Where is the Broadband Stimulus?

President Barack Obama laid out his plan for a huge economic stimulus package, with broadband rollout, an Internet-based smart energy grid and computers for schools as part of the plan. The idea was to put this plan into effect within weeks of taking office....one little problem, Congress doesn't work quite that fast!

I personally know of several companies in the Vsat business who have lobbied for some of the hundreds of millions Obama has promised to the industry to bring high speed internet to every corner of America. Obama called on Congress to approve funding for rolling out broadband to unserved and underserved areas, although his speech did not provide details on how he wants it to happen. No beef yet!

Our new President is learning (I hope) that the position of President has power, but nowhere near as much as he envisioned or perhaps fantasized about. The evidence of this glitch in his gettalong for me is that we have seen the markets virtually ignore the passionate addresses Obama has made to the American public and to Congress recently. If anything, the markets have reacted negatively - as if putting him in his place as a bit too carried away with his own BS.

Like all industries, the VSAT industry could use a shot in the arm.......hopefully the stimulus will come soon.

Full Birds

With the huge stock market swings we've seen lately you would think the satellite bandwidth folks (a pretty volatile group in their own right) would be in deep trouble. Not the case......the satellite bandwidth business is booming this year compared to many industries - why?...well, it isn't due to redundant backup demand (although that business doesn't hurt) or millions of folks begging for high speed internet in rural parts of the U.S. (which they aren't), rather it's due more than anything, to the surge in HDTV broadcasting. Every time I turn on the TV a new HDTV station pops up or the "locals" are switched over to HDTV broadcasting. I love it except when I see what it's doing to the cost of bandwidth for data transmission.

The major players, SES Americom and Intelsat, are booked up to very high occupancy rates right now and demand continues to exceed capacity. Even with new satellites on the drawing boards and under construction, the shortfall of bandwidth is alarming right now. HDTV signals require 4-5 times as much bandwidth for transmission as standard definition signals, even with sophisticated MPEG-4 encoding. In addition, our Internet communications bandwidth requirements continue to grow at about 50% annually. Staggering growth in such a turbulent market isn't it?

The success of HDTV well exceeds everyone's projections - the good news is really nice programming coming my way - the bad news, I rely on internet, not TV, to earn a living! I've seen bandwidth costs increase by 15% or more during the last 12 months. Additionally, Service Providers have been forced to throttle, employ access limitations (FAP) and cancel accounts that stress the network too much. It is a classic example of "needs in conflict" between satellite owners & ISP's, who want to maximize revenue - and consumers and entertainment producers, who want to use the internet in ways it might not be ready for....the next entertainment medium. Capacity over satellite will always be more expensive and limited than terrestrial counterparts; however, the growth of internet usage in general has accelerated so fast that something is bound to give....sooner or later.

There is a great deal of brainpower assaulting this shortfall of bandwidth that will become even more apparent in the next two years.......I hope brainpower wins the race on this one...slow internet is no fun!

Murphy's Law of satellite failure....

So far in 2008 there have been some glitches in the "get along" for satellite owners.....

In March, SES Americom satellite AMC 14 (totally leased to EchoStar/Dish Network) failed to reach the correct orbit to have maximum useful life. The options are to use fuel on board to get to the right orbit (reducing the total life of the bird) or leave it where it is and reduce the number of HDTV channels it is able to handle. Both options are a setback to Dish Network, who is struggling to compete with DirecTV.

Another of the SES Americom satellites, AMC 4, has recently been slated to be taken out of service at it's original slot by an unknown issue with several transponders. SES Americom has moved AMC 2 into the "slot" taken by AMC 4 at 101 degrees W. and most domestic customers have service. Since AMC 2 is not as powerful as AMC 4, it has not able to accommodate all of the customers - ie some folks with smaller dishes and outside the U.S. are still in the dark.

Separately, IntelSat will be forced to move a satellite (G 18) over to the slot currently occupied by G10R at 123 degrees W. G10R has developed propulsion issues and will not be able to stay in geo-orbit much longer. G10R does have enough fuel to stay in orbit until this switch takes place, so this change will likely be transparent to customers (the changeover was successful on June 3, 2008). After the changeover to G 18, G10R will be shut off and allowed to crash into the sea.

These three situations point out how vulnerable these birds in the sky are to failure of components and the forces of the universe (geez, this is starting to sound like Star Wars 10 or something). It would be no big deal if it were easy to point customers to a different satellite...but it is a fairly complex and somewhat costly maneuver in most cases. In defense of the satellite owners......Intelsat launched G 18 on May 21 and had it operational 13 days later on June 3, which might be a record, and demonstrates how quickly problems can be corrected by satellite owners.


In the very near future there will be reasonably priced fixed-automatic dishes (Motorized Earth Station Antennas) available that will enable customers to switch satellites literally with the press of a button (and a quick phone call). The dish will be stationary in location, but capable of tracking a satellite and locking on. This will revolutionize bandwidth pricing for many and prevent long outages in the event a satellite has a problem. Satellites formerly relegated to the satellite "junk yard" that are on inclined orbits (orbits that require some tracking by the dish to stay locked on) will spring back to life at very low bandwidth costs for those utilizing this new type of satellite dish. I predict that those using fixed-automatic dishes will be able to surf for about 50% of the current costs. Pricing will be in the $3,500-$5000+ range depending on dish size.

Hughes Network Services Posts 2007 Financial Results

"HNS delivered strong financial results in 2007," said Pradman Kaul,
president and chief executive officer. Revenues increased by 13% over 2006 to $970 million and our profitability in 2007 was also very strong.
Operating Income for the year was $90 million, a growth of 56% over 2006; EBITDA* increased by 28% to $139 million in 2007 over 2006, and Net Income increased by 161% to $50 million. All of the segments showed robust growth. The major revenue growth contributors were the consumer, international and the mobile satellite markets with growth rates of 13%, 11% and 77% respectively in 2007 over 2006. The consumer base grew to 379,900 subscribers at December 31, 2007, a growth of 16% over the subscriber base at December 31, 2006. Our North America and International enterprise groups provided a solid revenue base contributing in aggregate over half of HNS' total revenue in 2007. I am also very pleased to report that we were awarded a record $1.1 billion of new orders in 2007 representing a growth of 30% over 2006."

HughesNet, the company most satellite internet users are familiar with, has positioned itself pretty well to launch their new ka band product, SpaceWay . If successful, SpaceWay will enable HNS to rid itself of many of the expensive leases on Ku band satellite transponders it currently pays for. Profits will soar if Hughes can draw in many of the Enterprise buyers that want products like "point to point" internet - that is, direct (single hop) connections between a company's branches, as an example. It remains to be seen what Hughes will do to motivate commercial and consumer prospects to buy from them rather than the other options like Wildblue, ViaSat's LinkStar and iDirect products like the 3100 NB.

2008 is a year that I believe Wildblue will need to find a path to profitability or HughesNet will steamroll them out of the marketplace. Neither company has very good consumer ratings...in fact, both companies have a reputation for overcrowding, inept customer support and promises way beyond what is delivered. The difference is in profitability - and Hughes is taking care of business in that department. Wildblue is still spilling red ink according to my reading of the tea leaves. Stay tuned!

ViaSat hires Tom Moore to run ViaSat-1

The ever aggressive and strong marketing always trumps substance boys at ViaSat announced today that they hired Tom Moore, the co-founder of Wildblue, to head up their ViaSat -1 program. The ViaSat 1 program includes the launch of their own ka band satellite as well as providing the underlying services to consumers and commercial accounts on a direct basis. They plan to bring a set of services to the market by 2010.

It's been bantered about by investment banker types that ViaSat would need a company like Wildblue on the same team with them to get the interest of the investment world for this $500 MM+ project. With the hiring of Tom Moore, who in essence was fired from Wildblue by the Liberty Media crowd, it sure doesn't look to me like ViaSat is going to be including Wildblue in their plans!

My own thoughts are this: ViaSat is not happy with the growth of ka band earth station and gateway equipment sales worldwide (which they have been heavily invested in since 2004) and are determined to make a go of ka band. By launching their own satellite, ViaSat can control the performance information that gets out to the field, and more importantly, to the financial community. Additionally, it will enable them to reap much greater profits if they can get the "bent pipe" approach to ka band to work as well as it does on paper. Regardless, they will be playing catch-up to HughesNet, who will make a far more advanced ka band platform (SpaceWay III) available to commercial and consumer accounts in a few months.

I have said more than once......the ViaSat approach to ka band is much less expensive, and it shows. On paper, bent pipe ka band looks terrific, with all of that bandwidth re-use ....but as the rubber has met the road, bottlenecks have surfaced right and left at the Gateways and "bent pipe" ka band has bloodied it's nose more than once. It remains to be seen if the "on board processing" approach of HughesNet's SpaceWay III will prevail......or if all ka band goes the way of the 4 track tape player....

Why stuff happens on satellite connections...

If you are a customer of a consumer or even an enterprise satellite internet provider, chances are good that you have endured sudden slowdowns, disconnects, delays and a host of other annoying problems with your connection. What the heck is going on! Don't the satellite internet providers realize they are getting a terrible reputation by allowing this nonsense to continue?

Well, the truth is that indeed they do know you are not getting the level of quality that their advertising would suggest. After all, they produce the advertising like HughesNet puts on the air with the flirtatious red headed lady touting the greatness of the satellite experience....asking "What are you waiting for"?...well, for some of you, waiting has been a very good strategy! EVDO (cellphone technology), for example, has come to many areas close to the larger cities and as a result of much lower costs, rendered satellite internet obsolete.......at least for the present. But for most of you out in the boonies, it's either satellite internet or dial-up, with satellite internet usually providing the better experience....but at more than twice the cost of a phone line and service in most places.

So why is satellite internet (especially consumer service) so lacking in dependability? Here are the most common reasons for the problems and what gets consumers up in arms:

1. Overbooking of the network -
In order to have a chance at making a profit, satellite internet providers absolutely have to group a very large number of subscribers on the same resources (the same satellite transponder, for example)....creating a guaranteed bottleneck and slowdown during the times consumers use the internet the most - afternoons, evenings and weekends.
2. Weather -
There are two places that a weather issue can bring your connection to a standstill - your own outdoor unit or the main equipment at the uplink facility used by your internet provider. What causes the problems is heavy rain in the center of a strong storm just south of your location or at the uplink, wet heavy snow on your antenna or some types of heavy fog/rain mix. When you experience a sudden slowdown or complete halting of activity....you can usually save yourself a call to tech support - it's probably weather.
3. HOGS -
Most internet providers have implemented a number of measures to prevent a user from sucking all the "wind" out of a bandwidth pipe which is shared by hundreds or even thousands of users; however, it is still possible for around 5% of the users within a shared group to monopolize up to 75% of the bandwidth. This issue has improved a great deal by limitations to network access or Fair Access Policies (FAP) implemented by all consumer satellite internet providers and most enterprise operators as well.
Most who are labled "Hogs" by the providers and users who are affected don't appreciate the characterization and offer a defense of "I am entitled to every kilobit that I pay for." The notion of "lets all play nice" doesn't sit too well with a guy who just moved from the city where he had a 7000 x 512 kbps totally open pipe and now is paying twice as much for a 1000 x 256 kbps pipe that actually runs at 800 x 128 kbps on a good day.

4. Equipment failure or poorly aimed dish -
Although there has been a lot of noise on Wildblue and HughesNet forums related to equipment failure, the truth is, these are far less frequent causes of problems than items 1 - 3 above. Yes, Wildblue has had a problem with the manufacturer of its transmitters and HughesNet has had some modem issues in the past, but for the most part, the equipment is pretty dependable......as long as you get a quality installation.

A poor job of installing the outdoor equipment will not always reveal itself for several months.
For example, a pole mounted dish is set in concrete. The bottom of the pole is supposed to have a piece of rebar steel running through the pole so the wind load on the dish above will not loosen the pole at the bottom. This requires more work to get the hole large enough to handle the extra rebar. Imagine a very strong wind gust or sustained wind during a storm putting a very large load on the dish face of a setup without the extra rebar....over time the dish will be spinning like a top and a truck roll will be needed to repoint the dish.

So what can a consumer do about it? There have been many, many, many (I could go on for a bit) attempts to force satellite internet providers to provide an experience that is more like a terrestrial high speed setup. The efforts have been unproductive at best and a total waste of time and money at worst....why?... Satellite owners and providers have convinced Federal regulators that the industry is extremely risky and can't be compared to DSL, Cable or T1 connections. So far they have prevailed and to a degree they are correct - it costs a medium sized fortune to launch a satellite and keep it up and working....and the forces of nature affect satellite connectivity far more than a connection running underground.

VSAT Truth in Advertising?

Sooner or later you will want to find out how your VSAT connection with XYZ company compares to ABC company, which seems to be offering the same service package for internet as your provider does...for about $100 less per month! How can you compare the two providers and packages apples for apples? Let me say that it is nearly impossible...Why? Too many satellite internet providers use very convoluted terms and vague statements to disguise what they are selling you. To put it more directly, some satellite internet companies misrepresent their products performance capabilities- plain and simple.

Here are the terms that are most often abused: contention rate or ratio, Fair Access Policy, Acceptable Use Policy, Terms of Service (TOS) and vague Articles in your Subscriber Agreement. Most businessmen and individuals alike don't check up on the companies they buy from, even if they haven't done business with them before! Why?...because most of us can't imagine how a company could stay in business very long if they were engaging in deceptive or unethical business practices. Well, I forewarn you now...check up on every satellite internet company you intend to do business with - for some reason, the industry draws in a better than average number of downright crooks! It might be the gross dollars involved or the fact that most satellite internet companies require prepayment for equipment and monthly service......I'm not sure, but I am certain this industry has suffered from a lousy reputation for many years.

Back to what you should watch out for:

#1: Contention Ratio or Rate - This is the single most abused term used in both satellite and terrestrial internet comparisons. The reason it is purposfully mis-stated is that there is a lot of room for interpretataion about what the actual contention is, where it starts and how it is figured from one provider to the next. A unscrupulous or desperate internet provider can actually "make" the results come out any way they need to show their service package in a better light than the competition. It would take weeks to explore all of the ways a internet provider can "sandbag" the contention ratio he claims to be offering, but here are some questions to put them on the defensive if they are the deceptive type:
1. Instead of asking what their contention ratio is for a package, ask how many other users you will be sharing the connection with. You will be surprised to hear the answers they can come up with. How, for example could any ISP know how many users will be behind a router? It is actually possible to know with the right software. Listen to the explanation they give and then call an expert that has some independence from the situation.
2. Ask them to allow you to speed test and ping test a connection. Both at their location and at a customer site. Since most customers of a provider expect to be able to use the connection without having a stranger come in to test, it might not be easy to test at a customers site.....but it's worth a try, and some customers are surprisingly agreeable to such tests. If they give you the name of a customer, you can always ask them to run a test on a site like testmy.net or visualware's sites and email the results to you. A company claiming a 25:1 contention ratio and a speed test shows about 50% of the "up to" speeds, is a strong suspect for not trusting!

#2: Fair Access Policies are gaining ground rapidly as the most abusive/convoluted method for Internet Providers to "pack 'em on the transponders." At this time there is no standard set forth by the FCC, to force internet providers to use similar or comparible fair access policies...making it nearly impossible to do "side by side" comparisons. One provider, HughesNet, has made the policy so vague that even long time pros in the industry are pulling their hair out in an effort to advise clients about how to avoid FAP penalties, or slowdown's, if you will. Some type of FCC standard needs to be enforced on all internet providers - we can compare the specifications of two cars can't we?...why shouldn't internet be held to a standard that permits accurate comparison?

#3 Terms of Service and Acceptable Use wording has evolved into a art form of deception among some dishonest internet providers. What they have done is use blanket wording that makes nearly ANY type of usage beyond casual email and browsing a potential "black hat" activity. In other words, the vague wording of these two sections of your agreement with a provider can give them ammunition to throttle your usage or even cancel you. This makes checking on the reputation of a company more important than ever. Make them give you at least 3-5 customers you can call as a reference.

It is my hope that enough pressure will be put on the satellite internet industry from regulatory folks as well as customers that by this time next year it will be much easier to compare internet providers apples to apples, understand what your speeds and performance will be without having to hire someone to sift through it all and know how much bandwidth you will actually be getting for the dollars you are spending.