Global VSAT a regional game, says NSR

Satellite sector analyst Northern Sky has released a research note on the announcement by Intelsat of the EPIC high throughput satellite platform. And while NSR agrees that the launch signals a no-going back approach by FSS operators into the MSS market, it says that ultimate success will be achieved by providing regional capacity where it is most needed rather than adopting a blanket ‘global’ approach.

“The introduction of the EPIC platform by Intelsat is a signal that FSS operators are more and more convinced that the mobility market is ripe for broadband solutions at a cheaper cost per bit,” says NSR’s Claude Rousseau but he cautions that HTS capacity, previously aimed at broadband consumer markets, “is not necessarily designed to be a hit in all markets, even in the mobility segment”.

In its Mobile Satellite Services 8th Edition report, NSR noted the trend towards HTS solutions in MSS being ‘fine-tuned’ to region-by-region traffic demand.

In targeting maritime and aeronautical corridors with Intelsat-29e, Rousseau says the EPIC platform picks up the ball first kicked by Inmarsat Global Xpress, focussing coverage over high-travel/shipping routes.

Despite being later to market than Inmarsat, Intelsat’s primary advantage is that as the first Ku-band HTS service aimed at the MSS market, it will offer backwards compatibility at a higher throughput – not the case for Inmarsat, which plans a comprehensive migration from its legacy L- and Ku-band services to its Ka-band service.

Rousseau suggests this could be a costly path to walk and Inmarsat will have a challenge on its hands migrating its current customer base onto a completely new service. The fact that ‘Inmarsat’s 5th generation network coverage will bear a striking resemblance to its 4th’ should be an advantage and Rousseau suggests that “with a few thousand Ku-band customers, Inmarsat has a far broader scope and reach with its next fleet but also more ‘ground’ to cover”.

Inmarsat Maritime CEO Frank Coles has already said he doesn’t expect GX to become Inmarsat’s main offer but the fact that the satellites will be operational before Intelsat’s gives them something of a leg up.

But NSR also believes that users, “especially in the more traditional maritime market, will initially prefer to stay with what they have rather than switch to a new and unproven technology,” even if it still sees a transition taking place later in the decade as some HTS applications become more successful.

That sounds like the maritime industry to me. After all it is only a few months ago that some die-hards were complaining about the increased cost of using Inmarsat-Fleet and one gets the impression that if Inmarsat-B went on forever, some would consider that adequate for their needs.

Of course Intelsat will have to start its marketing from a much lower base. It has far less penetration of the maritime market and if the struggle to get users to adopt an ‘unproven’ service will be a challenge for Inmarsat, that must go double for Intelsat.

NSR notes that the Intelsat announcement also increases the pressure on Eutelsat, Viasat and Telenor – though mostly on Telenor since as the others have little exposure to maritime and oil and gas business. But while it concludes that the MSS market will see “more competition in high capacity business” it says most operators “will continue to fine tune their coverage to target high traffic areas and to transition customers to higher capacity services”.

Global VSAT, is after all it seems, a regional business too.