Richard A. Baldridge, ViaSat’s president and chief operating officer, said the company is determined to launch 1-Tbps ViaSat-3 satellites over Europe and Asia even if the Eutelsat partnership does not materialize and that no Asian partner is found. He said ViaSat-3 was on schedule and on budget, and that ViaSat-2, launched June 1, should reach its geostationary-orbit position in October. A high-resolution photograph of ViaSat-2 is in the upper right of this picture. (Just kidding) Credit: ViaSat

Key takeaways:

— ViaSat-2 has completed its chemical burn, now on electric. All OK, it will reach GEO slot in October. You’ve likely never seen a detailed photo of ViaSat-2 and won’t now.

— 2 ViaSat-3 satellite payloads & platforms are progressing on schedule and on budget at ViaSat and Boeing.

—ViaSat wants Eutelstat ViaSat-3 partnership but concedes political headwind and will go it alone in Europe if necessary.

— ViaSat-3 over Asia, still not under contract, presents market challenges but necessary for full-network coverage & future markets including military. The business case does not assume access to India or China.

BRUSSELS — ViaSat Inc. is determined to complete its three-satellite ViaSat-3 project and to enter the European and Asian markets even if it cannot find regional partners, ViaSat President and Chief Operating Officer Richard A. Baldridge said.

The company remains focused on a joint venture in Europe with Eutelsat but acknowledges that Paris-based Eutelsat is exposed to pressures that render a ViaSat-3 agreement difficult.

In Asia, ViaSat has not found a partner. But there too, he said, ViaSat can find its own orbital slot and will pursue the project — with a more-powerful satellite, not a copy of the first two ViaSat-3s — come what may.

What is the current ViaSat-3 schedule and cost estimate?

We are still working toward our original schedule to launch the first ViaSat-3, over the U.S., in late 2019 and to enter service in 2020. We are targeting that the second, over Europe, would launch about six months after the first one. And as far as the cost, it’s got the inherent risk associated with invention.

You’re not seeing anything in Arizona, where you’re making the ViaSat-3 payloads yourself, that would cast doubt on that schedule?

Things in Arizona are actually going well. That’s for the payload. The biggest challenges are often things you don’t anticipate. There are some issues with suppliers that are now on the critical path. They’re not part of the payload component, but are part of the integrated component.

I had thought the payload, which is new, and you’re new at it, would be where the issues came.

So far it’s going well. For instance, we’ve got engineering models of our thermal heat pipes, under load and going through cycles. Thermal was one of the focus areas when we started the program.

ViaSat-3 has deployable radiators?

Yes.

ViaSat 3 is registered in the U.S., or in the U.K. like ViaSat-2?

It’s being launched under a European filing. We’re still evaluating options.

On the ViaSat-3 program cost, I had about $1.4 billion spread over three satellites. This assumes synergies between the first two.

We’ve said publicly that the first two VS-3’s would cost about the same as ViaSat-2, including spacecraft, launch, insurance, and initial ground infrastructure. The first two have very similar payloads, but different configurations.

We are still working on the design and configuration of the Asia-Pacific satellite. We may decide to further integrate some of the modules on that one. We are going a step further in payload integration on that one. It will have another round capacity gains.

So I should not use $1.4 billion as a ViaSat-3 program cost?

Not for three satellites. If we stay on target and the first two cost similar to ViaSat-2 then the first two alone will be close to $1.3B. That’s where we were aiming. As we’ve said before, we think we have access to all the funding we need for all three satellites.

It sounds like an endless capex cycle.

No, not an endless capex cycle. If we can do some further integration & improve capacity and productivity, that would make complete sense. We are mass limited, so further integration can improve overall payload capability. 

ViaSat-2 was also mass limited, so we ended up with a hybrid propulsion system. We traded chemical propellant for additional payload, which added capacity and coverage.

ViaSat 2 is only partly electric.

Yes, the initial orbit raising is via chemical propulsion and the balance is electric, with electric station-keeping. So far, orbit raising is working just as planned.

How long until ViaSat-2 gets to final GEO position?

We finished the chemical part of the orbit raising and the current assessment is October arrival on station. Our co-passenger [Eutelsat’s all-electric 172B] wasn’t determined initially, and turned out to have greater mass than most. A lighter co-passenger would have allowed more chemical propellant and a shorter overall orbit raising time. But we’re still happy with the trade-off, given that we’ll have the use of the payload capability for far longer than the difference in the orbit raising time.

You think this is ViaSat-2? It’s not. ViaSat, concerned about IP theft, has scrubbed public images of most of the interesting features. Credit: ViaSat

When can we see pictures of ViaSat-2? Why is it still under a burka?

Because we’re really protective of our design and don’t want to expose any more than we have to.

The logo you’re showing in your ViaSat-2 PR campaign in fact is not the actual ViaSat-2.

No, and neither was the photo you saw on the cover of Aviation Week. We obscured the sensitive parts.

This may be the first secret commercial satellite. We can’t even see it.

What you will see is the performance it provides once in service, which will be as good or better than we said. Remember when we advertised ViaSat-1 as a 100-Gbps satellite. We delivered 140. Given the results of the ground testing on ViaSat-2, we’re optimistic we’ll get the same kind of effects there. I think the end result of ViaSat-2 will be better than 300 Gbps.

We’re optimistic ViaSat-3 will also out-perform, but it’s still early in that program.

You plan ViaSat-3 over Asia — an atomized market, lots of national satellites including HTS satellites, and a couple of aggregators like APT with China — plus big market-access issues.

Right. That makes Asia Pacific more challenging than the Americass and Europe, Africa, Middle East, and western Asia.

Being able to move capacity from one region to another depending on where demand is strongest will be important for all future HTS satellites, but especially for the ViaSat-3 satellite to be stationed over Asia. The satellite has not been contracted, but ViaSat insists it is key to providing a global network with the ViaSat-3 spacecraft over the Americans and Europe. Credit: ViaSat

So how to succeed in Asia?

This might be the lowest-yielding of the ViaSat-3 satellites. Not everyone agrees with me on this. But it’s really important, in terms of the network effect, to have global coverage. So how we design it is really important. Flexibility to move bandwidth around within the Asia Pacific region is an important component of getting the most value from the bandwidth. We won’t have to worry about stranding bandwidth in any particular geographic market.

So we should have a leg up on where we deliver capacity and where the demand is. It may be that demand shows strength in Indonesia. Or Australia.

Australia already has NBN.

There may be an opportunity for us to partner with them for future demand beyond what the two NBN satellites can serve. But it’s too early to tell. That’s an example of how the flexibility is really helpful.

So despite the national HTS systems and the other Asia-specific issues, you think there is a sufficient accessible residual market remaining to justify the satellite when added to the network effect.

We believe there is demand in the APAC market. More capacity is needed to serve aviation, maritime, U.S. government, enterprise and residential use cases. This demand is across geographies.

Don’t you need a partner and an orbital slot?

We have been working on that for a while. I think we’ll have a Ka-band orbital slot with no problem. But having regional partners is important to us. Also we think the U.S. government can be a big user of our capacity.

We are not counting on either China or India – even though both are very big markets that could certainly benefit from our service.

We think India should love us. We are spending time there. We tell them: We can provide 100 mbps service at attractive price points. We believe we have a unique capability in terms of speed, total amount of bandwidth we can deliver there, and price points.

You think that makes you ISRO’s friend?

We understand that a national space industry is important to India and that’s ISRO’s mission. We think we can bring a really valuable capability to India, help drive economic growth, and ISRO can still achieve its mission. But, it’s going to take some work to reach that kind of understanding.

Regarding the second ViaSat-3, over Europe: Your prospective partner, Eutelsat, appears divided on whether to join you. It’s no easy sell for them, politically.

I know it’s not easy for them. We started with the idea that Europe is a very attractive market and we want to be there. We went to Eutelsat and said: “We are coming to Europe. Our preference is to partner and it’s worth jointly figuring a way to work it out.” That’s how we’d like to expand globally – by partnering vs “invading” each market. If they don’t want to partner, that’s OK. But I am not coming without asking for a partnership.

It is a tricky situation, but we’ve had a very good, longstanding relationship to build on. We had strong support from [former Eutelsat CEO] Michel de Rosen, and if anything, even stronger support from [Eutelsat CEO] Rodolphe Belmer. They have been very data-focused, objective, and are trying to do the right thing.

But we’re going to show up with a helluva lot of capacity over this region at a very low cost. They can leverage that to build a stronger business together than either of us can do alone – and ultimately that should be a very good thing for Europe.

ViaSat and Eutelsat have already agreed to a joint venture employing their current Ka-band assets including the ViaSat-1, ViaSat-2 and Eutelsat Ka-Sat spacecraft. An agreement on ViaSat03 is still pending. Credit: ViaSat

It’s Eutelsat’s orbital slot that would be used?

Yes, that’s a part of the non-binding agreement we’ve reached so far, but if that doesn’t come through we have alternatives.

And the Eutelsat partnership in ViaSat-3 is not a sine qua non for your entry into Europe.

No. But I did a study early in my career on JVs and their probability of success. One of the key metrics was: Are the companies of similar size and in similar markets? It turned out to have the highest correlation of success. Most JVs fail. When you look at us and Eutelsat, we’re not that far apart. And we appreciate the pressure’s they’re under.

The political environment is very different in Europe. But, ultimately we both think this is good for Eutelsat, good for Europe and good for us.

We’re also making a significant effort to build our own European presence to make things easier. We just opened an office in Amsterdam. There is some great engineering talent there. We have been working well with the European Space Agency, and increasing the number of individual ESA member states we are supporting, including the Netherlands. We’re working with a chip company there on our phased-array technology.

The antenna company that we acquired in Lausanne [Switzerland] was four people when we arrived, and we’ve grown it to 35 people now – with a much broader array of technology. They do work for our U.S. divisions there, too. We’re doing a bunch of development work in this space.

We have worked with ESA to help them establish a program that might at some point support a spacecraft bus capability that could host our payloads.

Most of our work with ESA has been going through our Swiss office.

But whatever your final choice of a platform builder for the Asia-Pacific ViaSat-3, the Boeing 702-HP, to be used for the first two ViaSat-3s, could do the job?

Absolutely, and in fact we are very happy with the work from Boeing. I have no complaints; they have been great to work with.

Eutelsat says it will decide by the end of the year on whether to join with you on ViaSat-3. That schedule is not slowing anything down?

No, that’s ok. We’re still working on the satellite on our original schedule. We can reach an agreement with Eutelsat when we’re both ready – or we can continue on our own, or with other partners.

Any early conclusions from the JV with Eutelsat on their Ka-Sat consumer broadband system, which has struggled, on the differences between U.S. and European markets?

We’re in the data phase right now. It will take a little time, but I can tell you we think we can help make things better. That’s our initial conclusion. And I think the way we have started working together to solve this problem improves the chances of working together on the long-term, ViaSat-3-based service.

How about regulatory assistance in Europe in the way of broadband expansion and reducing the digital divide?

We don’t need much on the current services offered via the JV.

Eutelsat has been less communicative about Ka-Sat results recently.

Their go-to-market channel relies on undercapitalized distributors — and Rodolphe understands this.

If the distributors can’t make money, for whatever reason, it’s hard to build a growing, profitable, enduring business. It’s not sustainable. So there are some things we can change that reflect more of our U.S. retail model that we believe will improve things over time as we can roll them out.

Would you give the Eutelsat tie-up with ViaSat 3 a better-than-50% chance?

Of course, or we wouldn’t be doing it. It’s not 100%, but we’re working jointly to get there.

Services seems to be your future. So when do you sell your antenna business?

We’re not planning on selling the antenna business. That doesn’t mean that others don’t want to acquire it. But we aren’t planning to sell it. It performs well for us financially. And parts of it are very strategic.