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The September 9, 2006 Issue Provided by System Dynamics Inc.
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"Wildblue Country"--Broadband for The Rural Lifestyle

Wildblue Communications is finally on a roll. We first mentioned this satellite broadband provider in our July 2001 newsletter. They launched their initial satellite payload successfully in August 2004, got access to the satellite starting that October and targeted service to begin in 2005. So where are they now?

Brad Greenwald, WildBlue Vice President of Sales and Marketing --> Click for larger pictureIn early August, we visited with Brad Greenwald, VP of Sales and Marketing, who joined the company in 1999. We learned that Wildblue had about 80,000 customers at the time of our visit, and is adding about 10,000 customers per month. They now have about 200 employees, 3500 certified installers and 1600 dealers. With this growth comes the need for additional capacity, so they will be tripling their capacity with the launch of a second satellite at the end of November.

Their service is based on two-way wireless Ka-band spot-beam satellite technology. The customer home has a small satellite dish equipped with both a satellite transmitter and receiver for two-way satellite connectivity to the Internet. The satellite link is based upon the cable industry's "DOCSIS" (Data Over Cable Service Interface Specification) technology, enabling the company to leverage existing hardware and chipsets. The company has five gateways located throughout the U.S. and Canada that connect WildBlue’s satellite access network with the Internet.

WildBlue is happy to target the niche market of those who have been unable to get broadband via cable or DSL; Brad estimates that market to be between 12 and 15 million homes and offices. Customer testimonials on their Website summarize the common characteristics of their customers: they live "in the boondocks" and had "No DSL here, no cable here, only very slow dial up available until now." These customers are not going to quibble about the service being slower than some other broadband alternatives--those other choices are not available to them. The company is proud to point to its 94% satisfaction rating from customers, many of whom had never expected to have broadband finally reach them.

Over the last several months, Wildblue has announced some major partnership agreements, including one with AT&T to sell WildBlue's broadband Internet access service under the brand name "AT&T High Speed Internet Access, powered by WildBlue." Subsequently they signed five-year wholesale distribution agreements with DIRECTV and EchoStar Communications in which WildBlue is the only satellite-based Internet solution that each of them will offer to their respective customers for that period.

Last month WildBlue secured $350 million debt financing and just announced the launch of a national advertising campaign to support its dealers across the United States. Target publications include Country Living, Outdoor Life, Progressive Farmer, Farm Journal and Rural Life--all aimed at consumers who embrace "the rural lifestyle".


Using WildBlue at Mike's House

We know through our son Mike how critical the availability of installers and dealers is to the growth of WildBlue. Mike and his wife Crystal live near Colorado Springs in a community called Black Forest, which fits the "rural lifestyle" demographic with low population density and heavy tree cover. Mike works in high tech and would be lost at his office without broadband. But for years all he could get at home was dial-up.

Every time something new came along, we pointed it out to Mike, but none of the options worked. We kept mentioning WildBlue, but he couldn't get it because there was no dealer in his area. He was also concerned about whether he would be able to access his company's VPN--which often has problems with latency issues--through the satellite link.

Mike with WildBlue antenna --> Click for larger pictureThis spring the area was covered by a dealer/installer. Mike visited the dealer and satisfied himself that he could use WildBlue to get into his company's VPN, and arranged to have it installed at his house.

Crystal standing on stump of tree sacrificed for Wildblue --> Click for larger pictureFollowing the installation, Mike wrote: "I think the installer was a little surprised when we were determining the best mounting location. Many of the possibilities were totally blocked by trees. One of the best/easiest locations only had a partially-obstructed view. I said I could easily fix that. A few minutes later with chain saw in hand, one less ~75' tree on the property, and the problem was solved. We got the ProPack (1.5 Mbps). Anyway, we have finally entered the broadband era."

We visited Mike and Crystal after our meeting at WildBlue, and had the opportunity to play with WildBlue for a weekend. The WildBlue service seemed a little slow, but we've had a cable modem for five years, and a T1 line before that.

Dave measured the speed of email downloading over WildBlue at about 1.5 seconds for each message--about twice as long as over a Wi-Fi connection at a hotel, and about five times as long as over our cable modem at home. That's probably due to the satellite link rather than the speed of the WildBlue service: PC-based email involves a lot of interaction between the PC and the remote email server; the WildBlue satellite is in a geosynchronous orbit about 22,000 miles above the earth's surface, and adds a round-trip delay of about a half a second to each interaction. Email is likely the worst case, and Web browsing would do much better by comparison.

Wildblue may be slower than cable and DSL, but these aren't available to WildBlue's target market. Compared with dial up, WildBlue is always on and much faster. While those of us accustomed to blazing speeds might turn up our noses at Wildblue's "Satellite Speed Internet", when you view the alternatives for many customers, "satellite speed" starts sounding pretty good.

( www.wildblue.com )