it because they fear it."
I ask Dixon about the dispute, and he says it’s not to do with fear, but fairness. Viasat’s argument is that the spectrum was granted for a "different purpose" to what it is being used for. And so it is approaching each of the regulators in each relevant European country to explain what it believes is a breach of the terms of the spectrum licence.
"We want people to understand that the terrestrial portion for planes was only supposed to be used as a complementary source, but instead it is being used as the vast majority of the capacity that is being delivered to these airlines," he says.
"We’ll continue to fight that battle but it’s not getting in the way. It’s not stopping us from presenting our story to airlines, and it’s clear some airlines are waiting to see the outcome of this EAN dispute before making a decision about their in-flight airline future."
There have been some positive reactions – the Belgian court is one example – but so far, there has been nothing big enough to stop Deutsche Telekom and Inmarsat’s launch.
"We don’t plan to drop the fight," says Dixon. "As recently as a few weeks ago we were in a courtroom over this. It’s not a fight we want to drop because we think it is so egregious in the way it was being filed. The more the authorities hear this story, which is as black as white – they are as appalled as we are. That’s what we’ve found."
In-flight connectivity is a significant area of growth for the satellite industry and, for Viasat, this is no different. It has deals with numerous airlines including Virgin, Jet Blue and United Airlines, with El Al the latest to announce a partnership.
"In flight Wifi has been a very exciting part of our business and growth has exploded. More and more customers expect to be connected at all times, even in the air," he explains. The reason for this is simple: previous experiences of in-flight connectivity was, in Dixon’s own words, "abhorrent" because users could not stream or connect to a VPN due to a lack of capacity.
"We have changed people’s expectations of what they want from an internet service when they are in the air. They can have the same experience as they have in their home," he says.
"The more consumers who fly on flights enabled by Viasat, the more they will expect that from other airlines, and we feel we are very well positioned to take advantage of that."