ViaSat To Purchase WildBlue For $568 Million

ViaSat Inc. a Carlsbad, California satellite equipment maker for defense and consumer markets, announced on October 1 a deal, in principle to buy privately held WildBlue Communications Inc. of Denver, Colorado, a high-speed Satellite Internet provider, one of the nations top ISPs, for a reported $568 million in cash and stock. The move will allow the two companies to reduce long-term costs and risk, as they seek to expand their position in the consumer broadband satellite Internet market.

The ViaSat SurfBeam networking system, which pioneered the use of unprocessed Ka-band spot beam technology to provide increased capacity and lower the cost of bandwidth, currently powers WildBlue. ViaSat has plans to launch ViaSat1 a new higher-capacity satellite in the first quarter of 2011, which will enable WildBlue to run at speeds between 2-8 Megabits per second, similar to the speeds cable companies provide their customers. The increase in speed apparently will not be accompanied by a rate increase, as ViaSat plans to keep WildBlue service prices at their current levels, ranging from $39.95 to $79.95. Currently WildBlue speeds reach 1.5 Mbps and start at 512 Kbps. .

At the moment WildBlue has roughly 400,000 customers, with 90% of that total having just dial-up Internet service as their only alternative. The increase in speed will allow WildBlue to compete in DSL and Cable markets as well. .

One challenge for WildBlue has been a lack of capacity to meet the demand for their service. This has caused some potential customers to be acquired by satellite Internet rival HughesNet, who is typically higher priced and more costly to start up. The merger should alleviate this problem and accelerate WildBlue’s already robust growth. Great news for customers in rural areas where dialup is the only other option and better news for customers that have DSL and/or cable available for Internet, the advent of another player in those markets can only be good for consumers. .

The deal is expected to close in early April, subject to regulatory clearance and other conditions. The final transaction will consist of $443 million in cash and another $125 million in newly issued ViaSat stock shares. Based on how the Street has embraced this deal the stock may come out to be even more valuable than first anticipated. ViaSat shares rose sharply to a new 52-week high at $28.34 per share.

WildBlue Satellite Internet - The Broadband Satellite Leader

In June 11 2009 WildBlue revealed the future of Broadband Satellite Internet with a hands-on demonstration of its “next generation” satellite capabilities in the Washington D.C..

The demonstration showcased download speeds of 18 Mbps, nearly 12-times faster than satellite internet providers current capabilities. Members of Congress got to compare than enhanced Wild Blue speeds with their current service. Why was Congress involved, you might ask. Because WildBlue provides high-speed Satellite Internet access to nearly 400,000 Americans in rural parts of the United States, that currently have no other options, other than dialup service available to them.

Congress believes that access to high-speed Internet provides Americans with; increased access to information and technology, which will lead to more Internet commerce, education, news, and social interaction. What is a good thing for its citizens, will most assuredly to be for the government.

The United States Departments of Commerce and Agriculture will provide $7.2 billion in federal stimulus funds through the American Recovery and Reinvestment Act, in a inititaive to provide universal broadband access to all customers, regardless of how rural.

So, why Satellite Internet and not cable or DSL. The customers that are in need of the increase in technology are rural citizens, whose local Cable or DSL providers, can’t or won’t provide the means to bring those customers current. Satellite Internet needs no infastrucure to provide service to customers. A Satellite dish, a Satellite Internet modem, and a clear view of the southern sky is all that is required. WildBlue has been an active advocate in Washington, D.C. for the advancement of their Broadband technology.

In August WildBlue applied for and received $30 million in Broadband Stimulus, which helped subsidize Satellite Boradband connections for about 10,000 homes in Colorado and Wyoming and another 10,000 in Arizona. The areas mentioned all were out of reach of the high-speed cable, fiber and DSL lines. Wild Blue will continuing effort to provide Satellite Internet access to customers is centered around the launch of the WildBlue 3 satellite, at a cost of $300 million and a development and activiation timeline of nearly three years.

The Satellite Internet industry and the efforts of WildBlue to provide high-speed Internet access to everyone without, came into focus in October when ViaSat acquired Wild Blue for $568-million. The merger should strengthen Broadband Stimulus efforts.In acquiring WildBlue, ViaSat gains one of the most successful and fastest growing wholesale and retail broadband service providers in the United States. In less than five years, WildBlue has become one of the top twenty broadband U.S. ISPs. WildBlue pioneered the use of “unprocessed” Ka-band spot beam technology to increase capacity and lower bandwidth costs, portending the value potential for the technology innovations ViaSat-1 will make possible.

ViaSat, a satellite communications equipment maker for defense and consumer markets will boost WildBlue’s service and technolody levels and bolster the chances of getting government money earmarked for Broadband solutions. ViaSat and WildBlue applied for $500-million in stimulus funds. Both companies have recently partnered with satellite provider EchoStar Communications on seperate bids for grants and loans under the Federal Broadband-Stimulus program.

ViaSat is scheduled to launch a satellite, ViaSat-1, in the first quarter of 2011 that will enable WildBlue to offer speeds of 2 Megabits per second to 8 Megabits per second— closer to those offered by cable operators. Currently, WildBlue’s speeds top out at a DSL-like 1.5 Mbps. ViaSat plans to hold prices essentially the same for consumers, which range from $39.95 to $79.95 a month for speeds of 512 kilobits per second to 1.5 Mbps. The higher speeds will enable easier downloads of videos and other multimedia for WildBlue’s clients.