Europe To Get New Broadband Satellite Service

A British communications company is set to launch a satellite today that will provide broadband communications to rural residents and businesses in Europe.

The satellite, called HYLAS 1 (for highly adaptable satellite), is being launched by London-based Avanti Communications Group. According to Avanti, it is the first of its kind to lift of from outside the U.S. An Ariane 5 rocket will take the satellite to orbit from French Guyana.

This is a landmark day for the many consumers and businesses across Europe, who have been frustrated by lack of access to adequate broadband, it means that finally there is the opportunity to solve the digital divide. The launch of our satellite today means that access to broadband in remote areas is no longer on the distant horizon, said Avanti Chief Executive David Williams, in a statement.

The satellite will offer 10 Mbps speeds to some 350,000 customers. The British government has committed to providing everyone in the country an Internet connection of at least 2 Mbps, and the HYLAS satellite is part of that effort.

Avanti is also developing a second satellite, called HYLAS 2, which is to provide wireless broadband in the Middle East and Africa as well as Europe. HYLAS 2 is set to launch in 2012.

Avanti has several service contracts already. Among them are Hungarian service provider Banknet Kft, which serves Hungarian banks, and U.K. providers InTouch Systems and DSL Telecom.

The British government has given a €34 million ($45 million) grant to the venture. Other investors include Caledonia Investments plc, which owns 14.49 percent of the company, a stake worth about £71.7 million ($112 million) and Aegon UK, which owns 5.11 percent, worth about £25.2 million ($39 million).

Satellite internet service providers have proven more successful than those that tried to provide wireless phone service as well; HughesNet, Direcway, and Starband are all U.S.-based companies that provide the service.

Meanwhile there have been a number of companies that have gone bankrupt trying to build satellite-based telephone systems or combined data/voice service - most recently TerreStar, which filed for bankruptcy in October. Another, ICO Global Communications, filed for bankruptcy last year.

Avanti has a credit facility that totals £194 million ($303 million), but it has no current debt. TerreStar's debts exceeded $1 billion while ICO's debt was $750 million.