ViaSat (WildBlue) is launching a new satellite broadband service, promising up to 12 Mbps, and priced in line with cable modem service, using its newly-launched high-capacity satellite. It is a really big deal for rural consumers, and should be a big deal for policymakers as well.

HughesNet also plans a launch of a new satellite in 2012 that should perform along the same lines. And it would be hard to ignore the big changes these twin developments will represent. Up to this point, satellite broadband has been a decidedly “inferior” alternative to much-faster cable modem and digital subscriber line services.

That has had important implications in all discussions of broadband policy in rural areas. Satellite has, until recently, simply been dismissed as a key provider of rural broadband services, right now, at lower capital investment costs than are possible for any other form of network.

The downside, though, has been the cost of service and the limited bandwidth. The new WildBlue service significantly addresses both issues, and the new HughesNet service to launch in 2012 (assuming a successful satellite launch), will add even more capacity.

It might be stretching matters to claim that the new WildBlue service offers “satellite broadband as fast as fiber,” though some are going to say that. But it is no exaggeration to say that
WildBlue’s ability to service at speeds up to 12 Mbps broadband for $50 a month, in Colorado, changes the strategic background.

By way of comparison, WildBlue’s existing 400,000 nationwide subscribers are paying $80 a month for 1.5 Mbps service. So the new service represents a major disruption of the satellite broadband value-price relationship.

The new generation of satellites also will have important implications for the economics of rural broadband. Up to this point, it has been inconceivable to position satellite broadband as a reasonable alternative to either cable or telco fixed-line service, if the standard of comparison is 10 Mbps, for example. This is a disruption.

Granted, it likely never will be possible, for technical reasons, to envision a mass market service running at 50 Mbps or 100 Mbps, for example. But satellite broadband now appears to be a competent alternative to rural digital subscriber line or cable modem services for the first time.

Some time in 2012, WildBlue will face new competition from HughesNet as well. The big issue, some of us would think, is whether HughesNet will match WildBlue pricing. The big issue, or course, is that satellite transponder capacity, even on such advanced satellites, will come with limitations, in terms of how many customers each firm can serve.

By some estimates, if the typical bandwidth served up is “up to 12 Mbps,” WildBlue might top out at about 1.5 million customers in total. For satellite customers, and potential users in isolated rural areas, this is a very big deal.

WildBlue’s new service will soft launch in a few other states, including Wyoming and Nebraska, in the coming weeks and should be available nationwide by the end of February.

“Historically, satellite has been for the un-served,” said WildBlue chief executive Tom Moore. “We think this will transform that marketplace.”

ViaSat says the total bandwidth capacity of ViaSat-1 exceeds the combined data rate of all current Ku-, Ka-, and C-band satellites now serving North America. ViaSat could deliver 12 Mbps

The new satellite services should lead many rural customers to re-evaluate their options for broadband access, on one hand dramatically increasing the quality of experience, and at the same time significantly improving the value-price relationship.

At the same time, the new services should have an impact on thinking about the financial return from further investments in fixed-line broadband infrastructure in highly-remote areas, in fact making service extensions to very-remote areas highly risky.

Also, the new services instantly reshape the traditional arguments about how satellite broadband fits in to the rural broadband delivery infrastructure. If two existing providers can deliver 12 Mbps today, for about $50 a month, that might be the most effective and efficient way to get better broadband to customers, right now.

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