With residential service just starting in Spain, we catch up with the managing director of Viasat Europe
In this episode of the Viasat Podcast, Viasat Europe Managing Director Evan Dixon talks with host Alex Miller about the company’s activities in Europe. Some of the topics covered in the interview include:
- The recent introduction of residential service in Spain
- The challenges of meeting customer expectations in a variety of European countries
- How the upcoming ViaSat-3 satellite over Europe has the potential to greatly expand our offerings
- How Viasat is helping the European Commission reach its 2020 goal to have people in member countries have access to internet speeds of at least 30 Mbps
Alex Miller: Welcome to the Viasat podcast. I’m Alex Miller with Corporate Communications and today, we’re talking with Evan Dixon, managing director of Viasat Europe. Evan is based out of our office in Lausanne, Switzerland, and the team there is busy with the recent launch of residential internet service in Spain. Thanks for being on the podcast with us today, Evan.
Evan Dixon: Thanks for having me.
Alex Miller: All right. Well, first, congratulations on successfully launching our residential internet service in Spain. It’s a great accomplishment for the company as we’re looking to expand globally. Now, before we get into the rollout in Spain, can you give us a refresher on where Viasat currently offers internet service in Europe?
Evan Dixon: Viasat currently offers residential broadband packages in Spain, Poland and Norway. If you live in those countries, you can get Viasat Internet. We have websites set up in each of those countries, so you can find us in all of those countries. We offer fast broadband, so 50 megabits per second. Unlimited plans. It’s quite an eclectic group of countries that we’re currently in. Spain, Poland and Norway are very different culturally and geographically, but that’s largely due to the fact that we are in markets where we have meaningful capacity on KA-SAT. KA-SAT is rather constrained in terms of capacity in Western Europe. What we’re trying to do is launch our retail services in markets where we can really build a foundation for the future.
Alex Miller: So does that mean that the service plans are unique to each country based on what kind of capacity you’ve got?
Evan Dixon: The package designs themselves are relatively similar across the different markets. However, I think the most unique aspect of them is the pricing in each country. So the pricing is based on a number of factors, localized factors, but primarily look at two areas. One is we look at: What is our cost to deliver broadband services in that particular country? And then two is we look at the external market forces. That would include things like the competitive landscape, a population’s ability to pay as a percentage of disposable income. Are there subsidies available that we can then take and discount the product as a result? So those sorts of things go into a tailored, customized product in each of the different markets.
Alex Miller: Right. And Europe is a lot of countries in a kind of small area with a lot of different languages. I know there’s a lot of challenges to figure all that and that entire landscape out.
Evan Dixon: Yeah. It is very challenging. I think everyday we face a new challenge. I don’t know that I would characterize anything we’re seeing as a surprise per se, just given the fact that every time you enter into a new market, you do so with the full realization that you don’t -- there’s an enormous amount you do not know. So whether it’s learning about the market, whether it’s knowing about the consumer, whether it’s learning about government bureaucracy, et cetera, every day we are finding out new things. So our experience over the past couple of years has been a series of learnings and not surprises. I think the kind of things that we’re learning every day are: How do we most effectively and economically reach our target consumer within each market? What are people willing to pay for our service? If we learn those things and we continue to learn every day when people buy or choose not to buy our service, we can get better and better. I think that one of the things that we’re very focused on understanding is: How big is the market for our product? That question is one that we are finding out; the public’s data sources in terms of how large the populations are for unserved and underserved in these markets are entirely flawed. Our data is telling us very different things, and so we’re trying to understand based on experience how big the market size is so we can bring that right into into ViaSat-3.
Alex Miller: Okay. So you said that none of what you’ve learned has been a surprise, but there’s been some interesting things that you have learned. I was just wondering, is there an example like, people in Poland only use half as much capacity as people in Ireland or something like that?
Evan Dixon: Oh, yeah. I think the learnings are all over the place. I’d say one of the ones that we’re dealing with today are certain markets that we’re in where customers do not feel comfortable about giving a credit card over the phone. Well, coming from the US, the view is that when you are going to buy a subscription service, you provide a credit card over the phone, especially if you’re going to have that company invest an enormous amount of what we call SAC -- subscriber acquisition costs -- into that customer. We like to make sure that we know that the customer can pay us for the service we’re going to provide. So we’re trying to learn about some of these cultural differences. And how do you face that? How do you de-risk the amount of SAC that you got to invest in a particular country, while at the same time facing the challenge of a customer feeling very uncomfortable giving a credit card over the phone.? We’re having to do some unique things here that might be unique, both for a back-office perspective or a marketing perspective. How we treat customers over the phone — that might be very different to how we’re doing things in the United States.
Alex Miller: Right. And it sounds like you’re just having to be really flexible in terms of how you approach all these different countries.
Evan Dixon: Absolutely. I think having that flexibility when you enter into a market and understanding that, hey, just because this is where we’re starting, this by no means is where we expect to end up. I think that has made us relatively successful here. So when we roll out, I think sometimes when we enter into a new market we’ll say, okay, this is package we’re going to launch with or this is the sales script we’re going to launch with. And then very early on, we are making sure that that’s working. And if it’s not, understanding what’s not working and making that and being able to pivot pretty quickly.
Alex Miller: Okay. Well, let’s talk about Spain. How did the initial rollout go in that country?
Evan Dixon: Yes, we are really excited about Spain as a market for Viasat. There is a large underserved population scattered across that entire country. And we think it’s going to be a great market for us both in the short term on KA-SAT and long term on ViaSat-3. So our sales in the country continue to really see positive month-over-month growth. And that’s really all about having the word spread about our product. So when you enter into a new market, awareness is key. And for us, our product is such that people in need of quality broadband, as long as they’re aware that a solution exists, they will find you. And so our job is to make sure that they know that Viasat is a product that can solve their problem. And if they’re aware of that, we think they’ll find us.
Alex Miller: Right. So in the U.S. and also in some of the other countries where we’re in, oftentimes the customers that find our service useful are people who were outside the traditional cable or fiber zone. Is that what you’re finding in Spain, that those are the kind of customers that are gravitating towards the Viasat service?
Evan Dixon: Yeah. There’s no question that’s part of it. People that are unserved have always been the easy market for us. Clearly, we are a product for the unserved. But the growing market, the one that really gets interesting for us, the much larger market for us is the underserved. And the definition of underserved is one that moves every day. The faster our service gets, the better our product gets, the larger that underserved market gets. So it’s not a finite number by any means. Really, what we’re seeing in the early days here of launching service in Europe is that our subscribers mirror that of where population is, and so underserved people are in urban areas. They are in suburban areas, they’re in rural areas. When you look at a heat map of our customers, it closely mirrors the heat map overall of a population in a given country.
Alex Miller: That makes sense. Are there key similarities between Spain and what you might see in the U.S. in terms of how households are consuming internet service?
Evan Dixon: We see a lot of similarities between Europe and the US on a number of levels in terms of consumers and the way they consume internet services. We see a consumption pattern in terms of usage throughout the day with a peak in the evening being very similar between Europe and the United States. We also see the same applications being used, such as Facebook, YouTube, Netflix, et cetera. Those are all very popular here. But I think one of the biggest differences we’re seeing is the rate of growth in video streaming here in Europe. Here in Europe, we’ve long lagged behind the United States in terms of the percentage of bandwidth being consumed with video streaming. And what we’re seeing is that that is catching up very rapidly. The more that Netflix and YouTube get a market foothold here in Europe, the more we’re seeing that impact, the amount of streaming we’re seeing over our satellite.
Alex Miller: Ok. What are the opportunities and challenges that you’re seeing in Spain? And are they similar or different than what you’d see in other European countries? And I think you touched on that earlier, that they are indeed different.
Evan Dixon: I think the two biggest challenges that we face in every market that we enter is product education and brand awareness. What is satellite broadband and who is Viasat? There are varying degrees to how little education there is about our product or our company. But it’s inevitable. It’s always going to be a challenge. And so what we do is — it takes time and investment — but one of the first things we do is we have to get people comfortable with Viasat as a brand, so investing in above-the-line advertising to make sure people are aware of Viasat, and comfortable with who we are. Going back to the credit card issue, making sure that they feel comfortable in our brand, they trust our brand, so they feel more comfortable leaving a credit card over the phone with one of our agents. So it’s things like that, too. And then making sure they understand: What is satellite broadband? Living in the Viasat world, we feel like everybody in the world should know exactly what satellite broadband is. The fact is the majority of people don’t. And it’s our job to educate them through public relations, through marketing, through educational opportunities. So that’s what we’re focused on.
Alex Miller: There’s a fair amount of satellite TV in Europe. And that’s typically how we compare the size of the dish and roughly how the service gets to people. Is that correct? That they’re somewhat used to that?
Evan Dixon: There is. It’s much less prevalent than in the United States, but it’s prevalent enough that you can tell people it works the same way that your satellite TV might work too -- where we have to install a satellite dish on your roof. There’s equipment that goes in the house. And as long as that dish can see the satellite, you can get service. And that message sometimes resonates with people that don’t totally understand the technology. So certainly our agents use that on a daily basis to people confused by what the installation involves.
Alex Miller: And from the customers that have been installed so far, and I know it’s still early, but have you had any initial feedback from people saying, ‘thanks for bringing this because we didn’t have much before?’
Evan Dixon: Certainly. We’ve performed customer surveys. We have Facebook pages where people can leave comments. We get feedback from our call center agents. Broadly speaking, people are happy with the service. Like any new business, there are things we’re trying to improve. I’d say specifically on the support side is where we need to get better, and we’re making investments to make that happen. But in terms of, are we seeing feedback from customers that is shaping our future, the answer is yes. We like to make sure there is a feedback loop between what’s coming back from our customers and the products that we’re developing, and how we’re servicing them. And we make sure that we’re taking that into account when we design our packages, when we set up how we should perform customer care, making sure that we’re doing the right things in terms of support installations, et cetera.
Alex Miller: Yeah, that makes a lot of sense.
Evan Dixon: We think that the most important time to understand who your customer is is early on. And so as we’re launching in these markets, it’s a major focus for us to understand: Who is our customer? What do they want? How can we make sure we deliver that to them, and give a product that wows them and a service that makes them feel good about the company they’ve subscribed to
Alex Miller: You alluded to it earlier, but I wanted to mention that service in Europe today comes from our jointly-owned KA-SAT satellite. But in a few years, we’ll have a ViaSat-3 class satellite over Europe with a lot more capacity. So what kind of change is that going to bring to our residential offerings and any other offerings that we’ve got over Europe?
Evan Dixon: ViaSat-3 will be a massive impact for us as a business and for the people across Europe. I think first you’re going to see that we suddenly will have a lot of capacity over the premium Western European markets that we’ve been eager to enter into, and where KA-SAT has been somewhat constrained. Second, we’re going to be offering speeds that are going to be really surprising for people when they compare it to what else they’ve been able to get in the past, orders of magnitude faster than what we’re able to offer today. So we can truly say we’re offering fiber-like packages from the sky. And like I alluded to earlier, the faster the speeds we offer, the larger our market gets. So the people that are on the fence with their slower DSL package, who are asking ‘am I willing to switch to satellite for a faster speed’ — the faster the speeds that we offer are, the more likely that person is willing to switch.
Alex Miller: So big changes ahead in just a couple of years with the kind of things we’ll be able to offer. And it’s also interesting to think about, when you think of Europe, you think of it being pretty densely populated in areas, but there really are plenty of areas -- talking about Spain in particular -- where they’re pretty rural. So they really have been left behind somewhat.
Evan Dixon: Absolutely. I think you will see that in just about every country in Europe, just like you see in the United States, where population is spread out between urban, suburban, rural and ultra rural, and the size of each of those populations varies by country. But those four different geographies will always exist. And so our focus is to make sure that we have a product that can deliver service to each of those four different geographies. And we’re seeing that today that people in each of those four different geographies are purchasing the product, because even people that live in what we would consider urban areas, when we look at it from an aerial point of view, it turns out that they have been left behind, and fiber for whatever reason, just didn’t build out to their streets or city or neighborhood. And satellite offers a great option for them.
Alex Miller: And Europe in general, I know the EU countries have a kind of a mandate to try and get to a certain download speed. It is a 25 or 50 that they’re trying to get to.
Evan Dixon: Sure. So the EU 2020 plan, which is a plan that was developed by the European Commission, is trying to achieve by the year 2020, which we’re knocking on the door of right now — trying to achieve 100% of households having access to at least 30 megabits per second and 50% of households having access to 100 megabits per second. Here we sit probably less than half away from hitting that target. And 15% of Europe is still without access to a 30 megabits per second package. And so today we offer a 50 megabit per second package, so we are able to help solve the European Commission’s goals in the markets that we’re in. And we want to continue to help the European Union and every market that we enter to achieve their goals. And I think our goal is to make sure that the European Union and the European Commission understand that satellite can be a viable part of their solution.
Alex Miller: Yes. And it certainly seems like Viasat is well-poised to help out.
Evan Dixon: Absolutely. I think it’s our goal to get in front of as many people as we can in Brussels and in all the local governments to let them know that we exist, and that satellite is here today. We’re helping bring fast broadband to people today. This is not something that’s futuristic or, you know, many years down on the roadmap. That’s something that’s here.
Alex Miller: All right. So what haven’t I asked you that you’d like to share about our growing European residential internet service?
Evan Dixon: Well, look for us to be announcing a few new market entries over the next year. I think between now and next summer, you’re going to see a few announcements of markets. We’re certainly not done with growing the three markets that we’re in, in Poland, Spain and in Norway. But we’re going to continue marching down towards our goal of becoming a pan-European ISP.
Alex Miller: All right. Well, thanks so much for taking the time to talk with us today, Evan. And best of luck with Viasat in Europe and on all the projects that you’ve got going on there.
Evan Dixon: Thanks for having me, Alex.