wildblue history - ohio university

© 2007 WildBlue Communications, Inc

WildBlue History

November 2007

2© 2007 WildBlue Communications, Inc

WildBlue Communications

• Headquartered in Denver, Colorado in the U.S.

– Privately held corporation

– Entered commercial service June 2005

– Growing rapidly – more than 20,000 new customers a month

• U.S. national infrastructure with

– 2 Ka-band spot beam satellites

– 11 Gateway Earth Stations

– Network Operations Center

– Business Systems Data Center

– Customer Call Center

WildBlue is a “Broadband Internet via Satellite”

service provider with more than 250,000customers in the 48 contiguous United States.


“Satellite Telephony Bubble”

• By the late 1980’s, the cellular telephone business was growingfaster than anyone had imagined.

• Possibility of world-wide cell phones from space set off anirrational frenzy in the satellite industry in the early 1990s.

SYSTEMPrimaryInvestors

First SatelliteLaunched

ServiceLaunched

BankruptcyFiling

EstimatedMoney Lost

Iridium Motorola05/05/1997(90 total)

01/01/1998 08/13/1999 ! $8B

GlobalStarLoral;Qualcomm

09/09/1998(52 total)

01/10/2000 02/15/2002 ! $5B

OdysseyTRW;Teleglobe

never neverAbandoned12/01/1997

$1-2B

• Satellite telephony only worked outdoors, required big heavy phoneswith limited battery life – they were not cell phones; a limited market.

Iridium

Globalstar


“Satellite Data Bubble”

• Early in the Satellite Telephony frenzy, before any hint ofbusiness failure and multi-$B losses, an even more irrationalSatellite Data frenzy broke out.

• On 12/03/1993, Hughes Aircraft Company, parent of DirecTV,filed with the FCC for the first Ka-band satellite, Spaceway.

• The FCC was surprised; they had no process for satellitelicensing in the Ka-band

• On July 28, 1995, the FCCissue a call for Ka-bandsatellite applications andset a deadline ofSeptember 28, 1995.

• 15 companies filed newor amended applications


Applicant Satellites Orbital Slots Ultimately Awarded

Comm, Inc. (Motorola) Millenium 75W, 77W, 87W, 91W

Echostar None 83W, 121W

GE-Americom GE*Star 17W, 85W, 105W, 56E, 114.5E

Hughes/Galaxy Spaceway49W, 67W, 99W, 101W, 25E, 36E, 40E ,48E,54E, 101E, 111E, 124.5E, 149E, 164E, 173E

KaStar Satellite Ladybug 1, 2 73W, 109.2W

Lockheed Martin Astrolink 21.5W, 97W, 38E, 130E, 175.25E

Loral Cyberstar 115W, 28E, 105.5E

MorningStar MorningStar 62W, 147W, 30E, 107.5E

NetSat 28 NetSat 28 95W

Orion (3 companies) Orion F2…F9 47W, 81W, 89W, 78E, 126.5E

PanAmSat PAS-10, 11… 133W, 58W, 45W, 68.5E, 72.7E, 166E

VisionStar VisionStar 113W

Teledesic Teledesic 840 Ka-band satellites in low earth orbit

15 First Round Ka-band ApplicationsSeptember 28, 1995

Guess the only one of these companies to offer a Ka-band data service to date?Guess the only one of these companies to offer a Ka-band data service to date?


Teledesic

• Craig Macaw, Bill Gates venturewith Boeing, Motorola, others

• Announced on March 21,1994 andseeded with billions in cash

• Was to be a constellation of 840Ka-band satellites in low earth orbit

– Nearly free OC-12’s for everyone, everywhere

– All interconnected with lasers, 8 per satellite

– Unimaginable technology

• Licensed by the FCC on March 14, 1997for worldwide operations in the Ka-band

• Officially abandoned on June 27, 2003

840

satellites!

Teledesic Satellite Concept


KaStar Established in October 1998

• May 8, 1997 the FCC licensed 109.2W & 73W orbital slots to KaStar

• October 1, 1998 KaStar opens for business


WildBlue Timeline: Start-up Phase

• KaStar was founded inApril 1995 and filed with FCC

• Grew to !10 people by end of 1999 andto !40 people by the end of 2000

• Raised !$250M; early investors wereTRW/NGC, Kleiner Perkins Caulfield &Byers , Telesat Canada, EchoStar, TVGuide, Liberty

• WildBlue-1 “QuickStart” (22 months)contract with Loral signed in Nov 1999

• Invested in US Monolithics in Mar 2000

• Anik F2 Ka-band payload lease signedwith Telesat in Mar 2000

• Original Ariane, ViaSat contracts signed

• KaStar became iSKY, then WildBlue

8/10/1984ACTS satellite contract awarded toRCA AstroSpace

9/12/1993 ACTS satellite launched

12/3/1993 Spaceway FCC filing

4/21/1995 KaStar established as a Colorado Corp

7/28/1995 FCC calls for 1st round Ka-band filings

9/29/1995 First round FCC filings due date

3/14/1997 Teledesic FCC license granted

5/9/1997 FCC first round assignment order

10/1/1998 First two WildBlue employees

10/19/1999KaStar renamed iSky.net, thenrenamed iSKY, Inc. on 12/3/1999

11/2/1999 WildBlue-1 contract with Loral signed

3/17/2000WildBlue and Telesat sign Anik F2lease agreement

3/24/2000 WildBlue invests in US Monolithics

8/14/2000 iSKY, Inc. became WildBlue Comm.

3/5/2001 ViaSat SM/SMTS contract signed

6/25/2001 Telesat takes equity stake in WildBlue


WildBlue Timeline: Dark Days

9/11/2001Terrorist attack on the UnitedStates

9/26/2001WildBlue-1 satellite contractualship date

11/6/2001 Astrolink folds; closes down

12/2001 –01/2002

All WildBlue contracts suspendedor terminated; project put on hold

12/18/2002WildBlue licensed by FCC to useAnik F2 in the US

• Prior to 9/11/01, we were workingon several sources of new funds

• 9/11 attacks wiped out any hopeof continuing the project as planned

• Company chose to “weather the storm”with an assertion that the business planwas sound and economic conditionswould improve eventually

• Renegotiated/delayed all of our contracts

• Hunkered down with 9 remainingemployees

• Sold our stake in US Monolithics to ViaSatin Jan 2002, the proceeds of whichprovided cash to stay alive for at least ayear

• Spent all of 2002 looking for new partners,modified business plans including videobroadcast, etc.

Terrorist Attack – September 11, 2001


WildBlue Timeline: Dark Days

Dow Jones Industrial Average 2001

Early 2002: “Reports of our death were greatly exaggerated.”

Economic Impacts of 9/11 Were Hard on WildBlue

We Explored Every Mickey Mouse Idea (Well Almost!)


WildBlue Timeline: Recovery & Growth

12/23/2002Liberty, Intelsat, NRTC, Kleinerannounce $156M investment torestart WildBlue

4/22/2003Liberty, Intelsat, NRTC, Kleinerclose $156M investment

6/27/2003 Teledesic Folds

3/28/2004Spaceway F1, F2 sold to DirecTVfor video

4/28/2004 ACTS decommissioned

7/17/2004 Anik F2 satellite launched

10/18/2004First email sent over the WildBluenetwork

4/26/2005Spaceway F1 satellite launched byDirecTV for video

6/3/2005WildBlue enters commercialservice

8/21/2006WildBlue closes $350M debtfacility with Liberty, Tennenbaum

10/1/2006WildBlue reaches 100,000subscribers

11/2/2006WildBlue-1 satellite actual shipdate to the launch site

12/8/2006 WildBlue-1 satellite launched

• Liberty, Intelsat, and NRTCwith Kleiner Perkins andDavid Drucker invested$156M to restart WildBlue

• Company restarted with a one satellitebusiness plan based on Anik F2

• WildBlue-1 satellite was completedand placed in storage at SS/Loral

• Began rehiring in April 2003 andentirely rebuilt the company during thesecond half of 2003

• Successful launch of Anik F2 satelliteoccurred in July 2004

• Massive effort 2004-2005 to build outthe gateways, IT systems, NMSsystems, CPE manufacture capability

• Commercial service was establishedin June 2005.


WildBlue Timeline: Recovery & Growth

First Customer – June 3, 2005 Echo/DirecTV – June 8, 2006

Anik F2 Launch – July 17, 2004WildBlue Team – July 17, 2004Anik F2 Launch Party

First WildBlue eMail – October 18, 2004


Today’s WildBlue

• >250,000 subscribers, healthy growth rate

• Approximately 250 employees

• Exclusive distribution agreement NRTC

• Exclusive distribution agreements with both majorUS satellite TV companies, EchoStar & DirecTV

• Strategic distribution agreement with AT&T

• Two operational satellites providing CONUS service

• WildBlue controls almost 100% of bent-pipe Ka-bandspot beam satellite capacity over the United States.

The little bug that

just never gave up…


Rural Broadband Users- 2006

Homes & Small Offices(Rural = C&D Counties)

Homes & Small Offices(Rural = C&D Counties)With No Access To TerrestrialBroadband

35m100% -

Have Access

To CableModem/

DSL(21m)

DON’THave

AccessTo CableModem/

DSL(14m)

14m

Don’t use Internet

(4.9m)

Dial-UpSubs(8.6m)

Satellite (0.3m)

Fixed Wireless (0.2m)

WB

Target

Market


Satellite Broadband Market Size Forecast

2006 2007 2008 2009 2010

# Rural homes/SOHOs 34.2 34.0 34.0 34.0 34.0

# Rural homes/SOHOsw/ no terrestrial broadbandaccess

13.9 12.9 11.9 10.8 10.2

# Rural homes/SOHOsw/ no terrestrial broadbandaccess that are online

8.6 8.3 8.1 7.9 7.7

Satellite broadband subs 0.5 0.8 1.2 1.3 1.8

Satellite broadband subscriber

penetration of rural online w/no

terrestrial broadband access

6% 10% 15% 17% 23%

(millions)

Source: U.S. Census 2005, Frost & Sullivan 2006, WB estimates


Key Drivers of Satellite Broadband Market

Social Trends– Urban & second home movement to rural areas for “lifestyle”– Long-term reduction in rural jobs– Telecommuting

Product Trends– Decline in upfront price– Demand for speed & capacity (usage)

Competitive Trends– Growth of DSL/CM (assumed very low)

! LECs: “we will not serve 20% of our customers with DSL”

– Growth of fixed wireless– Expansion of nascent technologies (BPL, 3 or 4G, etc.)


Satellite Provides Ubiquitous Coverage


Network Architecture

SpaceSegment

SubscriberTerminal

GatewayEarth Stations

WAN/LANConnectivity

NOC andOSS/BSS

Internet

DOCSIS-based Standard Platform

Simple “Bent-Pipe”

DOCSIS-based

Unmanned Facilities

Leased connectivity DOCSIS-based

Commercial Products


Our “Bread & Butter” Market


WildBlue vs U.S. Homes (Density Comparison)

Density U.S. Homes WB Customers

(Homes/mi2) Cumulative (m) Cum % Cumulative Cum %

0-9 4.9 4% 19,082 45%

10-19 10.5 10% 26,374 62%

20-29 15.2 14% 29,285 69%

30-39 18.4 17% 31,621 75%

40-49 21.5 20% 33,116 78%

50-59 24.1 22% 34,299 81%

60-69 26.2 24% 35,139 83%

70-79 28.0 26% 35,753 85%

80-89 29.8 27% 36,279 86%

90-100 31.4 29% 36,714 87%

101-150 37.5 34% 38,124 90%

151-200 41.5 38% 38,808 92%

201+ 109.0 100% 42,266 100%

Total 109.0 42,266

Source: WB Analysis, U.S. Census data


Broadband Market (by Technology)

0

10

20

30

40

50

60

4Q'05 4Q'06

Satellite

Fixed Wireless

DSL

Cable Modem

Source: Jupiter; ignores BPL subs

U.S. Broadband Customers


Technology Comparison

2005 EOY

Subscribers

Growth 2005-09

(CAGR) Pro Con

Cable

Modem/DSL44.6 million 10% • Speed

• Price

• Local Presence

• Bundled offering

• Not ubiquitous

Fixed Wireless 0.2 million 32% • Price

• Local Presence

• Not ubiquitous

• Mostly unlicensed

spectrum (except

Sprint/Clearwire)

• Must choose where to

build

Satellite 0.3 million 42% • Ubiquity • CPE Cost

• Unproven VoIP offering

• Time to market for new

capacity

Broadband Over

Power Line (BPL)<0.1 million n/a • Price

• Local Presence

• Some existing

infrastructure

• Cost

• Not ubiquitous

• Must choose where to

build

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