Viasat prides itself on being vertically integrated. This simply means that rather than use a variety of components and products from other manufacturers, we typically use parts and systems designed and built by us. We believe our innovative ecosystem of high-capacity Ka-band satellites, ground infrastructure and user terminals provides an end-to-end platform that creates significant synergies in our business. That uniquely positions us to drive operational efficiencies allowing us to cost-effectively deliver high-speed, high-quality broadband solutions and applications to enterprises, consumers, military and government users.
Our product, system and service offerings are often linked through common underlying technologies, customer applications and market relationships. We believe that our comprehensive and vertically integrated portfolio of satellites, products and services — combined with our ability to effectively cross-deploy technologies between government and commercial segments and across different geographic markets — provides us with a strong foundation to sustain and enhance our leadership in broadband and communications technologies and services.
However, in the traditional satellite industry, that’s fairly unusual. For most satellite networks, everything from the satellite itself to the end-user terminal could be sourced from a variety of manufacturers. The plus side of this is that you might be able to shop around for the best deal and have a reliable source for components from a company that only makes that particular part, or component.
But there are plenty of down sides, too. One thing we’ve discovered over decades in the satellite industry is that the chances of all those disparate parts working seamlessly together are pretty slim.
Marc Agnew, Viasat’s vice president of Commercial Networks, who has spent 32 years at the Company, has seen how vertical integration can play into Viasat’s transformation. He said a useful comparison is how Apple worked from its very beginning. They built the hardware, designed the software and only used some parts from outside manufacturers. Compare that to how PCs were typically built from a wide array of different parts from a host of varying suppliers.
People may differ over whether they like Apple’s proprietary approach, but problems that often arise in PCs due to all those different cooks in the technological kitchen are typically not a problem with Macs, iPhones and the like.
Satellite networks tend to work better that way as well, Agnew said.
“What our CEO wanted to do was move away from that ecosystem of different suppliers,” Agnew said. “That allowed us to trade off requirements, functions and costs throughout the whole chain to optimize the entire system.”
Agnew explained that vertical integration also allows better, faster innovation since Viasat has visibility and control into most every element along the whole chain.
“If you are in that ecosystem of different suppliers, you can end up locking in a standard or component that turns out to be subpar down the road,” Agnew said. In the satellite industry with technology moving so quickly, he said that simply became unacceptable. Too, he noted that it’s easier for Viasat to supersede its own technologies in favor of something better. That kind of innovation is more difficult to influence when relying on other suppliers.
Agnew added that, if you’re constantly innovating and working to build the next generation high capacity satellite network as Viasat is, knowing the ins and outs of every segment of that network always works to your advantage.
Quick changes during COVID
An excellent, recent example of how the vertical integration model showed its value was during the first wave of the COVID-19 pandemic. With a great many people shifting their work activity from offices to home, normal traffic patterns on our network shifted dramatically.
Viasat was able to move quickly to prioritize important remote work applications on the network — such as Zoom or Webex — as well as other critical tools used for online schooling.
At the same time, engineers were able to deprioritize less-critical traffic, such as game downloads, to offset those more important ones. It’s exactly the kind of action that control over the entire network allows us to do.
As Viasat plans its next generation of ViaSat-3 satellites, Agnew said the work to build a more vertically integrated company helps position Viasat to expand globally.
“We have all the processes and teams in place to stand up a global network,” he said. “We’ll have operations 24/7 around the globe, so it’s essential to have the ability to scale up in a cost-effective way and not have to replicate the same teams on every continent.”