The European Space Agency has awarded Avanti Communications €250,000 (£220,000) in funding for the design of a super-fast satellite broadband system called Hercules.
The proposed satellite could deliver between 2Mb and 50Mb broadband access to 2.5 million UK rural households that are currently without access to broadband internet services, David Williams, chief executive of Avanti, said in the company's announcement of the award on Friday.
The UK broadband satellite operator said that it has proposed the new satellite to the British government as part of the Digital Britain consultation. The new design will ensure that if the UK government decides to proceed with extending broadband access to rural communities, the new Hercules satellite will already have been fully scoped and risk assessed.
Satellite broadband is gaining acceptance across Europe as a broadband-access technology, but the economics are still unclear, said Ben Tudor, a senior analyst at Current Analysis.
"Companies that have tried to provide satellite broadband in the UK previously have failed, and there is a question for the government as to whether satellite might be less cost-effective than simply laying cable to specific communities," Tudor told ZDNet UK.
Avanti has already built one satellite, Hylas, which will be launched in 2010. However, that satellite is only capable of delivering services to 100,000 users, a fraction of what is needed to deliver universal broadband, according to Avanti's Williams.
The option to increase capacity is likely to increase the attractiveness of the Hercules proposal, said Tudor, and will give Avanti an edge over competing satellite broadband providers, such as Eutelsat.
"Capacity is definitely an issue for satellite services, so if the demand is there through something like Digital Britain, we could see a real resurgence of satellite broadband," Tudor said.