• Alternative satellite internet company Astranis has its first spacecraft in orbit and says it's working "perfectly."
• "We have a new way of connecting people in some of the most remote and underserved parts of the world," Astranis CEO John Gedmark told CNBC.
• The company's small satellite, built largely in-house and named "Arcturus," launched on SpaceX's Falcon Heavy rocket and is expected to begin providing service to customers in Alaska by mid-June.

Astranis, a San Francisco-based company with an alternative approach to providing internet access from satellites, has its first spacecraft in orbit, and the company on Wednesday said it's working "perfectly."

"We have a new way of connecting people in some of the most remote and underserved parts of the world," Astranis CEO John Gedmark told CNBC.

The company's small satellite, built largely in-house and named "Arcturus," was deployed May 1 after launching on SpaceX's Falcon Heavy rocket and recently arrived in its orbit. Astranis has already completed tests with the satellite, including connecting to user equipment in its service target of Alaska for the first time.

"This test validates everything that we've been working on and working towards and it's a huge, huge deal," Gedmark said.

Astranis' is one of a number of next-generation broadband satellite systems in development, as companies race to meet a growing global demand for data — including SpaceX's Starlink, British-owned OneWeb, Amazon's Project Kuiper, AST SpaceMobile and others.

But the company's approach is the "third way" to providing broadband service from space, Gedmark said. The company's dishwasher-sized satellite combines the small form factor of satellites such as SpaceX's Starlink in low Earth orbit with the distant, geosynchronous orbit of traditional players such as Viasat.

Geosynchronous orbit, or GEO, is about 22,000 miles away from the planet's surface — a position that allows the spacecraft to stay above a fixed location, matching the Earth's rotation.

Arcturus is a fraction of the size and cost of traditional GEO satellites.

"We can build these satellites very quickly compared to what has come before," Gedmark said.

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Astranis highlighted 13 completed major milestones for Arcturus in a press release. Gedmark emphasized that the company is "incredibly proud" of the satellite's performance thus far, fending off both the "super harsh radiation environment" and "extreme temperature range" that GEO spacecraft experience.

Gedmark said Arcturus is operating about 10% to 15% above specification, which translates to about 8.5 gigabits per second of total capacity. For users, Astranis expects its satellites will deliver download speeds of about 25 megabits per second.

Alaskan service soon

Arcturus is positioned above Alaska, where Astranis' first customer — telecommunications provider Pacific Dataport — will use it to triple the data speeds available to users across the state. Gedmark said about 40% of Alaskans don't have access to reliable broadband internet, which "is a shocking number" that demonstrates how "starved of satellite capacity" the state has been.

"We cover about the entire state, including many of the most remote islands on the Aleutian chain," Gedmark said, adding that Arcturus "will allow hundreds of thousands of people to get true broadband internet."

Much of Astranis' target users are enterprises — such as industrial companies, schools and hospitals — rather than individual or residential customers.

The company expects Arcturus to begin service in mid-June after it completes further verification steps.

Demand pipeline

Astranis has raised over $350 million since its founding in 2015, at a valuation of over $1 billion, with investors including BlackRock, Fidelity, Andreessen Horowitz, Baillie Gifford and Venrock. The company has more than 300 employees.

As for raising more funding, Gedmark said the company remains in "a strong cash position" and is currently focused on making sure it gets service operational as soon as possible, for "people who really needed that internet yesterday."

Astranis has a demand pipeline worth over $1 billion, representing orders for 10 satellites, over the next two years. 

It expects to launch four more satellites later this year on a SpaceX Falcon 9 rocket. One of those four is under a deal with Latin American service provider Grupo Andesat, to provide satellites that would bring improved broadband access to as many as 3 million people in Peru. Two others are for mobility-focused Anuvu, which provides services such as in-flight WiFi for Southwest Airlines, and the final satellite is for an unnamed commercial customer.

Gedmark has previously estimated the market for broadband demand is a $1 trillion global opportunity and noted that Astranis' existing pipeline features contracts that have options for additional satellites.

"We're ready to go out and deploy many of these satellites all over the world and help get people connected," Gedmark said.