Years ago, I did a study on terrestrial versus satellite broadband. At the time, not so long after the failure of initiatives such as Teledesic, it was easy to be negative about satellite broadband. Satellite broadband was slower and more expensive than terrestrial alternatives and terrestrial broadband speeds seemed to have much more room to grow more quickly. Now, there are nearly 1 million North American satellite broadband subscribers. Things have gone well for Hughes and WildBlue (now part of ViaSat), and likely will continue to do so.

So why was I wrong? In part, Ka-band technology has made a real difference. A Ka-band transponder can serve many more subscribers than a Ku-band transponder. As ViaSat CEO Mark Dankberg has commented, early satellite broadband put too many subscribers on a transponder and degraded the quality of the product. Current Ka-band technology, whether implemented by Hughes or ViaSat, has eased the bandwidth crunch. Likewise, the growing capacity of dedicated broadband satellites has made a real difference. Hughes’ Spaceway 3 satellite had 10 times the capacity of the Ku-band band satellites it replaced. The Hughes’ Saturn and ViaSat-1 satellites will have 10 times the capacity of Spaceway 3. According to Dankberg, such an order of magnitude increase will be needed every few years to provide sufficient capacity to keep up with terrestrial broadband competitors.

This assessment confirms my original concerns. In fact, one of the problems that satellite companies faced in trying to get Stimulus funding was the difficulty of promising the 100 megabit-per-second (Mbps) speeds for satellite broadband that are an FCC goal. Of course, speeds of 100 Mbps are common overseas than in the United States, but it’s a laudable goal. So it remains true that satellite broadband has to work hard to stay competitive.

I thought that continued terrestrial broadband expansion would displace satellite service. Terrestrial build-out has continued, but the slow pace has made satellite broadband the fastest option in some parts of the United States. But many consumers, such as my mother in rural Florida, seems to favor slower terrestrial service over satellite options. She refused satellite broadband as too expensive and stuck with a slower terrestrial dial-up connection until the phone company finally offered her DSL.

But this pattern of adoption is changing as more people have access to broadband connections and more services are accessible by broadband. At the same time, people may leave an area where they had become accustomed to broadband and find in a new location that satellite is the only option. It is becoming harder for consumers to wait for terrestrial broadband or rely on slower terrestrial service, as the number of people who “have to have” broadband has gone up, and with it, the number of satellite broadband subscriptions.

The final unexpected fact was that many satellite broadband subscribers are not living down a rural Florida road like my mother. In fact, the picture is much more granular. You may get DSL and your neighbor may not. Even today, a surprising number of people in suburban and metropolitan areas cannot get broadband service and turn to satellite. WildBlue has suffered from an oversupply of capacity in some areas and a shortage in others, reducing its ability to add subscribers because the company misjudged where the business would be. Hughes, with leased transponders and a more flexible Ka-band satellite, has been more able to shift capacity, but the company also has told me that a lot of their business comes from surprising places. Further evidence comes from the FCC’s “High-Speed Services for Internet Access” report, which says there are satellite broadband subscribers in 93 percent of all zip codes, which means not all subscribers live in rural areas of the United States.

Satellite is everywhere, and this makes sense when you understand that broadband increasingly is necessary. Satellite speeds, if slow, have been increasing, and the coverage by terrestrial broadband technologies is considerably less uniform than one might think. In other words, while the dreams of 1,000 satellite constellations may be behind us, there is a solid niche for satellite broadband, and that niche offers millions of subscribers for the foreseeable future.

Max Engel is and experienced satellite and telecom industry analyst and founder of
The North Star Consultancy. He can be reached at maxengel@thenorthstarconsultancy.