ViaSat Plans to Boost Fast Growth with Second Internet Satellite

After 27 years as an unobtrusive specialist in satellite-based communications, Carlsbad, CA-based ViaSat (NASDAQ: VSAT) is acquiring a much bigger footprint.

While ViaSat has experienced plenty of success over the years, the company’s business has been focused mostly on its low-profile military and intelligence-agency customers. But that began to change in 2011 with the successful launch of ViaSat-1, the world’s highest capacity communications satellite, which provides commercial broadband Internet service (at 140 gigabits per second) in key U.S. regions. Carlsbad announced plans to build ViaSat-1 in 2008, and acquired WildBlue Communications, a suburban Denver company providing high-speed Internet service, for $568 million in 2009.

Mark Dankberg, ViaSat’s chairman and CEO, laid out his grand strategy for me a few years ago, and the results were evident in record financial results reported last week. For the fiscal year that ended March 29, ViaSat said its new commercial Exede Internet services—which are still based in suburban Denver—have become the biggest factor driving the company’s growth.

“We are closing out the year with revenues surpassing the $1 billion mark, coming [in] at $1.1 billion for fiscal 2013, which reflects a $256 million increase [30 percent] over the prior year,” Shawn Duffy, ViaSat’s chief accounting officer, told investors and analysts in a conference call.

ViaSat-2 Satellite (artist's concept)

ViaSat added about 44,000 subscribers in the quarter, ending March with a total of 512,000 subscribers for its satellite-based Internet service—including nearly 300,000 subscribers on ViaSat-1, with an estimated total capacity of 1 million subscribers. That’s a big jump since March, and to boost subscriber growth even more, the company unveiled long-awaited plans to build and launch a second satellite, ViaSat-2, through an expanded partnership with Boeing.

Using new technology architecture, ViaSat says the second satellite would provide enough capacity for an additional 2.5 million subscribers—and cover seven times the geographic footprint of ViaSat-1. The new satellite, which is scheduled for launch in mid-2016, would cover North America, Central America and the top of South America, and all of the Gulf of Mexico and the Caribbean—as well as the primary airline and maritime routes between the U.S. and Europe. ViaSat already has established partnerships to provide satellite-based Internet service for United Airlines and JetBlue, with ViaSat-1 service for JetBlue passengers beginning this summer.

Internet service could be a particularly attractive added value on trans-Atlantic flights. As Dankberg told analysts and investors: “Everybody with a mobile device would use it…We can take advantage of our bandwidth effectiveness to drive the cost down to … Next Page »

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Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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