ViaSat’s California broadband subsidy plan targets wired homes

by Steve Blum • , , , , , ,


Viasat stakes a claim from the Klamath to the Colorado.

A satellite Internet service provider, ViaSat, asked for $11.1 million in the latest round of California Advanced Service Fund (CASF) grant requests. They want to provide subsidized broadband service over a huge swath of California that begins at the border with Mexico and runs up the western half of the state all the way to Oregon, plus a few detours to the east.

They’re not asking for money to serve every household in that area, only about 178,000. Which are presumably the homes in scattered census blocks that are eligible for funding. Some have no broadband service, but many are considered “underserved”, which means they’re currently reached by terrestrial providers.

The proposal contains little detail about what they’re asking the CPUC to pay for and what kind of a deal they’re going to offer eligible homes. Simply dividing the grant request by the number of households claimed gets a total subsidy of $62 per subscriber. But they might not be figuring that way.

Last fall, they tried and failed to get a CASF grant for a few remote and sparsely populated areas of Monterey County. Back then, they asked for $362,000 to serve about 700 homes. Which would have been a subsidy of about $500 each. If they’re thinking the same way this time, they’re only planning to sign up 22,000 customers, a take rate of about 12%.

The deal they talked about for Monterey County was vague, but would have given subsidized homes a discount – $10 was mentioned – on monthly fees that range from $50 to $130 depending on total data traffic. Those caps – 10 GB a month for the cheapest tier – are controversial. At ViaSat’s claimed download speed of 12 Mbps, it would take less than two hours to burn through a month’s allotment.

There are other problems with satellite Internet service, such as latency and performance drops due to overloading or weather. ViaSat has done some impressive engineering to mitigate those weaknesses, and would likely satisfy the average consumer on most counts.

But the economics of satellite communications make stringent data caps necessary. ViaSat’s birds might be the best on orbit, but they are very expensive and have extremely limited capacity compared to terrestrial technologies. To get a decent return on investment during a satellite’s relatively short life span, as many subscribers as possible have to be packed in. So you end up paying about $5 a gigabyte.

There’s an argument to be made that satellite bandwidth is the best that some truly remote areas can hope for. But Viasat’s land grab isn’t limited to otherwise unreachable households. Given the way the program works, many homes that can get wired or terrestrial wireless service would be ineligible for CASF funded infrastructure upgrades, now and in the future.

They would, in effect, be unnecessarily locked in to costly and parsimonious satellite service. Californians deserve better from CASF.

Tellus Venture Associates assisted with several CASF proposals in the current round, including some that are impacted by ViaSat’s proposal. I’m not a disinterested commentator. Take it for what it’s worth.