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ViaSat (VSAT) Q3 2021 Earnings Call Transcript

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VSAT earnings call for the period ending December 31, 2020.

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ViaSat (VSAT 2.76%)
Q3 2021 Earnings Call
Feb 04, 2021, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Welcome to Viasat's FY '21 third-quarter earnings conference call. Your host for today's call is Rick Baldridge, president and CEO. You may proceed, Mr. Baldridge.

Rick Baldridge -- President and Chief Executive Officer

OK. Thanks for joining us today. We tweaked things a little bit in response to some customer input. We've adjusted the timing of our call so that people would have a little bit more time to review the -- our shareholder letter and prepare for the Q&A session.

We released our shareholder letter earlier today, and hopefully, you've had a little time. Today's call will primarily consist of Q&A. But first, let's have Robert Blair provide our safe harbor disclosure.

Robert Blair -- Vice President, General Counsel and Secretary

Thanks, Rick. As you know, this discussion will contain forward-looking statements. This is a reminder that factors could cause actual results to differ materially. Additional information concerning these factors is contained in our SEC filings, including our most recent report on Form 10-K and Form 10-Q.

Copies are available from the SEC or from our website. With that said, back to you, Rick.

Rick Baldridge -- President and Chief Executive Officer

Thanks, Robert. And hello, everyone. Thanks for joining us. On the call today, in addition to Robert, we've got Mark Dankberg, our executive chairman; our CFO, Shawn Duffy; and Paul Froelich from our corporate development and investor relations teams.

As I said, we're going to have -- do something a little bit different today with our Q&A. We've had some inbound questions from investors in advance. So in addition to the questions from analysts, as usual, we'll review some of the investor questions, to the extent they haven't already been covered during the Q&A. That's it.

And we thank those investors for submitting the questions. So before getting to Q&A, we'll do just the very quick highlights from the letter. First, another really solid quarter performance-wise, continuing our really strong EBITDA growth throughout the fiscal year '21. In fact, we anticipate the full year will be another record for the company on the EBITDA and operating cash flow front.

The performance drivers remain pretty consistent with what we've been -- what we've seen through the pandemic period. The fixed satellite service results were excellent driven by strong demand in the markets we're in. Our government franchise performance was solid, but it's being impacted by the logistics issues associated with COVID that we've talked about before. This is pretty much expected, and it reflects some of the inherent lumpiness we usually see in several categories and in awards.

Overall, we feel really good about our outlook on the government. So we've had a big order backlog, really good first half of orders. And there's -- our backlog is growing and still growing in that area, which helps underpin our confidence in the future. IFC remains impacted by the travel volume, but we did see a sequential pickup in the quarter.

And we've had strong -- a really strong quarter in our commercial networks business. We have generated $224 million in operating cash flow in the quarter and over $700 million on a trailing 12-month basis. Net debt was flat, and our leverage ratio declined, helped by our continued growth in EBITDA. Book-to-bill was positive, and backlog grew to $2.4 billion, not counting over $3 billion in unawarded indefinite delivery/indefinite quantity contracts, IDIQ contracts, in the government business.

Numbers aside, during the quarter and early here in the new year, we've announced some important execution milestones and wins. The agreement to purchase the remainder of our EBI business in Europe from our joint venture over there, which we think helps us establish a good market position and helps reduce the risk in our fixed broadband business as we prepare for ViaSat-3. The announced acquisition of RigNet, which we've been looking at it for a while, and that helps jump-start our growth into several key remote enterprise sectors ahead of our ViaSat-3 launch. Our new IFC win with Delta was pretty exciting, and it's an entry point with a major new, really high-class customer and a new distribution partnership in SKY Brasil as we completed the rollout of our fixed broadband offering in South America's largest market.

So these developments all underline our focus on execution ahead of ViaSat-3 as we grow our global footprint and build out a diverse set of existing and new markets. Speaking of ViaSat-3, we continue to make really good progress on the program and we're moving closer to delivery of the first payload, the record COVID spike seen in the quarter, especially in our Arizona, where our payload facility is located. However, those things haven't really worked in our favor. They've caused some intermittent work delays, both internally and with our supply chain here in this recent quarter, mostly internally.

That's unfortunately moved our first launch into the first quarter of 2022. Us and Boeing will be hunting for schedule efficiencies to make up for as much of that as possible in the growing months. We had some progress that performed ahead of our schedule. Had the COVID stuff not impacted, I think we would have had an improvement in our schedule.

We really remain excited about the big picture, opportunities for the ViaSat-3 program and will open up the company for our shareholders. The performance on that satellite is we're well over 95% complete, with just a couple of remaining things to get done. So we should be done here in a few weeks for the delivery to Boeing. o with that, we'll get -- let's get started to our first question.

Operator?

Questions & Answers:


Operator

[Operator instructions] Our first question comes from the line of Phil Cusick with J.P. Morgan. Your line is now open.

Phil Cusick -- J.P. Morgan -- Analyst

Hi, guys. Thanks a lot. In your shareholder letter last quarter, you have highlighted the strong government backlog to drive sequential revenue growth into year-end. Now we're talking more about friction with the administration.

How should we think about that? In the past, under administration changes, you've seen a sequential decline from December to March, but nothing that's outside of your normal year. Since you're calling this out, should we be looking for something stronger?

Rick Baldridge -- President and Chief Executive Officer

No. I don't think so, Phil. It's -- we're seeing kind of some of the same trends. I think without the COVID thing, we -- it would have been quite outstanding.

That's why we say it's just a little bit been impacted by the COVID stuff. And we're seeing that. We're seeing a good -- an example would be people can't -- COVID's impacted people from actually showing up and doing live with us of testing. Of course, that's an example where that test milestone is required for us to actually ship a new set of product.

It's things like that, that we're seeing that are unusual. But the rest of the business cycle is pretty similar. So I think the only reason why we want to point it out is we just had such a great order flow. And so it's not going to -- that order flow is not going to create an unusually high level of sales through -- in through the December quarter or through the March quarter.

So nothing really outside the normal.

Phil Cusick -- J.P. Morgan -- Analyst

And is there any kind of product cycle in your government sales? Or is this relatively the same amount of products? And any sort of ins and outs quarter to quarter is more driven by sort of the guarantees in procurement than it is in what you're shipping?

Rick Baldridge -- President and Chief Executive Officer

Yeah. I think that's a fair statement. We don't have -- we haven't seen any weaknesses in any of our specific business areas on the government side. So I think that's a fair statement.

The administrative transition is just more abnormal course for what happens during a transition from one administration to another that we anticipate.

Phil Cusick -- J.P. Morgan -- Analyst

OK. And one more if I can. Margins in sat services and commercial networks continue to trend really well. Can you unpack some of the underlying trends in those segments? There's been a lot of upside to margins lately.

How should we be thinking about that going forward?

Rick Baldridge -- President and Chief Executive Officer

On the satellite services side, this is what we've seen every single time, ViaSat-1 and ViaSat-2, that we have some upfront costs that we experience as we launch those new satellites. And when we cross that line of covering those costs, the margins have expanded like the last couple of times. And that's what's happened here on ViaSat-2, where we've covered all the costs. So the incremental margin, if you look at it year over year, it's actually up over 100%.

More revenue has flowed through then to margin than just the revenue increase. So we've had a little delay in ViaSat-3. And so what we've done is we've been able to reduce cost in that area and generate cash -- operating cash. So that's a normal trend that we've seen.

On the commercial networks piece, it's a little bit different. There, we're nearing the -- we're getting ready to ship our payloads. We had a bunch of R&D driving the margins in that business down during that development cycle, and those are basing off. Is that right, Shawn?

Shawn Duffy -- Chief Financial Officer

Yes.

Phil Cusick -- J.P. Morgan -- Analyst

Should that R&D sort of bounce back up or is this a good line for a while?

Shawn Duffy -- Chief Financial Officer

Yes. So I would say that when you -- I think we've kind of come down to a steady state from a percentage of revenues. It's been around this 5% of revenues. And so I kind of expect those levels.

Phil Cusick -- J.P. Morgan -- Analyst

Great. Thanks guys.

Rick Baldridge -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Ric Prentiss with Raymond James. Your line is now open.

Ric Prentiss -- Raymond James -- Analyst

Hey. Good morning or good afternoon, depending where you're at.

Rick Baldridge -- President and Chief Executive Officer

Good morning, Ric.

Ric Prentiss -- Raymond James -- Analyst

Hey. A couple of questions. First, as you manage capacity with the ViaSat-2 filling up and getting good margins, as Phil pointed out, you're managing capacity, but you're also starting to earmark some for the in-flight connectivity ramp. How should we think about the trend for broadband net adds and -- versus how much capacity you need? And what kind of pacing should we think on that in-flight connectivity order flow?

Rick Baldridge -- President and Chief Executive Officer

We've had some additional orders subsequent to the quarter, pretty good orders, from existing customers. So we're starting to see that come back. The airlines are way more in control of that. But we're obviously a follower of that.

So we have some models, some high and low and mid-models. But I think it's going to be -- I don't think you'll see a lot of input until -- a lot of increase until we get past a certain point just in terms of vaccinations in that. But we're seeing it come back for sure. And I think on the consumer residential broadband side, Mark, you might want to chime in here, but I think we're -- you saw a little bit of -- we're not seeing a slowdown of demand.

What we're seeing is people upgrade. They're choosing to upgrade services and expect that to actually slow a little bit as well. And so we're making trades for higher and upgraded plans for subscribers in some of those areas while preserving capacity in all those markets for IFC growth. So we'll make a trade.

We'll probably see slight reductions in subscribers for a little while. We've got some ideas and things we're trying that could offset that. But I wouldn't want you guys to put that in your models here in the near term. So we have some ideas on how to improve it.

But for right now, I think we expect some continued slight decline in subs.

Ric Prentiss -- Raymond James -- Analyst

OK. And the ViaSat-3a slipping out to calendar year first-quarter '22. How fast can you get that in service? And then remind us, is it still like a six-month lag for the 3b? And how about 3c?

Rick Baldridge -- President and Chief Executive Officer

Yeah. The first one is going to be probably the longest cycle of launch to in-service because we've got -- this is a very, very complicated overall system, and we've got to go through pretty thorough testing. We'll launch with a minimum amount of subs for a while and test. But it will be several months before we have a real full launch of -- on that satellite after it gets in orbit.

We have -- we expect a pretty short-cycle time to get it in orbit after we launch versus what we had last time, very short. So in the order of a quarter of -- 30 days-type thing before we're ready to go. So that helps that overall period. So we'll be launched and in service faster than we were launched on orbit last time.

That's what we expect. And then the second, yes, it's in the order of five or six months behind the first one. That's what we're expecting. The third one, maybe a little closer than it was before behind the second one.

Mark, do you want to chime in there at all?

Mark Dankberg -- Executive Chairman

No, I think you covered most of it. I mean anything I'd say, Rick mentioned at the beginning, that we're trying to do things to recover schedule, those areas where we can do the integration and test in advance, which is what we're doing now, give us opportunity to bring in that schedule.

Ric Prentiss -- Raymond James -- Analyst

OK. And then one bigger picture question. I got to tell you, probably the top question we get and you guys probably are, too, is the whole LEO question. SpaceX, Starlink, you've got now AST & Science out there talking with folks.

The RDOF auction's now over. It's the quiet period. Thank God, it finally ended. What can you share with us as far as your view of the addressable market, the competitive landscape and what the future kind of looks like? I know it's a big picture question, but we get it a lot.

Mark Dankberg -- Executive Chairman

OK. So well, one part we can deal with really quickly is the AS&T thing is direct to mobile. It's not a competitive service to what we're doing. We don't see that as impacting us, and we'll just put that one aside for a second.

On the LEOs and RDOF, I think we anticipate a trend where there is more buildout in the market, more due to RDOF than to other satellite competition. But even with our -- one thing, with RDOF, there's still a lot left to be determined because there's a lot of concern that a lot of the award -- though a lot of money, we had won by technologies that are unproven and may not be able to meet the obligations that are associated with them. So there's still some steps to go before those things are finalized. And I think, from our perspective, to the extent that they are awarded to and don't fulfill their obligations, that certainly creates more -- it just leads to a bigger market for us.

But on the other hand, there are -- the one thing I would say is we have had a service offering that's been positioned relative to the market the way the market has been and the way it is now. But we're not -- we have a lot of maneuvering room in terms of how we do go to market. And there's -- there are many people that have terrestrial services that are not happy with them in one way or another, whether it's price, the ability to support certain types of applications or the service that goes along with them, where we believe we can compete. So the main thing I would say is our expectations, our plans for service, are in the low single-digit percent of the U.S.

market and those markets we go into. And so here, in the long run, we don't see those types of addressable markets changing for us that much as a result of these things. The way we go about those markets, that might be the service plans, the specific service plans we have, the specific price points or the way we go about it, certainly could evolve. And I think you'll see that evolve.

But it's -- it makes complete sense for us to do that in response to changes in the market as they unfold over what we think is a pretty long period of time, three to five years. That's kind of what our view is. But we see that we'll evolve, and we always have. We've evolved from where we started.

Is that -- OK, good.

Ric Prentiss -- Raymond James -- Analyst

Right. That was very helpful.

Rick Baldridge -- President and Chief Executive Officer

And Mark made a really good point there that I think shouldn't be lost is the reason why we've been going after higher ARPU and higher quality services is -- and we have limited capacity. And we had demand, more demand for capacity. So that's what we did. So one thing is if the situation is different than that, we'll have a different tactic.

And so people shouldn't just expect we're just going to go after higher ARPU things all the time. We're going to do what makes sense.

Mark Dankberg -- Executive Chairman

Right. Yes. And one other thing, yes, and one other thing I would add is, right now, we're in a very intense capital spending campaign relative to our revenue and earnings. So optimizing for cash flow makes a lot of sense.

But we don't expect to be in the same position after the ViaSat-3 is launched. So that creates more maneuvering room as well.

Ric Prentiss -- Raymond James -- Analyst

Great. Thanks guys.

Operator

Thank you. Our next question comes from the line of Louie DiPalma with William Blair. Your line is now open.

Louie DiPalma -- William Blair -- Analyst

Great. Rick and Shawn, good afternoon.

Rick Baldridge -- President and Chief Executive Officer

Good afternoon.

Shawn Duffy -- Chief Financial Officer

Hey there Louie.

Louie DiPalma -- William Blair -- Analyst

And good afternoon to you, Mark, as well. I was wondering, you announced the Delta win, and for the economics of the hardware installation for Delta, are those economics similar to the economics for your other recent customer wins for in-flight connectivity?

Rick Baldridge -- President and Chief Executive Officer

I mean you could assume that. In other words, if what you're asking for is did we -- are we selling hardware to them and then providing services, yes. I mean we don't go into the details of every customer, but the answer would be yes. It's fairly representative of our offerings.

Each offering's unique, but the overall thing, you should assume, yes.

Louie DiPalma -- William Blair -- Analyst

Great. That is helpful. And on the same in-flight connectivity topic, do you have an update in terms of the total number of aircraft under contract that you have now, if you include the Delta plans? And you also mentioned, subsequent to the end of the quarter, that you won other orders from your existing customers. I was just wondering if you have account of your total number of aircraft under contract.

Rick Baldridge -- President and Chief Executive Officer

Yeah. Through the end of the quarter, it was a little over 1,000 backlog. We can assume it's grown a little bit since then.

Mark Dankberg -- Executive Chairman

Yeah. And we have about 1,500 now. So the total under contract would be close to 2,500.

Louie DiPalma -- William Blair -- Analyst

Great. And I was also wondering, do you have updated thoughts on what free WiFi could mean for average annual revenue per aircraft relative to what your current average annual revenue per aircraft is for your existing base. And I know this is a future catalyst, but investors are wondering what could be the implications post-COVID as airlines switch to a free WiFi model.

Mark Dankberg -- Executive Chairman

Well, I would say -- well, basically, the way to think about it is that the variable revenue that we get really is going to be related to the number of passengers that use it and the types of activities that they use and the way the airlines choose to deal with that. And a lot of that discretion goes to the airlines. But the general trend, and we've seen this trend anyway, is that if you put a really good WiFi service on, engagement tends to go up, and that tends to drive additional revenue in one form or another. But the exact amounts will vary depending on the airline and the type of service they choose to present and the other types of partnerships that they or we create to engage passengers.

So it's very hard to be specific, but the general trend is up.

Louie DiPalma -- William Blair -- Analyst

Thanks, Mark. And I have a question related to your government business. You have referenced that you have $3 billion in government defense IDIQs. And I know that $3 billion, I think, it represents the ceiling value.

And I was wondering, based on your conversations, how much of that ceiling value do you expect to convert to actual past orders and contracts over the next several years.

Rick Baldridge -- President and Chief Executive Officer

So there's a saying that past performance doesn't guarantee future performance, so I'll start with that. But we've had -- our history is essentially we consume the ceilings at the IDIQ contracts we have, very rarely doing not. So kind of we're expecting that. That doesn't guarantee that's going to happen because they're a little bit unique, and they're different than each other.

But we've had a really good history of fulfilling those. Like I said, that doesn't guarantee the future, but that's kind of what we expect.

Louie DiPalma -- William Blair -- Analyst

Thanks, Rick. And one last one. Mark just talked about the intense capex cycle that you're going through right now as it relates to ViaSat-3. And I was wondering, can you give us an update in terms of how much of the ViaSat-3 capex you've completed and how much remains.

Shawn Duffy -- Chief Financial Officer

Yeah. Sure. I can take that, Louie. So right now, we're over halfway through the program.

So you can think of that as over $1 billion is behind us, and so we're pretty far along that. And I think one of the other things to kind of put around that is if you look at our liquidity position today, strong operating capital, is like $700 million the last TTM, that we're in a really good position. We're basically fully funded to finish the buildout.

Louie DiPalma -- William Blair -- Analyst

Great. And for capex, like this quarter, hypothetically, are you able to break out what the capex would have been this quarter if there was no ViaSat-3? Like in other words, what is the capex that you incurred this quarter related to the other portions of your business, whether it's the customer premise equipment or maintenance capex. Are you able to break that out?

Shawn Duffy -- Chief Financial Officer

Yeah. And I think the best way to maybe look at that, Louie, is just kind of look at our -- look at that TTM cash flow that we had. And if we had taken our ViaSat-3 spend out of that, our free cash flow for that same 12-month period would have been about $275 million. That's probably the best way to kind of size it up.

Make sense?

Louie DiPalma -- William Blair -- Analyst

Yeah. That's what I was looking for. Thank you, Shawn. Thanks everybody.

That's everything that I have.

Rick Baldridge -- President and Chief Executive Officer

Thanks, Louie.

Operator

Thank you. Our next question comes from the line of Mike Crawford with B. Riley Securities. Your line is now open.

Mike Crawford -- B. Riley Securities -- Analyst

Thank you. With the ViaSat-3 constellation and the terabit-per-second capacity of the three satellites, I think you're going to increase your total bandwidth you have to sell about eightfold. And what would be some rough approximations of what that, selling those bits, to mean to revenue and EBITDA for ViaSat today, where you're looking at a little over $2 billion revenue and around $500 million in EBITDA today?

Rick Baldridge -- President and Chief Executive Officer

Yeah, go ahead, Mark.

Mark Dankberg -- Executive Chairman

Yeah. So it creates a lot of opportunity, right? One of the things that we've said in the past is that part of the way that we've been successful in competing is that we get these productivity gains, right? So we'll have 8x the bandwidth and a lot less than 8x the cost that we put in place so far. But if you like double the cost, double the capex that we've spent so far, so we'll end up offering a fair amount of the productivity gains to our customers. And that will vary depending on the market in the way that different -- that we bring the bandwidth to market, the terms of the contract and with the support that goes with them.

So it's very difficult to give an answer. But just to -- one of the things I would throw out there is, ballpark, if we gave substantial productivity improvements, we can still increase our revenues pretty significantly. And I don't really want to -- it's not fair or meaningful to put out a single number, but it's -- you can just look at what's happened over the last eight or nine years, where bandwidth consumption is -- bandwidth consumption has grown by close to a factor of 10 per capita consumption over about the last 11 or 12 years. So we need to be prepared for that pace of growth over the next decade as well.

And actually, we look at that as an opportunity, not a problem because that's what -- as long as our productivity improves faster than other options, then we compete really well. But then it just depends on what goes on in the market, how we deal with it. But it's not -- I don't think we want to put out any specific numbers. The one thing I would say is back in our -- in September, when we did our Annual Shareholders Meeting, we did put out a five-year forecast, which showed that, in aggregate, we think we can around -- double revenue over five years.

And so that gives -- that will give you a sense of sort of what -- how that -- to the extent that some of that's satellite services, not all of it is satellite services, we did give a breakout of that, you can kind of get an implicit view of what we think -- how we think we're going to apply the bandwidth and what that means for revenue growth. That's probably the best way to interpret for now.

Mike Crawford -- B. Riley Securities -- Analyst

OK. Thank you, Mark. And then if -- it seems under that construct, that after the ViaSat-3 EMEA satellite starts to load, that that's around the time when you flip into generating positive free cash flow even if you build another satellite every year and maintain this capex regimen around somewhat just off of $1 billion a year. Can you remind us what types of capacity we might see in ViaSat-4 and ViaSat-5 types of satellites that you're currently contemplating?

Mark Dankberg -- Executive Chairman

Yeah. So that's a really good point. I think that the point that is per capita consumption is going to continue to grow means you have to have a plan if you want to maintain competitiveness. And just to price your service offerings on a go-forward basis, you have to continue to improve productivity.

So we've talked about ViaSat-4 a couple of times over the last few quarters, and we are -- we're working on the detailed design of that. And what we think is somewhere in the range of 5, 6, 7 terabits is what's possible there. There are still trade-offs associated with that, but that's kind of the range. So think of it at maybe a factor of five-ish, five-plus improvement relative to ViaSat-3.

The next generation, just it's a little bit harder to have clarity on. It's -- we think this is -- on ViaSat-4, this is based on design work. That's where we are now. And ViaSat-5, it's based more on conceptual stuff, but we think there's another factor too that can be gained at least beyond that.

So altogether, that means we've got like an order of magnitude of productivity gains in front of us that we're working on.

Rick Baldridge -- President and Chief Executive Officer

So Mike, yes, Mike, one of the questions -- one of the points I just don't want to go unnoticed is you're right in that after we launch the second one over the EMEA, it's two or three quarters after that, and we think we'll go free cash flow positive. And as a company, we expect to stay there after that. So that's -- I think it's a really important point regardless of our buildout unless we do something completely different that I don't know about.

Mike Crawford -- B. Riley Securities -- Analyst

OK. Thank you, Rick. And then last question is if a LEO constellation of, let's say, 2,000 satellites was circumnavigating to go out at like 550 kilometers, like Starlink, how many of those, at any given point in time, would be over the U.S.? And then how many those will be visible from one point on the ground like, say, over Chicago O'Hare airport?

Mark Dankberg -- Executive Chairman

OK. So the answer, the exact answer to that question depends on the orbit selection. You look at what Starlink and Amazon have done, and not everybody has done and not all of their satellites, all this. But basically, they've tried to incline their orbits in a way that they don't cover -- the satellites that don't cover the poles spend more of their time over the mid-latitudes where the U.S.

is. But think of it as 6%, 7%, 8% of the satellites would be over the U.S. -- would be within sight of the U.S. But that -- even that depends a lot on the specifications of the ground terminals because the fact that the satellites are inside of the U.S.

doesn't necessarily mean that the ground terminals are inside of the satellites and can do that with the latency specs that they have. So it's a little bit -- there's just some complications there. And then just the fact that they're over the U.S. doesn't mean that they're all over places in the U.S.

where there's demand. That's the other factor. And then for your question about a place like O'Hare, so there are regulations around what's called EPFD, which is equivalent power flux density. And the whole point of that is to prevent nongeo satellites from putting an amount of power into a specific location that could exceed -- that could cause interference to geosynchronous satellites.

So that -- so the answer to how much of a bandwidth they could bring to a particular place depends on the specifics of that. But it definitely puts a bound on the amount of bandwidth that can go into small locations. And kind of the specific answer, again, it depends on the orbits and the look angles of the satellites. But with a couple of thousand, you can think of it as on the order of 10-ish satellites that could be in sight of a particular place in the U.S., but that not all of them -- they may not all be usable for a variety of reasons, depending on some of these specifications.

Mike Crawford -- B. Riley Securities -- Analyst

OK. Thank you, Mark. Thank you.

Mark Dankberg -- Executive Chairman

Thanks, Mike.

Operator

Thank you. Our next question comes from the line of Chris Quilty with Quilty Analytics. Your line is now open.

Chris Quilty -- Quilty Analytics -- Analyst

Thank you. I wanted to follow up first on Delta. I know, with American, you guys had a crazy fast rollout of antennas to the aircraft. Should we expect that type of installation? Or will this one be more gradual?

Rick Baldridge -- President and Chief Executive Officer

It will be a little more, I guess, fast though. They want to get these, the ones they've identified, outfitted quickly. So we won't have at the same level. Remember, we had quite a few more aircraft initially awarded by American than we do here.

And so the rollout was very, very rapid. We'll go as fast as Delta wants to go, but it won't be quite as fast, but it will be definitely a pretty big increase from where we are.

Chris Quilty -- Quilty Analytics -- Analyst

OK. And I guess part of that is of the 300-plus aircraft, what is new aircraft versus retrofits? And presumably, they've got new aircraft that are parked that are easy. Have you kind of given the breakdown of what you expect the penetration to be of new versus retro?

Rick Baldridge -- President and Chief Executive Officer

We haven't. I mean we have that. I'm not sure that we've got that cleared with Delta to release.

Chris Quilty -- Quilty Analytics -- Analyst

OK. And final question on Delta. Somebody kind of knocked around it, but the ARPA for the aircraft, given that this is going to be an all-you-can-eat plan, is it going to overall impact your reported revenue per aircraft substantially from what you're -- well, OK. But right now, the revenue per aircraft is down because of COVID.

But if you compare on sort of a nominal regular basis, is it in the same ballpark of what you've been generating historically?

Rick Baldridge -- President and Chief Executive Officer

Fair. Mark said earlier, it depends on what type of third-party deals are done on either side. It depends on how fast -- if they go free and how fast, and there's a lot of factors in there, Chris. So the other thing is the airlines are very sensitive to us talking about ARPA.

And so as opposed to kind of our competitors in the past that have single-point businesses, that the only way they kept investors happy was focused on ARPA, this is part of our satellite services business, so we blend that. I think our goal is to work with the airlines in a way that going -- either going free or having really high penetration and high passenger engagement is a good thing for them and is worth the -- either in a way that generates additional revenue for the airlines just a bit make this a net -- a very positive deal. But yeah, I think that's kind of all I want to say about that.

Chris Quilty -- Quilty Analytics -- Analyst

OK. But significantly, I get it. And I guess, on that same note, you guys had historically provided the backlog, and I didn't see it in the shareholder letter. I guess either that or the consumer ARPU.

Are those numbers you intend to give on a go-forward basis?

Rick Baldridge -- President and Chief Executive Officer

Things are changing pretty fast. We're going to -- especially with the onboarding of the European business, that's definitely at a lower ARPU than kind of where we are currently in the U.S., bringing Brazil on. And so we're working through how to best disclose those things. And we've said from -- many times, for instance, back to your previous question, we think satellite services revenue and EBITDA is going to grow next year.

And that's going to be a blend of things as in-flight connectivity comes back. And I also said we kind of expect our residential broadband in the U.S. to decline somewhat slightly. So things are changing pretty rapidly.

And just like we did this last time, we were really focused on subscribers. Subscribers didn't grow that much ARPU, it grew a lot. We'll make whatever changes make sense so that the overall economics are -- we're getting the most out of it than we think we can get. So we're sorting through what type of disclosures we're going to have in the future.

Chris Quilty -- Quilty Analytics -- Analyst

OK. Because that was a question I was going to ask to Shawn, is once you take on the European business, you're going to bring on a slug of subscribers and obviously a very different ARPU and how are you going to report that. And so...

Rick Baldridge -- President and Chief Executive Officer

Yeah.

Chris Quilty -- Quilty Analytics -- Analyst

Hopefully, when you start the new fiscal year, you'll have an entirely new set of aligned metrics, possibly with RigNet folded in as a different business segment or something that we can follow on a go-forward basis.

Rick Baldridge -- President and Chief Executive Officer

I think that's a good -- I think that timing is appropriate, Chris.

Chris Quilty -- Quilty Analytics -- Analyst

OK. So one question on the commercial networks business. You guys have been really strong in the antenna business, kind of a boring large diameter business. What's going on there?

Rick Baldridge -- President and Chief Executive Officer

We had another, actually, just really, really good new business quarter in that business. And it's just, so you know, we do -- it's usually through another prime, but we do a reasonable amount of government business in that segment, too. And so that's helped contribute to future growth there. And we have some very, very good opportunities in front of us as well.

So it's -- it continues to just be a good growth area for us with very little invested capital.

Shawn Duffy -- Chief Financial Officer

And Chris, keep in mind that we're -- that is where we report the product sales for the airlines as well as in that segment looking for it.

Chris Quilty -- Quilty Analytics -- Analyst

I know. But the language in the last Q or maybe it was in your letter here talked specifically about some of the large diameter stuff. And I thought it would -- said the earth observation customers.

Mark Dankberg -- Executive Chairman

Yesh, yesj. Right. So yeah, and basically, that's one of the things that's driving interest in space is, besides communication, is earth observation, right? And generally, that's kind of the way you get really, really high throughput on these earth observation satellites is by having large apertures on the ground, right, because you want the satellites themselves to be inexpensive, and unlike in the communications space, where you have way more earth terminals than you have satellites. In this case, a lot of times, you have more satellites than you have earth terminals.

So it's a really, really interesting field. I think there's lots of opportunity there. And I think we've got a leadership position in that. So that's part of what's driving the results there on both the commercial and the government side.

And we're -- there's more to it than just like our apertures as well. There will be -- I think there's more stuff that we're working on, and we have also a shared service initiative that's doing really well, that's called -- we call Real-Time Earth. And I think that this notion of real-time access to earth observation data is going to be a growing phenomenon as well.

Chris Quilty -- Quilty Analytics -- Analyst

Good. Speaking of little antennas, when you look at the ViaSat-3 rollout, and you don't call them gateways, you call them something else now.

Mark Dankberg -- Executive Chairman

Yeah, Satellite Access Nodes or SANs.

Chris Quilty -- Quilty Analytics -- Analyst

Yes. SAN. OK. When do you begin the rollout of that infrastructure in anticipation of ViaSat-3? And does that show as a significant capex movement in any way?

Rick Baldridge -- President and Chief Executive Officer

Yes. We -- it's Rick. We have already started. And so as you can imagine, the first thing you have to do is locate those points, make sure you have got fiber there, or get fiber brought there, get power and get leases executed, get all the regulatory approvals for each one of those sites.

And there's a process to go through here. We're well into that process here in the U.S., and we're actually well into that process in Europe and have begun that in the Asia Pacific region. So we've already begun to incur expenses associated with that, in front of including fiber leases and that. In addition, we actually have some of our gateways up and running, and we're running -- doing some tests of various elements of the ViaSat-3 network over some of our existing satellites in preparation.

Like Mark talked earlier, to the extent that we can do some concurrent integration and testing, we can help accelerate those things later. So we're currently doing some of that today. So we're well on our way here for the rollout of ViaSat-3. We've begun to incur expenses in the low millions of dollars per quarter in that, and that's going to increase quarter by quarter as we prepare for ViaSat-3.

Chris Quilty -- Quilty Analytics -- Analyst

Got you. And final question on commercial networks for Shawn. I mean the margins in that business have improved by like 30 points since the beginning of the year. And I'm just -- I know you've said the R&D is going to flatten out, the internal R&D, so that element we kind of know.

But modeling that on a go-forward basis, I mean, can you drive that business to an actual profit on a go-forward as you begin to ship all the mobility antennas and all these ground equipment? Or is it still -- should we still model that as a loss leader?

Shawn Duffy -- Chief Financial Officer

Yeah. So there's probably a couple things.

Rick Baldridge -- President and Chief Executive Officer

Well, first of all, loss leader is not a good example. That's a whole different type of...

Shawn Duffy -- Chief Financial Officer

That's where we cut our R&D. Really, yeah. Yeah, yeah. So I think there's a couple of things, is you're looking at, right? One is, as I talked about, we're going to -- that is where we put the terminal deliveries for the IFC.

So as Rick was talking about on the Delta program, we'll expect to see a lift there. That will help that segment. We think our R&D is hitting kind of a baseline rate, but I would expect that to stay there as we grow. So I think we would expect improvements on a year-over-year basis looking to next year, but we're going to continue to invest, too.

Chris Quilty -- Quilty Analytics -- Analyst

Got it. And if I can ask one final question, the -- on the consumer business. Most of your growth, your incremental growth in subscribers, has been in Latin America and Brazil. And I know SKY Brasil is talking -- you're looking at expansion into other parts of South America.

What do you have for capacity in the region right now, either on satellites or in terms of incremental subs that you think you can grow in the region before ViaSat-3 hits the market?

Rick Baldridge -- President and Chief Executive Officer

It's going to be limited. I mean, we're working with, obviously, with the Brazilian satellite down there today. In Mexico and Central America, we're working on ViaSat-2, all the way down -- a little bit in Colombia, all the way down to kind of the top part of South America. But it's reasonably limited until we get ViaSat-3 for the Americas on board.

Mark Dankberg -- Executive Chairman

Yeah. Plus the other thing is we have to portion that bandwidth among all the different markets that we have. So we have in-flight customers. We'll have remote enterprise customers as we get RigNet.

And so we just have to allocate the bandwidth. We're just in a situation where there's a lot more demand than there is supply.

Chris Quilty -- Quilty Analytics -- Analyst

Very good. Thank you.

Rick Baldridge -- President and Chief Executive Officer

Thanks, Chris.

Operator

Thank you. Our next question comes from the line of Giles Thorne with Jefferies. Your line is now open. Giles Thorne, your line is now open.

Giles Thorne -- Jefferies -- Analyst

I'm just happy sitting here talking to myself on mute. Sorry about that. It happens a lot. So I was -- my first question is could you -- would you be willing to tell us, back in early 2017, when you were putting the investment case together for ViaSat-3 and ViaSat-3 EMEA, what your target subs were for the point at which that satellite came online? And then where are you today on the sub count?

Mark Dankberg -- Executive Chairman

So one is, as I said, it's a dynamic marketplace, and it would be kind of presumptuous, it would be very presumptuous, for us to have picked a subscriber number. But what we're more focused on is can we -- how much revenue can we get in total and how much -- and what is the return on that revenue, and does it justify the capital expense. And so one of the things we keep working on is having multiple markets. And I just described sort of what's going on in South America, where because we have multiple markets, the aggregate demand for bandwidth is greater than the supply, which is -- that's a good thing, right? That's what we want.

And so that's just what we're doing in Europe too through our government work, through the remote enterprise stuff that we can do with RigNet, through the in-flight connectivity market. And a lot of those markets are doing quite a bit better than what we would have projected back in 2017, as an example. That's the situation we're trying to create. So the short answer is we don't have a subscriber.

We don't have a residential subscriber target. And we will dynamically set one in the context of all the demand among all these different services. That's basically how we've done things.

Giles Thorne -- Jefferies -- Analyst

OK. But just to build on that, the success of ViaSat-1 was having WildBlue there ahead of it, and the objective of the venture with Eutelsat was to have as many subs as you could. So I don't know. It doesn't feel like you didn't have a subscriber number in mind but that's fine.

What is the [Inaudible]

Mark Dankberg -- Executive Chairman

So let me -- OK. So let me just -- I just want to go back on the history on WildBlue. What WildBlue really got us was distribution, back office. It enabled us to do retail.

And while we -- once we had that retail, the -- one of the main reasons we did the acquisition was because we wanted to rejigger the number of the way that we went to market, right, based on the things that we learned about the market, from having the WildBlue experience. And so remember, with ViaSat-1, to go by memory here a little bit, but we basically had like 10 times the bandwidth. We probably ended up with two to three times the subscribers and three-ish times the revenue. But the margins were much, much better because of the productivity of the satellite.

So the thing I would say that will apply to Europe is we're looking -- these are the things that we're doing now, and we'll do with the case. And the capability we have there is all the back-office stuff is more complicated. The support step is more complicated because of the diversity of countries and languages. So we're going to be able to test that.

We're going to be able -- we also need to make sure we have the distribution and support channels we want in place. And we'll be able to do a lot more experiments regarding the service offerings and the way we bring those to market. And so we'll get -- we expect to get the same types of knowledge and experience and information through this as we did with WildBlue in the U.S., although we're starting from a different place. But it still doesn't make sense -- it doesn't make sense that we have a subscriber target number.

The way I describe it is we're going to do it in the context of all the demand for all the services.

Giles Thorne -- Jefferies -- Analyst

OK. And then so it just sounds there, Mark, like you are going to be building out what it is that you thought you were going to get by working with Bigblu. You're going to be doing that yourself. So that there are aspects of the customer journey that you weren't going to do, but you are going to have to build that out now.

Mark Dankberg -- Executive Chairman

Well, that was our original -- no, that was our plan. I mean if you look at the reason for doing a joint venture with Eutelsat was that we were going to lead the retail part of it. And Bigblu, they were working with, OK, with Eutelsat at the time. They would have been a component of that.

But there's other ways to achieve that as well. We don't look at that as a decisive issue.

Giles Thorne -- Jefferies -- Analyst

Do you have any mechanism to prevent...

Rick Baldridge -- President and Chief Executive Officer

I would say, as a matter of fact, we have been investing in this, the entire customer journey side. And so this is a good way to put that to work ahead of the ViaSat-3 launch. And so to me, this is a really good way to put our own tools in place, which we've already begun to do in a couple of those markets. Spain is one and kind of Norway is another.

So I think this is just a really good opportunity for us to get those things in place prior to the ViaSat-3 launch.

Giles Thorne -- Jefferies -- Analyst

And Rick, is that what you're talking to when you say buying in Bigblu should accelerate and improve momentum around fixed broadband in Europe?

Rick Baldridge -- President and Chief Executive Officer

No. No. I think that we've been developing end-to-end customer journey tool set that's far more digital. And being able to roll that out in, for instance, in some markets that where -- look, we have limited capacity in Europe on KA-SAAT, but ahead of ViaSat-3 launch where it's going to be a big launch is a much safer way to begin that process and a way that we can rapidly roll things out, learn and iterate.

Giles Thorne -- Jefferies -- Analyst

And do you have -- the subs that you bought in with EBI, is there a mechanism you thought Eutelsat is taking them from you once KONNECT VHTS comes online?

Shawn Duffy -- Chief Financial Officer

It was a little hard to hear you, Giles. Could you say that one more time?

Giles Thorne -- Jefferies -- Analyst

Yeah, sorry, forgive me. I'll come a bit closer to the phone. The -- if I understand correctly, the -- with the purchase of EBI, you now own completely a set of subscribers. And by the way, it would be really useful to know how many subscribers, but a set of subscribers that are legacy wholesale to Bigblu.

And I'm wondering, with Bigblu now firmly embedded with Eutelsat through KONNECT VHTS, do you have a mechanism to keep hold of those subscribers and stop Bigblu, migrating them at some point in the future onto KONNECT VHTS? Is it like a noncompete, something like that?

Rick Baldridge -- President and Chief Executive Officer

There are elements in our agreement with Eutelsat that deal with what you're talking about specifically. We talked about a little bit of it in the way we announced the deal, but there are more embedded elements that deal with that specifically. So yes, we have a structure that I'm sure will be imperfect that deals with the type of poaching of those subscribers. We also have economic remedies that deal with those types of things.

So honestly, that -- it's a component of this. It is, by far, not the most important thing. Well, I would say that, by far, the most important aspect of that is getting a running start for ViaSat-3 and accelerating ramp into a region where we think the demand is going to exceed the supply of our capacity over there.

Mark Dankberg -- Executive Chairman

Yes. And I would not interpret this as us battling with somebody else to keep subscribers on comparable plans. I think the real battle here is going to be what types of service plans can you offer or how do you distribute them, what are the pricing of those plans, how much demand is there. And actually, the other really big thing is going to be what's the trajectory of your future supply of bandwidth because that has a big influence on the types of services you can offer.

So this is kind of a set of initial conditions. And to Rick's point, there's economic consideration that's baked into the agreement that deals with the issue that you said, but it's not the main event at all. It's a sidelight.

Giles Thorne -- Jefferies -- Analyst

And then final question, sticking with the same topic. What is it all going to be for the go-to-market strategy going to look like? Just what's the latest thinking there, please?

Mark Dankberg -- Executive Chairman

What is the go-to-market strategy? Are you talking about on the residential side?

Giles Thorne -- Jefferies -- Analyst

Yeah. Yeah, that's right.

Mark Dankberg -- Executive Chairman

Yeah. So remember, residential is only one component. But basically, what we're going to end up doing is we're going to define very different service plans. I think we'll be able to deliver a more consistent quality of service for the plans that we do have.

And we'll come up with pricing and terminal strategies that are consistent with those. And it's a little bit premature to say what those are because we want more experience in the market. And this is what's going to give us the opportunity to do that. But it will be -- clearly, the European market is very diverse, more so than the U.S.

market. And there won't be a single-point solution that we apply all across the continent. It's going to vary by market. And one of the things that we're getting better and better at in the United States, and we're applying the same things to Europe as well, is really marketing on a more localized basis because we can, because we can deliver different types of services and different price points into different specific market subsegments pretty easily with our system.

So that's...

Rick Baldridge -- President and Chief Executive Officer

The last thing we're going to do, Giles, is tell the people that we compete to get exactly what we're going to do right now. And that's inappropriate.

Giles Thorne -- Jefferies -- Analyst

Yup. Fair enough. All right. Thanks.

Thanks very much.

Operator

Thank you. Our next question comes from the line of Mathieu Robilliard with Barclays. Your line is now open.

Mathieu Robilliard -- Barclays -- Analyst

Yes. Good morning. Good afternoon. If I could start with a question on the government side, so as you pointed out, and we've been used to it, it is a volatile segment, but the trajectory has been very positive over the last many years.

And I was trying to see how we could frame a little bit from our side, on the analyst side, what is the potential market you're going after. I don't know. Is it a market where you expect to gain market share from other players? Is it just new application, new services that are developing? But if you could frame in any way how big is the opportunity there, that would be super helpful.

Rick Baldridge -- President and Chief Executive Officer

One thing, again, no guarantee that past performance equals future, we've had 35. We have had a lot of years of really, really good consistent growth. I think we've only grown -- maybe we've not grown a couple of those years. And it really is by going in, consistently going into new and bigger markets and environments.

We've moved from Tier 2 to Tier 1 and moving to Tier 0 in some of those applications. We've gone -- we've been able to develop and rapidly deploy products that are around the programs of record in a way that's really helped our growth. We're working on the things, security and secure tactical communications, and things that are absolutely critical to actually accomplishing what the warfighter needs. That market is expanding globally through Joint Warfighter Concepts.

So just from a position standpoint and needs, we think we're in really, really good markets. So security, tactical comms, strategic comms, hybrid networks that integrate line of sight, radio and satcom networks and multiple satellites in that same network. So -- and the cloud really is just very -- coming into play in that, which we think only strengthens what we're bringing. So we really like this government communications market, and it's been a good one.

And I think the ViaSat-3 constellations fully enables further growth, not just in the global satcom piece, but in the other pieces that we bring.

Mathieu Robilliard -- Barclays -- Analyst

OK.

Mark Dankberg -- Executive Chairman

The other -- I think just another way to think about it is what's driving the growth in the defense business is very similar to what's driving growth in the commercial businesses, which is what used to be just voice communication, now is imagery and computer-to-computer. There's more things computerized. So one of the ways to look at our growth is can we get satellite antennas on more platforms than we used to, and that's happening for sure. You can see we've announced lots of different platform wins, whether they're ground or helicopter or different types of aircraft.

And then the other is the amount of data that those platforms get. And then the other dimension that Rick described is where it used to be acceptable just to encrypt the link, encrypt that communications link, now you've got to worry about trust and cybersecurity. So that's another component of our growth. And then the other thing, the third area is the terrestrial radio links, whether it's tactical data links or others.

So those are -- the three big thrusts are satellite, cyber, tactical radios and then moving a lot more data. Those are really big picture trends that we have good competitive positions in.

Mathieu Robilliard -- Barclays -- Analyst

Thank you. That's helpful. Then I had a follow-up question on the comments you were making about the ViaSat-4. If I heard correctly, you were talking about a capacity of 5 to 7 terabytes per second.

And I wasn't entirely clear if you were talking about one single VSAT-4, which would seem like a material leap, or if you were talking about a couple or 3-ton lights for this kind of capacity.

Mark Dankberg -- Executive Chairman

That's per satellite, one individual satellite. So -- and then we can have multiples of those satellites, if that's what made economic sense. But yes, it is a big leap. And I think that one of the things that everybody needs to take into consideration when they look at all these different approaches to broadband from space is how each of these things compare relevant to the others.

And I'm going to just throw out one other thing, which is that when you're doing geosynchronous satellites, it's very straightforward to increase frequency reuse and increase capacity on individual satellites without affecting either our other satellites or anybody else's satellites in the geo arc. One of the big issues with nongeosynchronous is that everything -- every nongeosynchronous satellite can interfere with every other nongeosynchronous satellite, whether your own or somebody else's. And so that's what -- one of the things that's really important in those filings is understanding what -- how much spectrum they include in their filing and the way that, that spectrum can interfere with other systems. That's one of the biggest issues that's going on now in these nongeosynchronous ones.

It's very, very difficult to increase your capacity without impinging on some other filing. So that's -- so anyway, what we think is not only do we have a productivity advantage now, but that we'll be able to expand that productivity advantage over time.

Mathieu Robilliard -- Barclays -- Analyst

Great. And to follow up on that, it is a question that was asked before, but obviously, I think for a lot of investors, a question mark in this industry is where does the capex rates end because technology changes, you have to adapt, you're looking to lower your costs, increase your market potential. But that always has to be balanced against free cash flow at some point, right? And the way you think about it, is it as you expressed it before, which is really from once the ViaSat-3 effort is behind us and gained scale, really, your objective is not to be free cash flow negative anymore, and you think you have enough scale to continue to invest as you should?

Rick Baldridge -- President and Chief Executive Officer

That's right. Yes.

Mark Dankberg -- Executive Chairman

So yes, yes. That's the answer. And just to be clear, and you sort of -- you pointed this out, the ViaSat-4 thing, like customers don't care how much capex we spend or how many satellites we have. What they care is how much bandwidth we have.

So if we can -- the way you manage your capex is to get as much bandwidth as possible per capex dollar. That is the entire point of what we're doing. And ViaSat-4 is a really good example of that.

Mathieu Robilliard -- Barclays -- Analyst

Excellent. If I may ask just a last one, just on the airline side. So I hear people talking more and more about free WiFi. I didn't fully understand if, in the case of Delta, that was going to be the offering.

But in any case, that seems to be the big discussion, free WiFi in the airlines. At the same time, you look at the industry and obviously, it's suffering. It will go back on its feet, but it's going to take some time. So I'm wondering how realistic is it to assume that all the airlines that started are going to offer free WiFi in the next few years when they have so many headwinds to face.

Is that your working assumption when you model...

Rick Baldridge -- President and Chief Executive Officer

First of all, we should -- well, we should state that in no way did we say today that Delta is going free or anybody else is going free. Now we're not stating what the airlines are going to do. I just want to make that clear.

Mathieu Robilliard -- Barclays -- Analyst

Yup. Clear.

Mark Dankberg -- Executive Chairman

Yes. Totally clear. And the other point is, really, in a lot of ways, all this is up to the passengers, right, is if the passengers express a preference for airlines that have free WiFi and the airline and some airlines have free WiFi and can leverage that preference in a way that's more profitable, that's what will cause, that's what will drive the adoption of free WiFi, right? That's what's really that issue. And we've worked with airlines that have been able to do that and to do it in a way that's economically profitable for them.

But it's -- I would say, it's a tricky thing to do, and it will evolve as airlines compete with each other. So we're going to take our lead from what the airlines do. What we think is we're learning a lot and that we can offer suggestions to the airlines that will help them drive passenger engagement at lower cost to themselves or even in a way that drives enhanced revenue. But it's -- and the point is the way we've been able to do that is through the same argument that I just described before, which is high productivity, which means that we can give them a lot of bandwidth value.

And those are the ingredients, and now we have to see how the market responds.

Rick Baldridge -- President and Chief Executive Officer

But if you're an airline and you don't have a choice because your provider actually can't provide the capacity to enable that, that's not a good position to be in.

Mathieu Robilliard -- Barclays -- Analyst

Yes. Makes a lot of sense. Thank you, guys. Very helpful.

Rick Baldridge -- President and Chief Executive Officer

Thanks, Mathieu. We have a last question for this, and then Paul may have -- anyway, last question.

Operator

Our last question comes from the line of Simon Flannery with Morgan Stanley. Your line is now open.

Simon Flannery -- Morgan Stanley -- Analyst

Great. Thanks for fitting me in. If I can continue on the IFC, obviously, nice to see the Delta win. Could you just talk about the opportunities that you see out there in the medium term to continue to take share in that business? And then expanding aviation into -- I think you've talked in prior earnings calls about the opportunity with government and the military to do more on this front.

And also I think you had an announcement about some new antennas on the business aviation side. So any color about the kind of the opportunities there to grow into that TAM? Thanks.

Rick Baldridge -- President and Chief Executive Officer

We're having -- we've talked a little bit before about that -- a little bit surprising, but the amount of discussions we were having globally didn't really decrease during the pandemic. I mean some of the actions people were willing to take, immediately, there was a pause in that, obviously, but a lot of ongoing discussions. And as that business took a pause last year, the point of time at which ViaSat-3 is going to come on globally gets a little closer. So people are making decisions to buy airplanes that's fallen closer into the time in which we'll have global coverage.

So that's helping the discussions. And I think that's where a lot of the growth will come from is in international over the next few years. So -- and we know kind of the most of the growth in the airline industry is going to come in some of the international markets. So being there with global coverage is going to be a really important factor for us.

And a lot of that isn't really just taking share, it's connecting new aircraft that have never been connected in some of these airlines that they're ordering and in the growth of aircraft that will be ordered in some of those new emerging markets. And a couple of things that we're doing is we're continuing to make real progress, and you mentioned one. There was an announcement out about our demonstration of our phased array antenna on a business jet. And we're -- we continue to invest in new technologies that will hopefully allow for shorter installation cycles, lower cost, better quality, I mean all those things, and we share those road maps with our airline partners and potential new airlines.

So just continue to lead investments in this area, I think, in a way that enables not only -- I mean, because right now, we have airplanes flying on our satellites and lease satellite capacity. So it allows for roaming into other networks. That's an important aspect we're able to offer.

Mark Dankberg -- Executive Chairman

Yeah. The other thing I would add to that is we've been very successful in the North American market. I think that's been our best market probably because that's where we had the most coverage to start with. But it's also -- that's also the market where penetration is the highest.

That is more planes have WiFi in that market, the domestic U.S. market, than any other market. And I think that the airlines have become the most knowledgeable about the role that in-flight connectivity plays in their overall competitive strategy. And then the other thing I would mention is that the times that when we don't win, when we're not successful in the market, it's usually because somebody discounted equipment or an install or dangled some offer that they weren't able to fulfill because, as Rick mentioned before, they didn't have enough bandwidth to really scale the offer.

And so I think that the fact that we've been very successful in the North American market is going to help us in these international markets where the airlines have less experience about the role of in-flight connectivity in their overall value proposition. And I think people are noticing that. So I would say we're really optimistic that a lot of growth is going to come in that Asia Pacific market. And the thing that's really notable about that is that so much of the travel routes are over oceans.

And so that's where the ViaSat-3 value proposition is really important because that will give us much more bandwidth over oceans than anybody else. And I think that's what creates optionality for the airlines. So we're really optimistic about the growth prospects, and so far, the responses that we're getting back from the market are supporting that.

Simon Flannery -- Morgan Stanley -- Analyst

Thank you.

Rick Baldridge -- President and Chief Executive Officer

OK.

Shawn Duffy -- Chief Financial Officer

Paul, anything you want to cover or?

Rick Baldridge -- President and Chief Executive Officer

If there's no other questions, I think, Paul, that most of the questions that we had from investors were actually covered in today's conversation. So thanks, everybody, for coming in. And if you guys have some feedback on this format, providing the letter a little early and giving some time or any type of other timing feedback you want to have, if you could reach out to Paul Froelich on our end or Jeff Mezeca, we would -- we'll take any comments and consider it into consideration. So thanks again everybody.

Operator

[Operator signoff]

Duration: 83 minutes

Call participants:

Rick Baldridge -- President and Chief Executive Officer

Robert Blair -- Vice President, General Counsel and Secretary

Phil Cusick -- J.P. Morgan -- Analyst

Shawn Duffy -- Chief Financial Officer

Ric Prentiss -- Raymond James -- Analyst

Mark Dankberg -- Executive Chairman

Louie DiPalma -- William Blair -- Analyst

Mike Crawford -- B. Riley Securities -- Analyst

Chris Quilty -- Quilty Analytics -- Analyst

Giles Thorne -- Jefferies -- Analyst

Mathieu Robilliard -- Barclays -- Analyst

Simon Flannery -- Morgan Stanley -- Analyst

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Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

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