The world of satellite broadband is on the cusp of an evolution to Ka-band global connectivity. Over the next year, ViaSat is looking to lead the North American satellite broadband market charge with the launch of its ViaSat-1 satellite. ViaSat-1 is a crucial element of CEO Mark Dankberg’s future growth strategy, as the spacecraft will be the highest-capacity satellite in the world at the time of its launch.

Positioned in geosynchronous orbit at 115 degrees West, ViaSat-1 will serve the U.S. market with 130 gigabits-per-second of bandwidth. ViaSat hopes the new satellite will boost its subscriber numbers and deliver high-speed Internet to more than 1 million customers.

Dankberg discusses the role Ka-band will play in commercial markets and the impact it will have on the military and enterprise markets as well, going so far as to predict military growth opportunities in the face of Pentagon budget cuts.

Via Satellite: How are commercial users driving the emergence of Ka-band in the North American markets?

Dankberg: Today’s market environment has created a user expectation macro-trend — customers want to be connected anytime, anywhere and at higher speeds. The current generation of smartphones, such as the Android and the iPhone, require much more bandwidth than the older phones. More people that fly and travel have Wi-Fi-enabled laptops and portable devices, and they expect to be able to use them. That’s what ViaSat-1 and Ka-band is all about — meeting the demand.

At the same time, the customers that demand more and more bandwidth obviously don’t want to pay more money for services. Interestingly, the amount that customers are willing to pay for connectivity service is relatively constant, even though they are consuming bandwidth at a much faster rate, so to drive the economics of your offering, you need to offer higher speeds and more bandwidth while cutting costs somewhere in the architecture. If you can get 100 gigabits-per-second or more through a satellite by spending $300 million to $400 million for everything from the satellite launch to the ground infrastructure, compared to spending the same amount to get 10 gigabits, then you’ve found the key to providing cheaper service. That’s what breaks through to the mobile enterprise and commercial costumers.

Via Satellite: How do you work with satellite manufacturers to lower the cost of the space segment?

Dankberg: From our viewpoint, we are not seeing lower costs being driven by the satellite manufacturers themselves. Satellite manufacturers currently have a fairly well-defined set of modules, subsystems and components that they offer. There’s not much room to lower costs there. To get to that lower-cost satellite, you need to assemble the right combination of systems. Our industry has come to a general understanding that people demand infinite capabilities from a finite supply of broadband bandwidth coming from cell phone towers or a satellite. When we look at our infrastructure, we all ask the same questions: “How much did I invest in a cell phone tower? How much did I invest in a satellite for bandwidth? How much capacity is available? What will our users pay to support?” Those are the economics that drive these services.

You have to have a teleport and ground infrastructure that’s consistent with the overall architecture. You have to have user terminals, whether they are mobile or government, that are consistent with the satellite’s architecture as well, so when we talk about getting the right cost for a satellite, we’re really looking at the system-level.

Via Satellite: What do you expect to achieve with in-flight broadband after making a considerable push into the market during 2010?

Dankberg: We feel that in-flight broadband is a very strong market right now, specifically because it follows that macro-trend I mentioned earlier. Again, the key is higher speeds and more bandwidth. This year, you will see the migration from the older L-band solutions move faster than ever to the Ku- and Ka-band solutions we’re providing.

In October, we acquired the SkyLink airborne broadband service from Arinc and added their business jet customers to our Yonder high-speed Internet access network. The other significant move we made last year in in-flight connectivity was our deal with JetBlue to install Ka-band satellite broadband connectivity on its entire 160-aircraft fleet in 2012. We’re taking the market way beyond what past services have offered in this market. Bringing in high-capacity Ka-band is what customers and our partners at JetBlue have responded to. On top of that, we also see strong growth potential in our military in-flight business, especially in the airborne intelligence reconnaissance market, in 2011 and 2012. We think these markets will continue to develop for some time.

Via Satellite: What progress do you expect to see out of WildBlue this year?

Dankberg: The biggest and most important thing for WildBlue this year is the launch of ViaSat-1 this summer. The satellite will go into service a couple of months after launch. Much of what WildBlue is doing right now is getting ready for that — defining our plans, working with our distribution partners to bring those plans to market and communicating the new offerings and service plans to current and new subscribers.

Via Satellite: Will ViaSat or WildBlue need to adjust business strategies to account for the ViaSat-1 launch delay?

Dankberg: The biggest issue, obviously, is the two-month schedule hit. Despite affecting when we launch the service, I don’t see a major impact on what we do or what our strategy is for the market. We’re still going to do the same thing, and we’re sticking with our strategy. It’s a major growth opportunity for us.

Via Satellite: What is the progress on your second satellite?

Dankberg: We’re aiming to launch our second satellite in the middle of 2014. Which means we’d like to get the basic contracts going sometime in the next few months. The main thing we’re doing right now is conducting technical and economic analysis strategies around three basic factors. The first is that we’d like to get is improved bandwidth economics, which means lowering our manufacturing costs by even more than what we got when we started the ViaSat-1 program in 2008. The second is that we would like to provide coverage over the whole United States with the second satellite, whereas ViaSat-1 is only focused on the areas of highest demand. The third factor we want to address is a plan to work with our partners to expand our coverage area outside of the United States and Canada.

Via Satellite: How are your military and government contracts moving along, and how do you expect your military business to develop over the next year?

Dankberg: I’ll start with Blue Force Tracking 2 (BFT-2). We’ve been under the delivery order contract with the Army for about eight months now, and the program is going really well. The Pentagon has increased their initial procurement quantity. The total contract order that they were supposed to have with us was set at $500 million, with $40 million to start with. They recently added $14 million to that total. The military has expressed that they are pretty happy with what we’re offering and that they will continue to grow the program. The demand for BFT-2 is very strong, so we will start deploying our BFT-2 solutions over the next year.

The next program that is moving along very will is our Multifunctional Information Distribution System Joint Tactical Radio System (MIDS JTRS) contract to produce 41 terminals for the SPAWAR [the U.S. Space and Naval Warfare Systems Command]. We just completed low-rate initial production units. The terminals are going through qualification testing, and we think that the military will increase production units after testing in 2011. The government has been talking to us about adding additional functional capabilities and modes to MIDS JTRS, which would include advanced airborne tactical data links and higher speed and bandwidth versions. The government also is considering the addition of operating modes such as UHF, broadband satellite communication and air-to-ground soldier radio wave forms. I think that program will be a significant growth driver for us in the near future.

We feel that if we can offer a good in-flight broadband passenger service that more customers will use, it would be an important validation of what ViaSat stands for — bandwidth matters.

Lastly, there’s our work in comms-on-the-move (COTM), which is mostly happening in the Middle East. COTM has been a fast growing business for us. I think we’re already supporting more than 150 aircraft platforms in the area. We’re seeing a larger and larger coverage footprint for COTM and expanding into new markets. The biggest application for this service is airborne ISR. The ISR market is based on transporting video from the aircraft travelling at high-speeds. While it is currently a regionally oriented application, we’re starting to get into more of a global command and control mission, which would involve more of a two-way, broadband type of communication and connectivity.

Via Satellite: Will the U.S. military’s scheduled spending cuts in 2012 affect business?

Dankberg: Actually, I expect that we’ll to grow our government business in 2012. The reason has to do with where the military will spend their money. If you look at the plans targeted for spending reductions, you’ll find that a lot of them are very large programs where we’re not involved. One example would be the F-35 joint-strike fighter — the largest U.S. defense procurement project out there. One of the ways the military will cut its budget it to slow down programs like the F-35 and divert spending elsewhere. As an example, one of the things that U.S. Defense Secretary Gates mentioned in the plan to offset slowing down F-35 is to buy more existing aircraft, like F-18s. That’s great news for ViaSat, as F-18s are platforms that use our JTRS radios.

Over the next few years, I think you’ll see the U.S. government trying to make existing platforms do more. For example, the Pentagon could start adding broadband connectivity to manned or unmanned aircraft and accomplish things that they couldn’t before with fewer people and fewer resources. That’s the market we’re in, and it’s a great environment for the types of products and services that we provide.

Via Satellite: What do you think were some of the most significant advancements your company made in 2010?

Dankberg: I’ll refer to what I said about satellite industry and what ViaSat stands for — providing high-capacity broadband and lowering the cost of bandwidth. Generally, our most significant achievements were focused and consistent on that mission. What stands out to me is the agreement we announced with JetBlue. I think this was one of our biggest achievements last year. We feel that if we can offer a good in-flight broadband passenger service that more customers will use, it would be an important validation of what ViaSat stands for — bandwidth matters. If you go back to 2008, when we first started working on ViaSat-1, not everyone understand that bandwidth mattered.

I think that when the U.S. National Broadband Plan came out, which talked about how much bandwidth the government needed and what satellite could provide, it became more and more widely accepted that bandwidth is an important factor for satellite. How much capacity does your satellite have? It’s a question that everyone asks now, and it really wasn’t being discussed in prior years. We feel like a big part of what we’re trying to do is advance past that point and have everyone in the satellite industry recognize that importance.

Looking at the industry as a whole, I think Eutelsat launching Ka-Sat really set the stage for 2011. What’s going on in Europe is what you’re going to start seeing around the world.

Via Satellite: What do you hope to achieve by the end of 2011?

Dankberg: To launch ViaSat-1 and offer our customers our new services. We cannot wait to show people what this satellite can do instead of hypothesizing about it. We want to know that customers are happy and that we can build off of what we’ve been working on for the past several years.