Frank Coles Interview Part 2 – the move into VSAT in context

Perhaps because it is a company that made its reputation in provision of L-Band services, Inmarsat appeared slow to spot the move towards maritime VSAT. It was not alone – I remember maritime consultants of various stripes telling me that broadband on merchant vessels would never happen, especially not the high-end VSAT services then used on cruise ships.

But move in it did – though not for reasons that are clearly recognised. The prime movers were the high-value end of the market and often regional rather than global traders.

But VSAT started to make its mark in maritime because land-focussed DPs needed to find new markets. The simplest way to do this was by offering a service that could compete with FleetBroadband, even accounting for the hardware lease costs and a contended network. These services had in some cases a slower data throughput than FB but owners were attracted by the potential of an all-you-can-eat data plan.

“That’s what allowed VSAT to gain traction and the desire for data and a fixed price service has become insatiable,” says Coles. “We took a path into this market first by buying ShipEquip with a view to developing our own bespoke VSAT network. ShipEquip gives us a ready-made base to move into VSAT.”

ShipEquip is already marketing Xpress Link, a VSAT offering with FB backup, which Coles says sets the stage for the next transition, to Global Xpress, which he claims will be ‘a game-changer,’ with throughput speeds of up to 50MB a second. The obvious question is whether Inmarsat will price GX more aggressively than its competitors?

“We will provide a value for money price because we will charge the same as the competition but provide double the throughput. The rest of market is not able to provides the speeds we can for same cost. Those owners who want significantly higher speeds and better quality will come to Global Xpress,” he says.

So much for the hype, but will he find enough takers for the service? After all the AMMITEC affair clearly demonstrated that some owners think Inmarsat-C telex is perfectly suitable for their communications needs.

“It will remain a niche product – there are a vast number of owners who are quite happy at lower end of the market and small data requirements a month,” he agrees. “There are 60-70,000 potential ships and 15-20,000 could be prepared to try VSAT”.

He says GX service will have “a smaller antenna and new technology to overcome rain fade” but there will be “a symbiotic relationship between Ka and FB. I think FB will be core maritime communications pipe for some years to come”.

His main rival here – in the PR war at least – is KVH, but he says the disadvantage of such ‘mini-VSAT’ offerings is that users rarely get level of service they are promised. As more ships are added to the network, the worse the service becomes, meaning the provider has to secure more bandwidth, pushing up their internal costs.

The first GX satellite goes up in July 2013, the second at the end of 2013 and the third,  completing the global service, in the middle of 2014, at a cool $1.5bn but Coles says even this expenditure doesn’t mean that it will start charging for GMDSS, as has been wrongly suggested elsewhere.

“We’re putting GX into the market but we are still required to provide GMDSS free of charge and there will be no charge in future. And we’ll be here tomorrow and next year and the next, which not all of our competitors can claim with any certainty.”