WildBlue Jumps Digital Gap without U.S. Funds; State Interest Up
GREENWOOD VILLAGE, Colo.: Since setting up its first customer in Strasburg, Colo. nearly a year ago, National Rural Telecom Cooperative (NRTC)-backed satellite broadband provider WildBlue has been bridging the digital divide in rural communities across the U.S. without govt. aid. The firm’s main market lies beyond the reach of terrestrial broadband -- particularly in farming and ranching communities targeted by WildBlue advertising the past year in agriculture magazines and local radio spots.
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WildBlue’s service might seem a natural means of meeting the President’s broadband pledge and FCC rural connectivity goals. But the firm doesn’t qualify for federal USDA grants, and state support has been stirred only by word of mouth, WildBlue Sr. Vp & Gen. Counsel David Brown told us in an interview. Faster than dial-up but slower than wired options, the least expensive WildBlue access is $49.95 a month.
The U.S. has about $2 billion in USDA Rural Utilities Services loans to spend on rural broadband deployment through 2007. Satellite broadband is touted as an ideal rural broadband solution, but “it doesn’t really fit the rules around the Department of Agriculture money,” said Brown. The USDA funds are “really meant for small local telcos as opposed to somebody that can distribute nationally,” Brown said.
The USDA rules, written in the early 1990s, “didn’t have satellite in mind,” Brown said. If a broadband provider can distribute service nationally, including regions already wired with DSL or cable, “then you don’t qualify for the money,” he said. WildBlue relies on the NRTC for political maneuvering, and the cooperative “has been leading the charge for the USDA RUS rules to be written in a more technologically neutral way,” Brown said.
If WildBlue is looking for govt. support in bridging the digital divide, it might have more luck at the state level. Several states are “very interested in the service,” thanks to WildBlue’s ability to get broadband to rural residents, WildBlue Pres. & COO Kenneth Carroll said: “They're very interested in working with us to develop programs for rural constituents to provide the service where cable, DSL or fixed wireless isn’t available.”
So far state interest is from the bottom up, he said: “Somebody in the state government got the service, or their parents got the service out on their farm or ranch, and it percolates up. Then the state gets interested and says they're going to look at using you to complete the blueprint for service to all constituents.”
Tribal connectivity should be included in that vision, Carroll said. “It’s an important area,” but one that WildBlue hasn’t “specifically engaged in,” he said. NRTC members and retailers WildBlue works with serve tribal lands, he said: “I don’t have specifics, but we are very interested in being able to service those communities.”
WildBlue’s subscriber count continues to grow faster each month, Carroll said, but WildBlue doesn’t plan to release an updated subscriber number soon. In Dec., WildBlue said it had over 25,000 customers. Its larger satellite broadband competitor, Hughes Network Systems, counts over 250,000. Rural and rural-suburban customers are WildBlue’s niche and Colo. is one of WildBlue’s “high growth areas,” Carroll said: “But any state that has a fair amount of rural population has been very good for us.”
Colo. subscribers mainly fall into 2 categories, Carroll said. They're either ranchers or farmers who need Internet access for business or home schooling, or they're people who want Internet access at 2nd homes in the Rockies. WildBlue has signed customers in equal numbers up I-70’s high country corridor and on the plains beyond Denver, he said. Word of mouth brings most of the firm’s customers, he said: “In another state, the route postal guy got [WildBlue] and talked 5 or 6 people on his postal route into subscribing.”
NRTC members were WildBlue’s main distribution channel at launch, though since then the firm has begun a retail campaign through other dealers. Next to brand awareness, price seems to be the big barrier -- hence an offer of free installation until May 15, Carroll said.
Some would-be WildBlue customers can’t get service due to a satellite capacity crunch, however. Late last year the firm halted installations in western N.Y., western Pa., and parts of Mich. and O. to fix spot beam capacity problems (WID Nov 25 p2). WildBlue leases capacity aboard Telesat Canada’s Anik F2 for its service. “There are a couple of small areas in that heartland area that still have installations suspended,” Carroll said. The firm hopes to resolve the capacity shortage with software upgrades and, ultimately, launch of WildBlue 1 in the 4th quarter, he said.
After launching its own satellite, WildBlue could have enough satellite capacity to lure distribution partners, said Carroll. DBS players EchoStar and DirecTV or major telcos would be ideal, he said: “We're always interested in new distribution partners if there are contracts that make sense for us.”