article

Satellite:


Satellite resale might be the final piece
in the jigsaw puzzle of broadband technology. Adding satellite to their portfolios allows resellers to put together a total network for businesses especially chain restaurants, hotels, motels and gas stations with remote locations and other needs that DSL, cable and other technologies cant meet.

“Of the more than 7 million business establishments in the U.S., more than 40 percent cannot be addressed by terrestrial business-grade broadband (defined as 512 kbps or better), write Frost & Sullivan analysts G.L. Fong and K. Nour. This represents a total satellite market potential of about 3 million [businesses] in the underserved market.”

In 2003, there were about 1.1 million T1 and 56/64 kbps frame relay ports and satellite networks served about 230,000 two-way narrowband business sites in the United States. Today, about 17 percent of data services are provided via satellite.

“Where we cannot cover the map with other broadband access technology options, such as DSL, frame relay, private line or cable … we will offer satellite broadband service,” says Dan Moffat president and CEO of New Edge Networks, which has a wholesale relationship with Spacenet Inc. to resell its satellite service. New Edge bills and collects from its customers, while Spacenet provides, installs and maintains the satellite systems. “With a single point of contact, customers can get a choice of carriers, technologies and products at virtually any business address in the U.S.,” adds Moffat.

If they cant meet all the potential customers needs, resellers run the risk of being eliminated from a WAN sale. Satellite gives them an “fill-in” product to sell. “I cannot imagine selling a portfolio of broadband products that does not include satellite,” says John Williams, CEO of Skycasters LLC.

“Customers want solutions, not technology. Anyone who has sold DSL knows many potential customers cannot be served because of loop issues or the location is simply outside of the DSL footprint. The groundwork laid by Covad [Communications Group Inc.], the Bells and others has paved the way for our business, by creating awareness and then failing to deliver the product to a wide geographic area.”

Satellite has value propositions beyond bringing broadband to underserved markets. Hotels and motels that offer Internet access need to support multiple users and offer high-speed service; satellite may be an appropriate answer when T1s get too expensive. Satellite also can kick-start productivity for retail stores still using dial-up for point-of-sale payment verification by cutting the processing time to about six seconds. Other common applications are check verification and inventory management.

Satellite can solve many access puzzles, but it wont be the perfect fit in every situation. Moffat says it has limitations, such as latency for specific data or voice applications because the data has to travel almost 50,000 miles up and down before it reaches its destination. Some applications, such as VPNs, require special treatment to work properly over satellite. And, in some cases, potential customers may not have roof rights in certain office buildings for a dish or may not face the southern sky.

“As to technological differences, cable and DSL are both going to cost less to install, cost less to operate and will perform a little better,” Williams adds.

“We recommend that if a customer can get cable or DSL, they do so, and consider satellite as an alternative for the areas where nothing else is costeffectively available.”

Broad Sky Networks addresses some of these issues wherever possible by reselling a number of options. “We allow managed service providers (MSPs) and other telecom resellers to enter into a relationship with Broad Sky and gain access to not just a single satellite network, but multiple providers with a single partnership,” says Mike Mudd, president at Broad Sky. “This allows our resellers to mix and match the most appropriate service for a particular location or client. Well deploy multiple satellite services for a client based on performance requirements, pricing or in some cases, the required line of site for a given location isnt available so well use a different satellite provider and aim at their satellite.”

To make it easy for resellers and customers to embrace what traditionally is thought of as a high-end, complex sale, some vendors are offering support packages. For instance, Broad Sky provides engineering, shipping and installation services, although resellers must be trained to handle first-tier technical support calls.

“In a single satellite-installation truck roll, we can install our dish and routers and install additional VPN routers for MSPs,” Mudd says. The company also can install switches, services and Wi-Fi access points for hospitality deployments, as needed.

Broad Sky also allows resellers to lease equipment, which adds $80 to the monthly service, but can be written off; the resellers have a buy-out option and can own the equipment after three years.

Skycasters allows VARs to purchase equipment and service at wholesale prices; margins are typically around 25 percent, says the company. Rates for service vary from $80 to $160 per month, while wholesale rates for equipment range from $500 to more than $1,500. Skycaster resellers own the customers, and provide installation, billing, support and customer service. The company offers training and certification for resellers support and installation personnel.

“Satellite is not a good fit for every customer, and there is an important need for fact finding during the sales process as well as the need for customer expectation management before the sale,” says Williams. “Also, the ability to support the customer after the sale is extremely important.”

Links
Broad Sky Networks www.broadskynetworks.net
Fros & Sullivan www.frost.com
New Edge Networks www.newedgenetworks.com
Skycasters LLC www.skycasters.com
Spacenet Inc. www.spacenet.com

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