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Avanti's bird plumps up feathers

Just needs a few more customers

The smart choice: opportunity from uncertainty

HYLAS 1, the satellite launched in November to service Avanti's broadband internet offering, is fully operational and ready to go, though questions remain about who is going to be using it.

HYLAS 1 was successfully launched in November, completed testing last week, and is now ready for commercial services. The first customers are expected to receive internet access in the next couple of weeks. HYLAS 1 was part funded by the EU, though the vast bulk of the money was fronted by AIM-listed Avanti Communications, which intends to wholesale internet access to rural areas of Europe not serviced by ADSL, 3G, 4G or White Space.

The EU, and the UK, funded half the R&D and development costs for HYLAS 1 though the ARTES (Advanced Research in Telecommunications Systems) programme. Avanti Communications paid for the satellite itself, as well as the launch and insurance, and the company is planning to make that money back by providing rural broadband to those who can't get it any other way.

Right now Avanti reportedly has around 5,000 end users who rely on leased satellite capacity (your correspondent was once one of them), and will begin migrating those customers onto Hylas 1 next month. But it is the reselling agreements that really matter to Avanti, as the operator has no interest in selling direct.

The company has been busy parading some decent reseller deals. Although Avanti is often not able to name the parties (one recent announcement includes lifting 3,000 connections from a competitor), they include HughsNet and BT – though those resellers will have to sell a lot of connections to enable Avanti to recoup the huge investment in the satellite itself.

A 500Kb/sec connection via HYLAS 1 will cost, from reseller Europe Satellite, €25 a month with a cap of 3GB every month. A more-reasonable 4Mb/sec (enough for some iPlayer goodness) will set one back €81 a month and comes capped at 8GB (so not too much iPlayer goodness) – and that's after one has bought oneself a dish and paid the €45 activation fee. For satellite that's good, though it can't compete with terrestrial broadband.

Avanti is already moving on with HYLAS 2, extending coverage further into the Middle East and offering faster connections, but some investors are concerned that ground-based competition is advancing so fast as to make satellite broadband redundant.

Ofcom's announcement on Tuesday that it would be auctioning off 4G licences next year certainly hit Avanti's share price as investors became concerned that blanket 4G across the UK would undermine the market. In reality the UK isn't a big deal for Avanti or HYLAS, and far more concerning is the cheap microwave kit that's hitting the market these days. Combine that with light licensing and you end up with companies such as exwavia, which will connect any property in Wales for an up-front price of under a grand (which the Welsh Assembly will pay for). That's five times what a satellite dish costs, but with zero latency over a much faster connection, and considerably cheaper in the long term.

Satellite connections are still cool, and cheap to deploy once the bird is in the air. The unavoidable latency of geo-stationary satellite communications is something one can get used to, but as ground-based infrastructure improves, the window of opportunity won't stay open forever. ®

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