Satellite Internet Consumers have a rough summer.....
This might go down as the worst year ever for consumer grade satellite internet quality. There isn't a provider out there who is exempt from heavy criticism in 2006. We've been saying for a long time that it is very difficult to provide consistent service on a satellite internet connection for less than $100 per month....and this year seems to bear that out more than ever.
Here is the "rap sheet" on the providers:
Starband:
Even with the introduction of new equipment and service levels (the Nova series) this company did so much damage to their reputation from 2003-2005 that they are toast and apparently just don't know it.
Now owned by SpaceNet, which is a subsidiary of Gilat, Starband is trying to re-invent itself (again) under the leadership of Andreas Georghiou. Georghiou was formerly with the very successful SES Americom as Chief Commercial Officer.
Too little to late? Yes. They are so far in the financial "drink" it would take a miracle to bring them to consistent profitability. They can't afford to take decent care of consumer customers and their speed packages are pedestrian at best.
Wildblue:
The big story in 2006 for Wildblue is headlined "Experience is everything....and we don't have enough".
This company grew in subscribership by leaps and bounds in 2006...but didn't plan for the growth worth a darn. They were bringing on customers right and left, but the "upfront" equipment costs were a good deal greater than what they charged customers in their effort to cut into DirecWay/HughesNet's market share.
As a result, Wildblue had to go to the well twice during the last 12 months to finance the losses they are sustaining as well as try to build out a network that will support the new satellite they intend to launch ( WB1) in November 2006.
They have found it necessary to change the rules for subscribers more than once to try to balance the network. The Fair Access Policy, which limits heavy users, has been adjusted twice to curtail the aggressive users who thought they were getting away from the onerous DirecWay FAP only to find a equally restrictive FAP at Wildblue. Several of the regional uplink gateways have insufficient routing and terrestrial connectivity to take on any more customers, even though the satellite they beam to has more than enough capacity.
Subscribers are currently complaining of very slow speeds during "prime time", packet handling errors which often result in dropped connections, inability to utilize voice over IP, and outages of durations which leave many with a bad taste for making the switch to this company.
HughesNet:
After what seemed like a great start, HughesNet has also fallen on difficult consumer times. They agressively went after the upstart rival Wildblue during the summer of 2006 and got a lot of business. They may have gotten more than they bargained for as the network has gone from tolerable overcrowding to unbearable speeds and pings at times.
They rushed a new modem onto the market (HN 7000s) which touted the new improved DVB S2 packet handling capability. This new modem was sold as a way to lessen the crowding of transponders and improve downloads by up to 30%. The problem is they only had ground equipment in place to handle two of the 9+ satellites they have customers pointed to! Many subscribers who "bit" on the upgrade or bought this new technology are reporting no improvements in speed, even on the updated DVB S2 satellite gateways.
Next year might prove to be different as both Wildblue and HughesNet plan to launch ka band satellites which are designed to provide a better consumer experience, but in my opinion, 2006 is a mess at best and a disaster at worst.
UPDATE:
PETAH TIKVA, Israel, Sept. 28, 2006/Satnews Daily/ — Gilat Satellite Networks Ltd., (Nasdaq:GILT) announced on Wednesday that its top creditor, York Capital Management, has exercised its option to convert all of its $70.4 million loan plus accrued interest of about $1 million into approximately 10.6 million ordinary shares of the company.....Amiram Levinberg, chairman and CEO of Gilat, said York’s decision to shift its position from a debt holder to a shareholder is a strong vote of confidence in Gilat and significantly strengthens Gilat’s balance sheet.”
This makes York Capital a 33% owner of Gilat, which in turn owns Starband. What does this mean? Well, they will lose 6+ million less per year, since that is the amount of interest each year that has effectively been forgiven with this move. Of course, I'm assuming they will fall back into the red after posting a nominal profit this year....stranger things have happened in this industry, so stay tuned.
Here is the "rap sheet" on the providers:
Starband:
Even with the introduction of new equipment and service levels (the Nova series) this company did so much damage to their reputation from 2003-2005 that they are toast and apparently just don't know it.
Now owned by SpaceNet, which is a subsidiary of Gilat, Starband is trying to re-invent itself (again) under the leadership of Andreas Georghiou. Georghiou was formerly with the very successful SES Americom as Chief Commercial Officer.
Too little to late? Yes. They are so far in the financial "drink" it would take a miracle to bring them to consistent profitability. They can't afford to take decent care of consumer customers and their speed packages are pedestrian at best.
Wildblue:
The big story in 2006 for Wildblue is headlined "Experience is everything....and we don't have enough".
This company grew in subscribership by leaps and bounds in 2006...but didn't plan for the growth worth a darn. They were bringing on customers right and left, but the "upfront" equipment costs were a good deal greater than what they charged customers in their effort to cut into DirecWay/HughesNet's market share.
As a result, Wildblue had to go to the well twice during the last 12 months to finance the losses they are sustaining as well as try to build out a network that will support the new satellite they intend to launch ( WB1) in November 2006.
They have found it necessary to change the rules for subscribers more than once to try to balance the network. The Fair Access Policy, which limits heavy users, has been adjusted twice to curtail the aggressive users who thought they were getting away from the onerous DirecWay FAP only to find a equally restrictive FAP at Wildblue. Several of the regional uplink gateways have insufficient routing and terrestrial connectivity to take on any more customers, even though the satellite they beam to has more than enough capacity.
Subscribers are currently complaining of very slow speeds during "prime time", packet handling errors which often result in dropped connections, inability to utilize voice over IP, and outages of durations which leave many with a bad taste for making the switch to this company.
HughesNet:
After what seemed like a great start, HughesNet has also fallen on difficult consumer times. They agressively went after the upstart rival Wildblue during the summer of 2006 and got a lot of business. They may have gotten more than they bargained for as the network has gone from tolerable overcrowding to unbearable speeds and pings at times.
They rushed a new modem onto the market (HN 7000s) which touted the new improved DVB S2 packet handling capability. This new modem was sold as a way to lessen the crowding of transponders and improve downloads by up to 30%. The problem is they only had ground equipment in place to handle two of the 9+ satellites they have customers pointed to! Many subscribers who "bit" on the upgrade or bought this new technology are reporting no improvements in speed, even on the updated DVB S2 satellite gateways.
Next year might prove to be different as both Wildblue and HughesNet plan to launch ka band satellites which are designed to provide a better consumer experience, but in my opinion, 2006 is a mess at best and a disaster at worst.
UPDATE:
PETAH TIKVA, Israel, Sept. 28, 2006/Satnews Daily/ — Gilat Satellite Networks Ltd., (Nasdaq:GILT) announced on Wednesday that its top creditor, York Capital Management, has exercised its option to convert all of its $70.4 million loan plus accrued interest of about $1 million into approximately 10.6 million ordinary shares of the company.....Amiram Levinberg, chairman and CEO of Gilat, said York’s decision to shift its position from a debt holder to a shareholder is a strong vote of confidence in Gilat and significantly strengthens Gilat’s balance sheet.”
This makes York Capital a 33% owner of Gilat, which in turn owns Starband. What does this mean? Well, they will lose 6+ million less per year, since that is the amount of interest each year that has effectively been forgiven with this move. Of course, I'm assuming they will fall back into the red after posting a nominal profit this year....stranger things have happened in this industry, so stay tuned.
posted by Randy Scott at 12:02 PM
