ViaSat-3 satellite service launch slips to early 2023
The first leg in Viasat's plan to provide global coverage with a trio of high-capacity broadband satellites is enduring another delay. The latest slip will push the service launch of the first ViaSat-3 satellite, slated to provide coverage in the Americas, to early 2023.
Viasat had anticipated the first ViaSat-3 satellite to enter service by the end of 2022, but the company now expects that to occur around January 2023 (during the company's fiscal fourth quarter), Viasat President and CEO Rick Baldridge said last week on the company's fiscal Q4 2022 earnings call.
He said Viasat has been able to mitigate the delay by conducting testing on the ground that would normally be done in orbit. Of note, the company said it completed successful ViaSat-3 ground network "alpha" testing over existing satellites, and that ViaSat-3 had entered a "thermal vacuum chamber" (which exposes the satellite to vacuum and the extreme temperature ranges the satellite will experience in orbit) as the final stage of payload testing.
"Alpha testing on the ViaSat-3 ground network has gone very well and we're on track to have sufficient infrastructure in place to enable commercial services, which we were targeting for early in our fiscal fourth quarter – within a week or so we were planning last quarter," Baldridge said.
Viasat wasn't specific about the timeframe of the delay, but it equates to a slip of about six weeks, B Riley analyst Mike Crawford estimated in a research note. "VS-3 initially was envisioned to go into service in CY20 and now is nearly three years delayed," he added.
Baldridge noted that Viasat expects its residential business to decline further in the first three quarters of fiscal 2023 as more existing bandwidth from satellites such as ViaSat-2, a bird launched into orbit back in June 2017, is allocated to its fast-growing in-flight connectivity (IFC) business.
"But in the fourth quarter, we're expecting that to turn around and start growing again," he said. "And we do have expectations of growing the residential subscriber count in the US as well as internationally going forward from there."
The first ViaSat-3 satellite will cover the Americas. The second will cover Europe, the Middle East and Africa (EMEA), and the third will cover Asia-Pacific. Viasat has generally expected a six month period between ViaSat-3 launches, but it's possible that those timeframes could be moved up a bit.
Relieving a capacity crunch
ViaSat-3 will provide critical, additional capacity for the company's various connectivity and data services, including residential broadband. The growth of Viasat's fixed satellite home broadband service has been in a holding pattern as the company taps into existing satellite capacity to help fuel the IFC business.
"Until ViaSat-3 (Americas) enters commercial service later this fiscal year, continued growth in domestic IFC demand will continue to pressure our US fixed broadband business," Viasat explained in a letter to investors.
Viasat believes the capacity packed into the ViaSat-3 satellites will support faster speeds, enabling it to deliver tiers well above those that top out at about 100 Mbit/s today.
"Our most promising plans are around higher quality and more video streaming ... That'll be one of the things that we do with ViaSat-3," Baldridge said. "You'll see us also begin testing on higher speed plans than we have now. Right now we topped out at 100 megabits per second. We'll probably go to meaningfully higher speed plans."
Viasat also anticipates using the additional capacity from ViaSat-3 to put the company in better position to participate in US government subsidy programs focused on providing broadband access in rural areas and to support initiatives such as the Affordable Connectivity Program, which grants monthly discounts of up to $30 on Internet access service to qualified homes (or up to $75 per eligible household on Tribal lands).
Viasat posted record fiscal Q3 2022 revenues of $702 million in fiscal Q3 2022, up from $596 million in the year-ago quarter. Growth was aided by its recent acquisitions of RigNet and Euro Broadband Infrastructure (EBI).
Revenues from Viasat's US fixed broadband service declined slightly in the quarter as the IFC segment fueled growth at Viasat's satellite services division.
Viasat ended the quarter with 1,830 aircraft in service, up 40% year-over-year, with relatively recent wins coming from Breeze Airways, Porter Airlines, Virgin Atlantic and Southwest Airlines.
Viasat currently expects to close its pending acquisition of Inmarsat by the end of calendar 2022.
— Jeff Baumgartner, Senior Editor, Light Reading
A version of this story first appeared on Light Reading.
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