Home News Satellite Troubles: Viasat’s Setback Raises Questions for Space Industry

Satellite Troubles: Viasat’s Setback Raises Questions for Space Industry

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Satellite data and services provider Viasat is facing a major setback with one of its new satellites, sparking a debate on the optimal approach to business growth in space.

Size Matters

Viasat has placed its bet on a handful of expensive and technologically advanced satellites that transmit data back to Earth. In contrast, SpaceX has chosen to rely on a larger number of more affordable satellites to achieve similar results.

Unexpected Challenge

Late on Wednesday, Viasat (ticker: VSAT) revealed an unexpected problem with one of its newly launched ViaSat-3 satellites. An incident during the deployment of the reflector—a vital part of the satellite that collects and focuses data streams—may impact its functionality.

Seeking Solutions

Mark Dankberg, Viasat’s CEO, expressed disappointment in a recent news release. The company is working closely with the reflector’s manufacturer to resolve the issue and acknowledges their dedicated efforts and commitment.

Stock Takes a Hit

In response to the news, premarket trading witnessed a sharp 22% decline in Viasat’s stock, dropping it to $33.50. Meanwhile, S&P 500 and Dow Jones Industrial Average futures experienced slight increases of about 0.3% and 0.2%, respectively. As a result, Viasat saw over $1 billion wiped off its market capitalization.

The Cost Factor

This setback forces industry insiders to contemplate differing approaches to satellite deployment and raises crucial questions for the future of the space business.

Viasat and SpaceX: Different Strategies for Satellite Constellations

Viasat and SpaceX are two leading companies in the satellite industry, but they have chosen distinct approaches when it comes to building their constellations.

Viasat: Quality over Quantity

Viasat is opting for a small-number-expensive-satellite strategy with its ViaSat-3 assets. The goal of this strategy is to provide global broadband coverage and other services to companies and governments. Despite being a costly endeavor, Viasat generated $2.6 billion in sales in the calendar year 2022, which is roughly on par with its sales in 2021.

The ViaSat-3 constellation, consisting of three satellites, is estimated to cost between $2 billion and $4 billion to build. While this approach allows for higher quality satellites, it also means that the loss of even one satellite could pose a significant problem for Viasat.

SpaceX: Quantity with Affordability

In contrast, SpaceX is pursuing a different path. The company is launching thousands of small, lower-cost satellites to create its Starlink constellation. This constellation not only provides internet access to hard-to-reach areas on Earth but also to planes and ships.

Building such a large-scale constellation comes at a higher cost. Although estimates vary, it is expected that SpaceX, led by Elon Musk, will spend over $10 billion to complete its network infrastructure to the desired level. However, due to their cost-effective design, losing a few satellites in the process is not a significant setback for SpaceX. In fact, their strategy allows for faster deployment of next-generation satellite technology.

Different Approaches, Similar Goals

While Viasat focuses on building fewer but more reliable satellites, SpaceX prioritizes quantity in order to maximize coverage. Both strategies have their pros and cons, but they ultimately aim to provide global broadband coverage and expand access to remote areas.

In this rapidly evolving industry, it will be interesting to see how these two competing strategies play out in the coming years.

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