Gilat's new focus: Aero mobility, backhaul and China

January 13, 2017

Gilat CEO Yona Ovadia says his company is pushing hardest in the aero, maritime and land-based broadband mobility markets, with cellular backhaul a focus -- and around 150 mbps to a hand-held demonstrated with Softbank. The biggest single geographic priority, he said, is China. Credit: Gilat Satellite Networks

Gilat CEO Yona Ovadia says his company is pushing hardest in the aero, maritime and land-based broadband mobility markets, with cellular backhaul a focus -- and around 150 mbps to a hand-held demonstrated with Softbank. The biggest single geographic priority, he said, is China. Credit: Gilat Satellite Networks

PARIS — Satellite broadband hardware and services provider Gilat Satellite Networks is refocusing its business on cellular backhaul and other mobility applications including aero and maritime markets and sidelining its previous accent on the U.S. military market. 

Israel-based Gilat has specifically identified China as the one of its top near-term priorities after striking deals with a Chinese satellite builder and a manufacturer of high-speed trains.

In a Jan. 11 presentation to an investor conference organized by Needham & Co., Gilat Chief Executive Yona Ovadia said Gilat’s patented products, including a new aeronautical-broadband modem, for in-flight connectivity and cellular backhaul are more profitable than the company’s other product lines and would be the focus of continuing R&D spending.

Softbank, Gogo and a second, unidentified IFC customer 

Gilat has already booked in-flight-connectivity provider Gogo Inc. as an inaugural customer for the aero modem, which Ovadia said has demonstrated it can deliver as much as 400 megabits per second to an aircraft. Ovadia said a second in-flight-connectivity customer has purchased the Gilat antenna; he declined to identify the customer.

A test of its LTE model with cellular network provider Softbank of Japan registered speeds of 143 megabits per second.

Ovadia cautioned that these speeds demonstrated only the capacity of the satellite-to-ground link. The actual throughput maximums to a given aircraft or cellular customer will depend on network provider decisions on how to distribute the capacity it has available.

Ovadia said Gilat and competitor ViaSat Inc. have the only dual-mode Ku-/Ka-band antennas for in-flight connectivity, enabling aircraft to switch from a Ka- to a Ku-band satellite smoothly en route.

Some industry officials say Ka-band showsthe most potential for raw throughput. But the installed base of Ku-band satellites around the world — and the decision by Intelsat, Telesat and other fleet operators to field high-throughput satellites in Ku-band — gives Ku-band certain advantages.

ViaSat is better known as a provider of very-high-throughput satellites for consumer and airline broadband in North America. But the company also offers Ku-band capacity it has leased on third-party satellites around the world for its airline customers.

Ovadia declined to compare the ViaSat and Gilat aeronautical antennas, but noted that ViaSat’s technology is used only on ViaSat-controlled networks. “We sell ours to whoever would like it,” he said.

‘If I owned a satellite, I’d be sweating now’

By steering clear of satellite ownership, Gilat contrasts itself with competitors ViaSat and Hughes Network Systems, owned by EchoStar Corp., which own their own satellites as well as provide ground hardware and manage consumer broadband businesses.

Ovadia said that with each day that passes, the value of a given satellite drops as overcapacity from current geostationary-orbit satellites both in service and on the way, plus the potential of low- and medium-Earth-orbit constellations, drives down bandwidth prices.

Ovadia cited forecasts showing the supply of geostationary-orbit high-throughput satelilte capacity more than tripling by 2020. Add in the potential non-geostationary-orbit systems, he said, and supply could increase by an order of magnitude between 2016 and the early 2020s.

The same forecasts show demand for satellite bandwidth rising much more slowly.

“This is where we come in,” Ovadia said. “With the abundance of capacity, we will create new markets. It will create a blue ocean where industry can play, and where we aim to play. Satellite broadband is going mainstream.”

Ovadia said there is no end in sight for the drop in satellite prices — a nightmare for satellite owners but an ideal environment for businesses that will grow with increased applications.

“That’s why we’re not in the satellite business,” he said. “We don’t want the overcapacity. We postpone any buy decisions until the last moment because the deals get better by the day.

“If I owned a satellite, honestly I’d be sweating a bit. There is an abundance of capacity and it’s going to get worse.” 

As a buyer of satellite capacity, Gilat manages numerous commercial and government broadband-deployment projects worldwide. Perhaps its largest is in Peru, where it provided the network architecture and so far has won bids to be the service provider for four of the seven Peruvian regions for which bidding has occurred.

Lining up Chinese customers

In China, Gilat has signed agreements with the China Aerospace Science and Technology Corp. and Synertone for satellite broadband ground hardware, and with the China Railway Rolling Stock Corp. (CRRC), the world’s largest manufacturer of high-speed trains.

Asked about Gilat’s comms-on-the-move product line, which had viewed the U.S. Defense Department as a major customer, Ovadia said: “We are in this market, but it’s not a focus for us.”

Peter B. de Selding