Viasat reported its annual results Tuesday afternoon with record revenue. The company also announced a couple surprises, with a new wide-body airline customer for its inflight connectivity solution and a change of plans for its future satellite constellation.
Going low: A shift to LEO
While Viasat continues to think big with its terabit-class ViaSat-3 satellite constellation the company also has plans for a non-geostationary constellation in the works. Previously that was anticipated as a MEO network with about 40 satellites in play. But the FCC tipped its hand with respect to rural broadband subsidies under the Rural Digital Opportunity Fund (RDOF) and now Viasat wants in on that cash with plans for a LEO constellation instead.
The shift hinges on a 100ms latency time specified in the FCC’s initial guidance on what will be acceptable for the broadband subsidy funding in rural markets. The initial filing indicated that even LEO satellites would not be considered as a gigabit solution for the first tranche of funds, eliminating LEO satellites from the highest subsidies. But Viasat believes either that policy will change in the final ruling or that the second tranche of funds, for service in the 2026-ish time-frame will allow for NGSO satellites, assuming they meet the latency requirements.
CEO Mark Dankberg was clear that access to those funds is not the only consideration in developing a new constellation, but it is a massive driver. “If you know what the [required service] locations are and what the subsidies are and can design to that,” he says, the economics of the multi-billion dollar investment become much more appealing.
The new network would require ~300 satellites, up from the 40 that the MEO constellation was to contain, but Dankberg notes that the LEO satellites “are much smaller and less expensive” than the MEO option. He also indicated that the FCC subsidy funding could exceed the constellation deployment costs.
The company filed its application for the change in altitude of the constellation and that approval remains one hurdle to clear. The FCC must also adjust the qualifications for the rural development subsidies. And Viasat would need to win the auction for the service to receive the subsidies. But it is making the move.
Adding a wide-body customer
It seems that the best way to keep winning customers in the inflight connectivity business is to deliver a strong offering the first time you get them in the door. It worked at American Airlines as the company selected Viasat’s Ku/Ka solution for its future 787-8 aircraft and it also appears to have worked at Aeromexico. The Mexican carrier was announced as another 787 customer for Viasat during the call. Viasat already has its kit on the Aeromexico 737 MAX and the carrier was very satisfied with the performance, including coverage of the Caribbean on the ViaSat-2 satellite, before the aircraft were grounded last year. Viasat confirmed that one 787 is flying with the system online today.
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