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Fast forward: Pradman Kaul, Hughes Network Systems


In an environment when cable operators are openly talking about providing residential Internet access service that reaches into the 100 Mb/s range, and fiber-to-the-node is being criticized as not providing enough bandwidth, it may come as a shock to some that there are still vast chunks of the country where traditional broadband is simply not economical. Hughes Network Systems, providing very small aperture terminal, or VSAT, service, is stepping into the gap, generating $500 million per year in revenue from those areas as well as offering secured data networks for some of the largest enterprises. CEO Pradman Kaul recently spoke withTelephony`sVince Vittore about the business and its prospects going forward.

On the enterprise business: Our enterprise business is a very robust business. It`s mostly Fortune 1000. The areas where it makes sense for them to use VSAT networks are: one, where they want to standardize on IP; two, where they`ve got a lot of locations; three, where they`re geographically dispersed; and, four: a portion of their business where they can`t get broadband.

On strong verticals: If you look at customers from a vertical market segment, there are some segments where we are very pervasive. Energy is one. Every time you go to fill your tank of gas, it generally will be a HNS VSAT that takes your credit card information back to the data center of the gas company. Another big industry is fast food because of credit-card transactions. We started to get very big in the retail industry. In the financial market, it`s more in the rural market, places like Edward Jones [the brokerage firm]. Internationally, a lot of banks tend to be our customers.

On competing with growing broadband options: Everybody feels there`s about 30% of this country that will never be covered economically by broadband. We can`t economically compete with DSL when DSL is charging $20 per month. But in the U.S., there are 10 million to 15 million households that don`t have DSL and won`t have it for the next three to four years at least. We believe there`s a $30 billion market in datacom. We`re probably addressing $3 billion to $4 billion of that.

On the emergence of WiMAX as a competitive threat: I view WiMAX as a complementary technology. For the backhaul requirements, the LMDS product we have is very appropriate. We`re already doing that for 3G systems in Europe. From a competition perspective, there will be some overlap, but I think the WiMAX [providers] are first going to go where there are a lot of customers. I don`t think they`re going to go into areas of thin density because their cost per subscriber will be very high.

On applications driving VSAT demand: The consumer is just focused on Internet access. Once you go to an all-IP network, you don`t have to have all the equipment we used to have. Most of the original customers, it was mostly point-of-sale application. Now there`s a lot of file distribution. Internationally, there`s a lot of distance learning, kiosks for Internet access and voice over IP. We recently sold a system to Telmex for 12,000 VoIP lines in remote locations.


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