I went to the KVH annual meeting today. It was the first annual meeting I've ever attended. For the most part, it was pretty boring, but it was a good chance to talk to management about the company. I was most interested in where they are with their proposed high bandwidth satellite internet access systems. Here's some of my comments from the meeting:
Their latest contract with INMARSAT calls for KVHI to get a service revenue residual for their systems. This will provide an ongoing revenue based on usage charges. This sounds like a really good thing.
INMARSAT is an international system. The previous satellite phone system (the one that didn't really pan out) was just for N. America. It was mentioned that the market overseas should be larger as the phone infrastructure is not well advanced in many countries. This means that satellite phones should be more popular, as there may not be land lines available in all places.
As far as high bandwidth wireless internet access - it sounds like this is still a year or two in the future, but KVH wants to be a part of it. I'm not very familiar with the wireless and satellite technology, so I'm really not sure how well positioned KVH is in this area. However, they do want to get involved, and the potential here is very large. They are aware of a number of satellite technologies that are happening. One of the satellites will provide 6 Meg bi-directional bandwidth, another will provide 1.5 Meg bi-directional. One of these satellites will be launched next year. They mentioned a possible price scheme, unfortunately it wasn't a flat rate type of price. I think a reasonable flat rate with unlimited usage would cause this type of service to catch on quickly. It sounds like they are only in the discussion stages with any of these projects, and would need to partner with the service providers in order to profit from this market. They did say they would prefer the same model for this market that they have with INMARSAT, where they get some small percentage of the ongoing revenues. It sounds like they know what's going on in this area, and there is a definite potential for some very interesting and profitable developments in the next year or two. |
