Cable edge-outs, fresh fiber builds pose bigger threat than FWA, Viasat says

Fixed wireless access (FWA) deployments and subscriber gains may be ramping up, but they don't pose as big a threat to Viasat's satellite broadband business as do new fiber network builds in rural areas, a top Viasat exec says.

"It turns out fixed wireless has not really been a material factor in changing the market for satellite broadband in the US," Mark Dankberg, who serves as both chairman and vice chairman of Viasat, said Thursday on the company's fiscal Q3 earnings call.

Cable network edge-outs and new fiber network builds "are probably more of a factor," he said.

The launch of the first ViaSat-3 satellite, set to provide coverage in the Americas, has slipped to late summer 2022. Pictured is an artist rendering of a ViaSat-3 satellite.
(Source: Viasat)

Those comments take shape as both telcos and cable operators gear up to upgrade networks to fiber-to-the-premises (FTTP), deploy FTTP networks in greenfield areas and adjacent markets, or look to expand to underserved or unserved areas using funds from the Rural Digital Opportunity Fund (RDOF) and other government subsidy programs.

Dankberg further allowed that a growing group of consumers using mobile as their primary home broadband service is also playing a competitive role.

Viasat's view of FWA could change in the months ahead as deployments expand and operators draw more customers. Just yesterday, T-Mobile proclaimed that FWA is "ready for its primetime moment" as the company's base of FWA customers climbed to almost 650,000 at the end of 2021, versus 422,000 at the end of Q3 2021. Verizon is also gaining traction with FWA – it ended 2021 with 228,000 subs after tacking on 78,000 in Q4 2021.

How much of a competitive impact Viasat's residential satellite broadband service is seeing from FWA or even Starlink is difficult to pinpoint. Viasat no longer reports US subscriber numbers as it expands that piece of the business globally. However, the company did note there was a "slight decrease" in its US subscriber base in its fiscal third quarter as Viasat reallocates satellite bandwidth for mobile services.

Viasat execs aren't overly concerned about a new, faster and pricier "Premium" tier from Starlink that will start to reach business customers and other high-capacity users in the second quarter of 2022.

On the enterprise side, Viasat tends to be a bit more vertically integrated in each market where the company adds value beyond providing the core broadband pipe, Dankberg said. "The types of plans they [Starlink] are describing ... are interesting, but we don't see them having any impact on our forward-looking outlook," he added.

ViaSat-3 slippage

Viasat's plan to provide global coverage with a set of new, high-capacity ViaSat-3 satellites has fallen a little behind schedule. The launch of the first of three satellites, set to cover the Americas, is now expected to happen in the late summer rather than in the first half of 2022.

The culprit? A "modest slippage in our supply chain" fueled in part by the pandemic, Rick Baldridge, Viasat's president and CEO, said. "We've been working through limited availability of specific, critical skill workers."

But if the current plan holds, Viasat hopes to have the first ViaSat-3 satellite in service before the end of 2022. Future ViaSat-3 satellites are poised to cover the European, Middle East and Africa (EMEA) and Asia-Pacific regions.

Execs said the company is making good progress with alpha testing of a space-ground integration system for ViaSat-3, and they don't expect the scheduling delay on the first ViaSat-3 satellite to materially impact Viasat's financial guidance.

The payload module for the second ViaSat-3 satellite (for the EMEA region) is at Viasat's facilities, with about 95% of the payload units now installed, the company said.

Financial snapshot

Viasat posted record Q3 revenues of $720 million, up 25% year-over-year, propped up by its recent acquisitions of RigNet and Euro Broadband Infrastructure (EBI), as well as growth in its in-flight connectivity (IFC) business.

Its satellite services unit saw revenues climb 40% to a record $310 million, while government systems revenues rose 2% to $270 million.

Commercial Networks revenues rose 55% to $140 million, driven by mobile IFC terminal deliveries and the performance of its ground antenna systems business.

Viasat expects its proposed deal for Inmarsat to close by the end of 2022.

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• The Divide: What Viasat's Evan Dixon wants DC to know about satellite broadband
• Viasat wins part of US military's 5G testing contract

— Jeff Baumgartner, Senior Editor, Light Reading

A version of this story first appeared on Light Reading.