Wednesday, July 20, 2005

SatMex Woes Reflect State of Satellite Internet Industry

Mexican satellite operator SatMex filed for bankruptcy protection in its home country a few weeks ago even as its creditors continued to pressure the company to make a similar filing in the US. SatMex filed a voluntary "concurso mercantil", a type of bankruptcy filings in Mexican courts, citing a burden of over $500 million in debt. Whether the Mexican filing will preclude any Chapter 11 moves in the United States remains unclear. A bankruptcy in Mexico gives Satmex more protection because the company isn't liable for back interest payments. Under U.S. bankruptcy law, the company is liable for such interest payments.

Stories of satellite operators losing big money are common in the satellite internet industry these days, in fact, not a single satellite owner operating in the U.S. is making a profit other than SES Americom, a wholly owned subsidiary of SES Global, located in Luxembourg and possibly New Skies, another European operator with CONUS coverage. The other operators in the America's are spilling red ink all over the place.

There is a curious fight underway between Direcway LLC, Starband and Wildblue Communications for domination of the U.S. satellite internet consumer market. No company has ever been able to show a consistent profit in this sector and yet they keep coming with one new offering after another. Rupert Murdock and News Corp saw the writing on the wall and got out, selling 1/2 of their interest and gave up day to day management of HNS which owns Direcway. Starband has financial problems and no one seems to want to own it (Spacenet has it now). I believe Wildblue is on a very short string with investors and needs to show well this fall and winter in order to keep afloat. The break-even for ka band internet is said to be over 200,000 subscribers (Direcway has 250K ku band customers and has just turned a profit I'm told). It will be interesting to see who is standing this time next year in the Consumer marketplace.
The Good News in this piece is that early tests of both Wildblue and Direcway 7000 series consumer satellite internet are very encouraging...very good speeds and much lower latency (the deal killer for vpn & voip). New adopters have been able to do most anything they could do with a DSL or Cable connection with these new systems and if the speeds and low latency hold up over time, people will buy.

Randy Scott

Tuesday, July 12, 2005

Wildblue - Direcway 7700 ...you call this a rollout?

Some things never change...Satellite Internet Providers have a history of Alligator Mouth Syndrome. Both Wildblue and Direcway have managed to stir up all the anticipation that press releases will allow and touted the "roll-out" of both services..."Where's tha Beef"?
Wildblue apparently has equipment problems.....if it isn't the modem, then it's the dish, or the NRTC installers inexperience, or is it the transmitter? Who knows... I've only found a few folks able to use WB yet...granted, they aren't lining up at my door to let me know how it's going (I only dream about having my ears that close to the ground), but there haven't been many reports on forums or press releases by anyone to indicate very many have the service up and running - and this is 30 days into the "rollout" - if you dare call it that. I did see one posting today saying the basic WB service was running at 512/100 kbps on the users first day, but not verified through one of the testing sites typically used by experienced users.
Update: July 19, 2005:
Wildblue had to fly it's technical folks out from HDQ to at least one install this week as a result of the NRTC member installers' inability to accurately point the dish and utilize the right cabling. I don't understand why WB is relying on a group that could screw up a one car funeral...Give a hand to the Wilblue boys who understand damage control as well as anyone.

Direcway has shipped equipment to several Direcway Value Added Resellers....but it it can't be commissioned yet! They haven't given the VAR's any commissioning details and a modem recall is rumored ....so guess what, no installs for at least a week or more.
There are several other companies making noise that they too have new improved satellite internet products coming to the marketplace in coming weeks or months (including Surfbeam ku band, new ka band competitors and a DOCSIS product by Telnor from Norway).......will the Alligator Mouth Syndrome continue?....stay tuned.

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