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The View From Viasat
Year In Review
by Mark. D. Dankberg, Chairman, CEO and co-founder, ViaSat, Inc.

While the demand for fast and secure IP networking is a general driver of new business in satellite communications, two specific developments—one government and one commercial—continue to generate huge opportunities. The first is the building of the Global Information Grid (GIG) by the Department of Defense, while the commercial development is the launch of Ka-band satellites and services for broadband Internet access.

It’s nearly impossible to quantify all the opportunities stemming from the GIG—new needs are popping up all the time. The new generation of dedicated military satellites certainly is behind all sorts of developments, from the satellites themselves to ground systems. And even associated technologies that might otherwise be categorized as non-satellite must be included in prospects generated by the GIG. One example is the government-mandated Information Assurance (IA) products that secure GIG data, both at-rest on media storage systems and in-transit. ViaSat is providing a number of in-line network encryptors for the GIG in the form of stand-alone products and embedded technology.

Yet all those new dedicated DOD space assets won’t be enough to satisfy the need for bandwidth by troops on the ground, so commercial capacity and off-the-shelf products are on government procurement lists as well. That need has generated new GSA purchasing vehicles like Satcom II, which means business for dozens of satellite communication companies included in last year’s awards. All agencies of the Federal Government, including the Department of Defense, can use Satcom II to purchase satellite communication systems, information assurance products, and engineering services. Under Satcom II, ViaSat received a five-year, $90 million Indefinite Delivery Indefinite Quantity (IDIQ) contract to provide a full range of satcom products and services.

On the commercial side, the past year saw the unqualified—and unprecedented—success of satellite broadband Internet access aimed at consumers and small business. With WildBlue surpassing 250,000 subscribers during the year, new Ka-band satellites are now a great investment. WildBlue 1, the first all Ka-band spot beam satellite specifically engineered for broadband by satellite, successfully launched, entered service, and immediately began filling up with happy subscribers.

“The launch and implementation validated what we’ve been saying all along,” said Mark Dankberg, ViaSat Chairman and CEO. “That by applying new ideas and technologies that lower the cost-per-bit, increase capacity, and provide a great customer experience, broadband by satellite is a great business.”

Major ViaSat Milestones for 2007
The past year has continued the strong financial performance of ViaSat. Fiscal year 2007 was the fourth consecutive year of record results in sales, new orders, earnings and earnings per share. The average compounded annual growth rate for these metrics has been very strong:
  • Revenues up 23 percent per year on average.
  • GAAP net income up 32 per year per year.
  • New orders up 15 percent on average, and increasing to a record $515 million total for the past year.
That financial performance earned ViaSat a spot on the Forbes “Best 200 Small Companies” list for the sixth time.

“It’s important that service providers and operators have solid technology partners,” said Dankberg. “As we grow, we increase our ability to take on larger and more complex programs.”

On the business side, ViaSat counted a number of successes for the past year:
  • Introduction of the first ruggedized military BGAN terminal with integrated Type 1 encryption.
  • Continued rollout of our DVB-S2 technology for VSATs, including Adaptive Coding and Modulation (ACM).
  • Winning an award to update the Blue Force Tracking system for the U.S. Army.
  • Additional applications of ArcLight® mobile broadband technology:
    • First flight on a military helicopter to create a “command post in the sky”.

    • Introduction of KVH TracPhone V7 small maritime broadband terminal.
    • Increasing installations on GulfStream and Bombardier business jets.
  • Launch of ToowaySM broadband by satellite in Europe with our partner Eutelsat.
  • Shipments of our SurfBeam® DOCSIS®-for-satellite consumer/SME terminals surpassed 300,000.

Looking Ahead
As the networking technology behind WildBlue, the SurfBeam product is the fastest growing, most popular two-way satellite terminal ever produced—and other regions of the world are noticing this fact. That success has opened doors to two adjacent markets, each of which could be substantially larger than revenues associated with this technology.

International satellite operators and telecom companies are seeking to introduce Ka-band broadband access into new geographic markets. The Tooway service in Europe is just one example. The other is to define a new Ka-band satellite system in the U.S., so the market pioneered by WildBlue’s WB-1 and ANIK F-2 satellites can expand. The FCC has granted ViaSat two U.S. Ka-band orbital slots.

“While new Ka-band satellites will not be in service before our fiscal year 2011, we anticipate executing new agreements during fiscal year 2008 that will pave the way to exciting growth,” said Dankberg.

Mobile Broadband and MSS band mobility is another area that holds great potential. The abundance and price of Ku-band satellite spectrum gives it compelling advantages in certain markets for mobile data connectivity and entertainment. ViaSat entered the market as the satellite modem supplier to Boeing’s Connexion in-flight broadband service. Despite Connexion’s demise, there has been steady growth in mobile broadband equipment and services for business jets as well as defense applications.

“We think this is a very attractive growth area and this next year will be a key indicator of how the market will go in the years ahead,” said Bill Sullivan, Director of Mobile Satellite Communication at ViaSat. “We’re bullish on that market, and we’ve filed for, and received, an FCC license so we can offer Ku-band services of our own.”

Sullivan cites a number of new initiatives in play:
  • Restoration of in-flight commercial airline service, led by the former Connexion customers.
  • New antenna technologies that will extend Ku-band service availability to smaller private aircraft.
  • New small vessel maritime service extension, beginning with the partnership with KVH.
Another source of growth on the horizon is the Mobile Satellite Services (MSS) band.

“Last year we started on the Ground Based Beam Forming (GBBF) system for the Boeing MSV satellites,” said Prakash Chitre, VP and General Manager at the Comsat Laboratories division of ViaSat. “That’s our single largest commercial development program ever, which is a very telling indicator of the potential for this market.”

ViaSat IP core networking expertise, proven in the SurfBeam DOCSIS broadband program and coupled with on-going terrestrial fixed/mobile convergence technology initiatives, creates the potential for new MSS networking ideas with game-changing performance, flexibility, and cost points.

Finally, one of the most exciting potential areas is to bring the HAIPE IS (High Assurance IP Encryptor Interoperability Specification) technology that is at the core of the information assurance products into space. Should the Lockheed Martin TSAT team win the contract award, such would become the largest satellite on-board electronics program ever managed at ViaSat.

Mr. Dankberg co-founded ViaSat Inc. in 1986 and has led the company to become one of the fastest growing high-tech companies in the world. He has held the position of Chairman of the Board and Chief Executive Officer since the firm’s inception. Before its initial public offering in 1996, ViaSat was named three times to the Inc. 500 list of fastest growing privately held companies. Since then, the company earned recognition in the BusinessWeek “100 Best Small Corporations” list, the “200 Best Small Companies in America” by Forbes, the Business 2.0 list of “100 Fastest Growing Technology Companies”, and Red Herring magazine’s “Small Cap 100”.

After earning his BS and Masters degrees in electrical engineering at Rice University, he began his career at the Collins Radio division of Rockwell International as a systems engineer. Next he became an engineering director and then a vice president at M/A-Com Linkabit and helped to establish that company’s Linkabit’s VSAT business, which, along with other M/A-Com divisions, became Hughes Network Systems.