PARIS — Satellite broadband hardware and service provider Hughes Network Systems’ early experience with rural Wi-Fi in South America, Africa and Russia has shown that each installation generates, on average, monthly revenue equivalent to two U.S. fixed broadband subscribers.
Hughes Chief Executive Pradman P. Kaul said it was too soon to say whether this figure would hold up as Hughes expands its community-Wi-Fi service, but that the early results show each installation producing $150-$200 per month.
“Community wifi is exciting for markets to address people who can only afford $5-$10 per month by combing them to get ARPUs of $150-$200 per month,” Kaul said here Sept. 10 during Euroconsult’s World Satellite Business Week.
“This represents our initial experiences in these countries. It varies from country to country, but that is the general ballpark. I think it is sustainable. We’ll learn a lot more in a year or two. But it is a number that is standing up right now.”
One industry official familiar with community Wi-Fi in Mexico said that in some cases it can return $500 a month in gross revenue, but that a provider like Hughes or its U.S. competitor, Viasat Inc., will take home no more than half of that or less after paying local partners and what this official said is often-onerous government license fees.
Another industry official with experience in Brazil agreed. “Some governments, and Brazil is one of them, talk about universal access to broadband but then make it difficult for a service provider to make it a profitable business,” said this official, who does not work for Hughes or Viasat.
Hughes has said that a community-Wi-Fi terminal typically needs to have a capacity of up to several hundred Mbps to afford download speeds of 10 Mbps or more per user. Each Wi-Fi unit can cover a 500-meter area, depending on the local geography.
Hughes’s Russian partner, KB Iskra, has installed high-power Wi-Fi access points to provide coverage of more than 1,000 meters from the terminal, enough for an entire small village.
“Typically, each VSAT supports 20 to 30 subscribers, each paying on average 50% less each month than individuals with home-based service in urban areas, thanks to the cost-sharing model. The company has installed more than 600 shared VSATs, and now provides affordable service to almost 20,000 regular Wi-Fi users who would have otherwise remained unconnected,” Hughes said of the KB Iskra experience in eastern Russia.