Satellite Broadband Providers Expand into Rural Areas

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Cowboys need broadband, too.

Internet providers that beam broadband connections to rural America via satellites are expanding their services as the need for faster video and downloads is becoming universal.

ViaSat and HughesNet are launching new satellites that take up the slack of lagging landline-based services and promise to increase capacity and delivery speeds. "If there is broadband wireless or wired connection, that's going to win every time," says Chris Baugh, an industry analyst at research firm NSR. "But unserved customers (are) a sizable market."

The companies have traditionally marketed to non-urban regions too far out for cable and DSL providers. But rural satellite service has remained a limited slice of the business because DSL and cable companies have expanded. Costly pricing, data-consumption caps and slow transmission speeds have also limited their growth.

But with satellite technology improving, the companies are hoping to attract customers who receive slow DSL service — 15 million to 20 million, according to a ViaSat estimate — to consider switching.

But persuading this market to try satellite service will be a challenge, Baugh says. "There is a market there, but it's a secondary market. They have DSL and, if they are to switch, they have to buy satellite equipment. It's not free."

The satellite companies also face competition from wireless carriers that are rolling out faster 4G service that rivals landline broadband in speed.

ViaSat. The California company bought WildBlue, a satellite broadband provider, in 2009 with plans to broaden coverage. But hampered by the old satellite's limited capacity and slow transmission speed, WildBlue's growth stalled at about 400,000 customers. "It wasn't a service we were proud of," says ViaSat CEO Mark Dankberg.

With a new satellite launched last year, ViaSat began selling the new service in January under a new brand, "Exede." The download speed will increase to about 12 megabits per second from 1.5 mbps on the old service, Dankberg says. Pricing starts at $50 a month for 7.5 gigabytes, not including overage fees.

HughesNet. The company will expand this summer with a new satellite that will increase the download speed by "at least three to five times" the current 1 mbps to 5 mbps, says the company's Mike Cook. Pricing hasn't been determined. It now charges $49 to $120 a month to 620,000 customers.