A huge rectangular box rises 25 feet above the factory floor at Boeing Co.’s El Segundo satellite plant, making the people below it look like ants.
In a few months, the hopes of Carlsbad-based ViaSat Inc. — a $1.4 billion Carlsbad satellite technology company — will ride with that box into space.
Those hopes include market expansion, greater revenue and the chance to get one step closer to an ultimate goal: becoming a global broadband provider.
For now, though,the satellite called ViaSat-2 is all “buttoned up” — in its most compact form for its rocket ride. Its solar arrays are folded tight against the satellite bus (or body) like some huge Japanese folding screen. Once extended, the arrays will stretch half the length of a football field.
The satellite — which will have double the data capacity and seven times the geographic coverage of its predecessor, ViaSat-1 — has a proprietary design.ViaSat (Nasdaq: VSAT) and Boeing (NYSE: BA) banned photography during a factory visit Jan. 10.
Launch Site
Soon the partners plan to load the satelliteon an airplane bound for South America, specifically French Guyana. From there, France-based Arianespacewill handle the launch, now scheduled for March or April.
ViaSat plans to spend part of 2017 getting the 14,000-pound payload from an initial orbit to its final orbit — the one it needs to start making money for company shareholders. If all goes well, ViaSat-2 will be serving the Lower 48 states, Mexico, Central America,Canada and a good chunk of the North Atlantic in the fourth quarter of 2017.
The endeavor — satellite, launch, insurance and related earth station infrastructure — will cost ViaSat between $500 million to $600 million, a company spokeswoman said.
New Vertical Markets
The launch will continue the Carlsbad company’s transition from a hardware provider to a company that also provides broadband services. Indeed, the launch will further reposition ViaSat in its current markets and move it into new ones.
It’s not just new geographic markets,though coverage will expand by a factor of seven. It’s new vertical markets, as well.
“You’ll see us starting new businesses on ViaSat-2 that you don’t see today,” executive Keven Lippert told reporters Jan. 10.
In the future, more consumers will be using satellite-based Wi-Fi. “You won’t know it’s a satellite,” Lippert said. People will know what’s behind their internet connection only if they are reminded with a phrase like “Satellite Inside,” the executive said, riffing on chipmaker Intel Corp.’s trademark.
Increasingly it looks like ViaSat’s competitors will not just be other satellite providers, but cable companies as well. ViaSat-2 will be able to compete with low- and mid-tier cable service, said Lippert, ViaSat’s executive vice president for satellite systems and corporate development.
“There is a lot of data [showing] people don’t have a choice for broadband,” he said. If things go right, ViaSat could bring competition to a population that has never known it.
Also around the corner, in 2019, is the first ViaSat-3 satellite — which will be even more powerful than ViaSat-2.
Asked about its market position, Lippert said that ViaSat has the benefit of being in multiple markets. In addition to consumer, there is aeronautical.
ViaSat is having a banner year providing Wi-Fi for airlines, providing service to customers such as United Airlines, JetBlue and Virgin America. But the growth story this year is in-flight service with American Airlines.
The U.S. government is “becoming a pretty significant customer for us,” said David Abrahamian, ViaSat’s director of space systems. The company recently got work providing Wi-Fi for Air Force One and other aircraft transporting top U.S. government leaders.
As for the new markets? ViaSat is looking atthe oil and gas industry. It is also experimenting with community broadband connections in Mexico. Trials have been “very successful,” Lippert said.
Military Work
ViaSat-2 has the potential to do “wonders” for ViaSat’s worldwide mobility network, said Mike Crawford, an analyst with B. Riley & Co. LLC. Crawford, however, prefers to look at what’s coming next.
“More exciting for me is what they can do for the military” when the company gets ViaSat-3in place, Crawford said.ViaSat-3 is not a single satellite but a constellation: current plans call for three of them.
The first of the ViaSat-3 satellites is scheduled to go up in 2019, to an orbit that will cover all of the Americas: North, Central and South. A second ViaSat-3 is planned to cover Europe, the Middle East and Africa. Plans call for a third covering Asia and the Pacific. All will handle data much faster than ViaSat-2, and have more capacity.
Why is it a boon for the military? Such aconnection could easily move data regarding “where the bad guy is to the person who needs it” — that is, friendly troops on the ground, Crawford said.
B. Riley does business and seeks business with companies that its analysts cover. Also, a member of Crawford’s household has a long position in the stock, according to a disclosure on a recent B. Riley research report.
ViaSat-2 could be the start of something really big, said ViaSat’s Abrahamian.
“We’re evolving to be the first global internet service provider,” he said.
Things look pretty good in the short run, he said at another point: ViaSat is “forecasting decent growth this year” over its $1.4 billion in 2016 revenue.
