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Avanti Communications Group plcKa-band Broadband to Consumers NetworksEvolutions in Satellite Telecommunication Ground Segments - June 2008

The Consumer Market

We are all consumers!

Almost certainly we all have broadband access at home

Most of us will have a terrestrial solution, either ADSL or Cable

Some of us will use mobile solutions

How many of us have a satellite based solution?

But we all have one thing in common:

“We all want the most for the least” or even worse:

“Everything for Nothing”

The Consumer Market

The consumer or residential market is characterised by high performance BUT low price expectationsMust be a similar experience to other (sic terrestrial) broadband services:

Speed (surfing and downloading)Transparency to applications (e.g. VPNs)Availability (inc contention)

Pricing must be comparable to other solutions if penetration is to reach interesting levels – very low elasticity of demandService wrap must be similar to terrestrial ISPs/Telcos/Mobile operators:

Ease of ordering, installation commissioningReliability and after sales support

Available Market (Europe)

Original Digital Divide:

512 kbps versus dial-up

Rural areas beyond economic reach of terrestrial services is typically < 5% of homes where only dial-up is availableResearch indicates 3% of EU-27 homes and businesses will never receive DSL > 6 million potential subscribers

New Digital Divide:

Higher speed next generation services (> 8 Mbps) are not available much beyond 3 -5 km from the exchange 5 – 15% of homes

Represents several millions of homes without good quality connections

Important that satellite can compete in the higher speed markets

Proven Market (USA)

WildblueLaunched service June 2005 using Ka-band on Anik F2WildBlue-1 launched December’06 in service March ’07, increases capacity of system up to 750,000Total subscribers now in excess of 250,000 (est.)

Hughes Network SystemsStarted in Ku-band as DirecPC in 2001, added 10k/mth during 05/06Reached over 400,000 subscribers, 46,700 in Q1 2008 aloneNow launched Ka-band services on Spaceway 3, total capacity of 10Gbps

ViaSat claim more than 500,000 Surfbeam terminals shipped (Jan 08) and ViaSat 1 slated for 2011 – Large Ka-band satellite with total throughput up to 100 Gbps

Total Cost of Ownership Model

Fixed Costs / RevenueHardware cost @ -300€Installation cost @ -150€Connection fee @ +100€

Recurring Costs / RevenueBandwidth cost @ -10€/mthSupport costs @ -5€/mthMonthly service fee @ +30€

Profit:24 months = 10€ / 1% profit36 months = 190€ / 19% profit48 months = 370€ / 31% profit

Implications for satellite service providers

Cost of ground and space segment important

Low cost installation and reliability essential

Reducing churn and longevity of customer relationships key to profitability:

Service must be meet expectations

Service must be able to evolve over time to meet higher expectations:• Increasing speed (down and up)

• Shift towards increasing symmetry between down and upstream

• QoS for critical services

• Application acceleration – PEP must be able to evolve to handle new applications/protocols

• Security features to protect satellite network from attack

What is Avanti doing different?

HYLAS – low cost small but very flexible Ka-band mission

Avanti is a new small entrepreneurial service provider

Listed on LSE AIM with a Market Capitalisation of $120m. Long Term institutions and management own 60%;

Debt funding £32m for completion of HYLAS;

Company fully funded.

Strong Management team and 55 employees

Low operating costs

Market driven and very agile

Vertical integration and wholesale business

Already providing services using commercial Ku-band capacity

Current Services – End user delivery

Two service types:Hybrid satellite to WiFi 802.11 for home users

up to 2.5km - unlicensed frequencies

Satellite direct to premises

Higher grade of service usually used by business users

Copyright Avanti Communications Group plc

HYLAS Satellite platform

ISRO I-2K Platform – 22 years of in-orbit heritage:Launch Mass: 2550 Kg

Power : 2.4 KW

Lifetime:≥ 15 years

Falcon 9 Launcher(SpaceX)

HYLAS Payload

Flexible in-orbit capacity-to-beam allocation between three and eight-beam modes:

Generic flexible payload equipment provides flexibility in spectrum allocation to each beam

Flexi-TWTAs provide flexibility in power allocation to each beam

Adjustable channel bandwidth from 54 to 250 MHz

Channel uplink and downlink centre frequencies independently tuneable in orbit

Maximises usable capacity and minimises commercial risk (payload can be adapted to market trends)

Connectivity from the Ku- band payload to the Ka-band gateway and user downlinks

Connectivity from the Ka-band Forward and Return up links to the Ku-band downlinks

SPECIFICATIONVery high power (62dBW) Ka & Ku band satellite = 2-3 times more powerful than any other satellite over Europe66m two-way antenna45cm receive antennaUp to 3GHz capacity15 year lifetimeISRO I-2K Platform

• Launch mass 2600kg• 2KW payload power• 250kg payload

APPLICATIONS250 HDTV channels320,000+ broadband usersTriple playTransportable / mobile

HYLAS – Satellite Coverage

Copyright Avanti Communications Group plc

HYLAS Benefits

BENEFITS:Very small two-way antenna requirements: from 66cmLicensed band for two-way satellite communicationsReduced cost of satellite terminals (approximately €300 per terminal expected before 2010)Easy antenna pointing due to circular polarisationMore cost effective capacity due to frequency re-use in spot beamsUp to 2Mbps upload bandwidth from customer sites from a 66cm antenna (more is possible with larger antenna and/or larger amplifier)Transportable and mobile applications possible due to high power

Cost reduction through volume engineering for mass production

ACM required for both forward and return links to maximise throughput at Ka-band

Hub diversity to improve overall system availability

Higher terminal rates must be supported

Higher order modulations (8PSK) can be exploited

Simpler installation through circular polarisationand auto-power control

Embedded acceleration essential forconsumer market

Implications for Ground Segment

Conclusions

Everything depends on price:Price Space Segment costs

Price Terminal costs

Price Installation costs

Price Operational costs

Performance as good as terrestrialNo noticeable delay for surfing or for FTP

Availability > 99.5% (approx 1 hour per week outage)

Support service development and product reliability to keep customers and increase ARPU