On 7th December Avanti announced that it would be part of a UK Government programme, promoted by BDUK, to bring broadband by satellite to up to 300,000 homes in the UK that are unable receive broadband through the terrestrial network.
What is BDUK?
Broadband Delivery UK is a department of the Department of Culture Media and Sport set up to manage the national delivery of Universal broadband service and superfast broadband roll out. It is fully funded by the government.
What are the details of BDUK Satellite scheme?
Consistent with longstanding government policy, BDUK has now established a scheme to use satellite broadband to ensure that the rural consumers who cannot be served by terrestrial broadband can access speeds of up to 30Mbps. BDUK has made available a budget to ensure that up to 300,000 homes receive support.
What support will homes receive?
Each home will receive a free installation, which is made possible by a government contribution of £350 per installation, which fully funds the equipment (a satellite modem) plus labour. That is paid directly to the chosen service provider. Thereafter the householder will pay a monthly charge to receive the service. The service provider pays Avanti 100% of the cost of the equipment and a portion of the service charge.
How do households subscribe?
The scheme is being rolled out around the country starting immediately and information will be made available by the Local Authorities. The householder can choose from a number of service providers who in turn will buy service from either Avanti or the other satellite operator on the scheme.
Which satellites will it use?
In anticipation of the scheme, Avanti put UK beams onto HYLAS 1, HYLAS 2 and HYLAS 4 so it is well prepared to address the market.
What is the project worth?
The Government has said that 300,000 homes and businesses are eligible under the initiative to benefit from the government funding on a satellite broadband service delivering up to 30Mbps. The average cost of a package is around £34 a month of which Avanti receives around half, so this is a total retail market opportunity over £120m a year. As the leading provider of Ka band satellite capacity in the UK, we would expect Avanti and its service providers to win a significant share of the business form those homes who chose to take it up. UK Broadband penetration is currently 78%.
If we assumed that one third of homes accepted the offer of free installation (the national UK average is 78%) and that Avanti gets just half of that business, (thus 38,610 homes) then Avanti’s revenues from installation and operation could be $20m per annum.