Satellite Broadband Going Strong

Satellite broadband provider Hughes Network Systems has stormed back into ISP-Planet’s ISP rankings, reporting 401,000 broadband customers as of March 31, 2008, which makes it 18th in the U.S.

“Within the next few weeks, we’ll publish Q2 numbers,” notes Mike Cook, senior vice president of Hughes. “The headline is that satellite broadband is now a proven and accepted part of the internet landscape.”

But aren’t there some things that you cannot use satellite broadband for? Latency on a satellite connection can be half a second. “We cannot do much about latency for a twitch game, but we believe that the experience of a user of satellite broadand is comparable to that of a user of a terrestrial system for the general applications that people use on the internet.”

So, browsing and e-mail work. What about VoIP? “We absolutely have a huge number of customers using the service with Skype and other common applications. We don’t specifically support them but we also don’t curtail the use of them.”

Hughes does try to curtail the use of video. “We don’t recommend people download movies and very large files. We don’t favor people using P2P either.”

But the company does have a download window. Any files downloaded between 3 AM and 6 AM don’t count towards the daily usage allotment.

A more creative and usual attempt to solve this issue, one other ISPs may want to imitate, is this: the company has a deal with Blockbuster to deliver the company’s Blockbuster Total Access plan to Hughes users. Users can receive movies through the mail and either return them through the mail or just go to a Blockbuster store.

And the company is working on the latency issue. “We’ve been at this for a long time now and we believe we’re good at it. Many years ago, we moved into fully bi-directional systems. We’ve put a huge investment into accelerating the protocols. Although there is an inherent physics issue [the distance between the satellite and the user has to be traversed twice, at no faster than the speed of light], we are mitigating latency with such strategies as header compression, data compression, and pre-fetching.”

The business plan

The company knows its target market, a niche of 12 to 15 million American households with no access to broadband. “Even if this number goes down by 25 percent, we’re left with 8 to 10 million households,” says Cook. “We believe we can grow significantly. Our penetration is limited by awareness as much as by anything else. Ours is a profitable business that’s generating cash.”

The company recently launched its Spaceway satellite, which is allowing it to offer greater bandwidth. But the original plan was for three satellites, not one. “There were three Spaceway satellites built,” Cook explains, “when we were a sister company of DirecTV. When we were sold, DirecTV kept two Spaceway satellites for themselves.”

The experts at TMC are predicting that Hughes’ rival, WildBlue will catch up with it and that Hughes will experience capacity problems. Such claims would be easier to judge if WildBlue published subscriber data, but it does not. I suspect that Hughes has a significant lead and that both services can grow.

Growth prospects are being improved by the odd behavior of the incumbents, who seem to delight in anti-consumer behavior. BBR notes that Embarq recently said that selling data on browser habits “empowers users” and it notes that Time Warner Cable is calling a contract that imposes new usage caps a “price lock guarantee.”

Wild Blue has been in business since June of 2005. Hughes dates back to the aviator himself. Hughes’ network footprint, including networks using Hughes equipment, covers the entire planet earth.

Cook notes that the company has operations in Europe and North America, and that the European network can also offer service to the top third of Africa. In developing nations, he says, “we work with people on the ground who have the appropriate licenses. Most are business-oriented, not consumer. Business demand comes first. Where license fees make the service expensive, [business customers have] the ability to pay for the service.”

The company is adding services to make its offering more attractive. For example, it recently added identity theft protection, and it uses Tucows e-mail, which is going through an upgrade of its own.

If there’s a problem, Cook says, the company sends out the same techs it sends to business customers.

Hughes and the ISPCook says that Hughes has an agent program that offers referrers a flat fee plus an ongoing payment.

The only limit is that any user must have a clear view of the southern sky, he notes, because all of the satellites are in equatorial orbits. He says that typically 5 to 6 percent of prospects have LOS problems that cannot be solved. Most, he says, can be solved with a pole mount or an installation on a roof. Obviously, however, your local geography will have a significant impact on these numbers. If you’re in the plains, almost everyone should be fine, but you might have issues if you’re located in the Rocky Mountains or the Appalachian Mountains.

Hughes accomodates larger ISP partners, such as EarthLink and Embarq, but asks smaller ISPs to conform to specific business models.

Asked whether Hughes could supply bandwidth to a remote wireless access point that, in turn, serves many customers, Cook replies, “we would certainly be able to support that configuration—it wouldn’t be one of the standard plans, but we’d be happy to put something together.”

Article adapted from ISP-Planet.

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