Huge Battle Shapes Up for Satellite Broadband

Huge Battle Shapes Up for Satellite Broadband



Robotics -Huge Battle Shapes Up for Satellite Broadband

HughesNet and WildBlue now are positioned for a head-to-head contest for leadership of the U.S. satellite broadband market, say researchers at Northern Sky Research. Hughes has long held the title of leader in terms of subscriber base, reportedly with more than 400,000 clients, but WildBlue's rate of growth to date has been faster than Hughes, NSR says.

WildBlue had 300,000 consumer broadband subscribers at the end of 2007 and is said to be growing faster than Hughes. Leading observers predict that market share will be nearly 50-50 by the end of 2008.

WildBlue has the lowest-priced entry level services, starting at $49.95 a month, compared to HughesNet at $59.99 a month.

NSR researchers note, however, that the HughesNet Home Plan has a nominal upper download speed of 1 Mbps compared to 512 Kbps for WildBlue's offering. Comparing higher speed plans, HughesNet's services on the Spaceway-3 satellite now either meet or beat WildBlue's offers, NSR says.

NSR believes that HughesNet has a very slight edge in the game to sign up new subscribers based on their service plans. WildBlue may still win out for those needing just a basic service with its lowest cost-entry level offer. However, many potential subscribers will use pricing and speeds for cable modem and digital subscriber line services as their reference in choosing a satellite offer, and the fact that all of HughesNet's plans have a nominal maximum download speed in excess of 1 Mbps will be a powerful selling point, especially when the cost differential between a HughesNet plan and a WildBlue plan never exceeds $10 per month, says NSR.

Up to this point WildBlue has had some capacity issues in some regions, but that should not be a near-term issue now that WildBlue has added new capacity. Longer term, more capacity on higher-power satellites probably is necessary, NSR suggests.ViaSat ( News - Alert) is a logical partner in that regard.

Hughes, despite the launch of the new high-power Spaceway satellite, might also face capacity constraints as well, as it migrates traffic from leased transponders onto its owned satellite.

Even the Spaceway series of satellites, as impressive as they are today from a technical point of view, will be quickly bypassed in terms of cost per bit for the service Hughes can offer, NSR argues. In that regard, WildBlue and Hughes are in the same situation as major cable operators and telcos facing each other in local markets. The standard for bandwidth is set, in large part, by what competitors are bringing to market.

In revenue terms, VSAT networking service and customer premises equipment (CPE) revenue were more lucrative by twofold as of the end of 2007 for the industry, but single site satellite broadband Internet access revenues should exceed that from VSAT networking in just four to five years. In other words, consumer broadband now represents the immediate opportunity for growth.
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