Tag Archives: crew calling

Yes we can! (maybe)

And he doesn’t have any HTS capacity coming onstream. Nati Harnik/AP

With the political fervour in the US growing daily stronger it seemed appropriate that the 2016 Satellite show followed hard on the heels of the Conservative Political Action Conference at National Harbor on the outskirts of Washington DC.  But even once the politicos had departed, the prevailing mood echoed the incumbent president’s best-known slogan.

There is a pretty simple reason for this. The huge amounts of new capacity coming onstream over coming months and years contrasts starkly with the depressed end user market. Where FSS/mobility providers are eyeing expansion into terrestrial markets and talking up compatibility to the next generation of cellular services, there is no escaping the gap between ambition and reality in the maritime market.

This means the providers have to believe in something that at first look seems highly questionable. As more capacity and greater competition acts to lower prices, shipowners can be persuaded to pay to use more data, the pie will grow and the supply side will prosper.

These same providers must be able to differentiate on more than just cost and in doing so must still make money. This is happening at a time when the trend in VSAT is towards lower margin, more commoditised services, similar to current L-Band offerings.

The maritime panel at Satellite 2016 featured three network operators, all of whom are bringing new capacity to market, either High Throughput or enhanced L-Band and service providers that enable the ground segment and whose role is to distribute services to end users.

Billions of dollars are being spent on campaigns to convince owners and managers not only that they need more bandwidth, but also that they should choose a particular product even if it is more expensive than what they are using now.

This makes it more like an election campaign than the participants on the maritime panel would probably admit, but if this is a battle, what wins?

To Matt Broida of HarrisCaprock, the formula “is 60% cost, 30% business model and 10% technology” and he sees significant growth potential from the latent demand in a number of deepwater segments.

But that cost element shouldn’t be all about price. Broida pointed out that Exxon has cut staff by 20% in 20 years but produced 25% more oil in the same period. “That’s the model we have to go to. Bandwidth and hardware prices are going to come down but keeping that value for yourself is the business model. Staying competitive means you don’t want to give that all away to customers.”

His view is that it is the value chain that is disruptive “and if your strategy is to keep doing what you’re doing but better, you’re waiting to go out of business”. Service providers have to figure out who to partner with. “If you choose the right partners you can come out of disruption on the right side of it. It forces you to place some big bets but it enables you to place more bets than you could make on your own.”

For Inmarsat’s Drew Brandy the move from the company’s legacy L-band services to VSAT is an inflection point with a similar metaphor. “Like us many others are gambling on increased demand driven by new applications and that we can evolve to provide new differentiated solutions,” he said.

The Inmarsat FX VSAT model is designed to mirror its L-band offerings, built for simplicity and pre-assembly so moving away from bespoke nature of VSAT. “It strips some of the cost out of the solution because you’re not doing bespoke customised installations every time.”

Perhaps driven by the need to prepare previous damage to its partner relationships caused by waves of price rises, Inmarsat is focussed on adding value for its distribution channel to provide sufficient margin support and Brandy thinks there could be more for SPs than in current L band deals.

Inmarsat was one of the innovators in crew calling but less than 30% of crew are still properly served. Crews consistently put comms access near the top of their wish list but the lack of delivery is not going to change until vessel operators accept it as a differentiator. “As costs start to fall over the next few years, the internet will become for accessible and available and owners will start to make that change provided strict access policies are in place” he suggested.

The price elephant is still in the room. Intelsat’s Chris Insall bemoaned shipowners’ decades-long focus on price above all other things. “It’s just been part of the process but the focus we see is increasingly on operational efficiency. We’re entering a phase where there is a realisation that sub-500kb [ie L-Band] systems are unable to match the requirement of crew and operational demands. I hope we have moved beyond area of focus on cost.”

As a result he took issue with the assertion that maritime bandwidth is in oversupply for either crew or operational demand. “The majority of users say they want more bandwidth than is currently available, there is a need for genuine broadband services.”

To Comtech EF Data’s Louis Dubin the proliferation of HTS products and solutions is still creating confusion and he stressed a need for innovation to be baked-in. “If price is your only differentiator, we’re all going down quick.”

The risk for owners he said is that they cannot capture the benefits of HTS because they are relying on a previous generation of infrastructure. You might buy multi-megabit but end up getting kilobits. In the space segment very little changed for decades but with so much happening so fast, owners are increasingly looking for a consultative approach to their investments. “It’s not their core competence. They need you to prove it for them.”

So this need not be a zero sum game – even if the session title was Battle on the High Seas. What the supply side must do is find ways to help users make money, not just with cheaper communications but with applications that allow them to realise efficiencies, according to Iridium’s Brian Pemberton.

“Some customers are very content with the basic operations they are running but others are interested in what might be possible with 10x or 20x connectivity without having to increase their spend 20 or 30 times.”

Iridium to a great extent made its reputation in crew calling, providing commodity voice services at competitive prices. Nonetheless this is a segment that remains underserved and Pemberton doesn’t expect that to change. Much of this comes back to the ability to monetise the service.

“Understanding crew behaviour and cultural expectations is very tricky. We see a lot of opportunity going forward, but the willingness to pay and ability to pay are definitely challenges,” he said.

There are still too many operators who analyse the opportunity and conclude crew communications is a pot of gold. “In fact it’s about taking mean margins from a lot of people and aggregating those into something. There are a lot of broken business cases out there,” he added.

And neither does he see the operational segment as a cash machine as owners bank on increased data for competitive advantage. “They want to enable that connectivity but what they may find is that they already knew 99% of what the data is telling them. What I think we could see is that processing taking place on the vessel with just the exceptions sent back.”

But he added that customers shouldn’t expect the same from Iridium’s new services as they have in the past. Iridium he said planned to be “quite disruptive to the market in migrating our customer [and] putting tools into hands of distribution partners which they can use to differentiate and earn better margins.”

At the time of writing, there are 228 days to the US election. But for the mobile satellite providers and their partners the battle for hearts, minds and wallets is only just beginning.

Maritime satellite gets with the programme

Maritime communications spent a long time being of little interest to most people. Beyond safety requirements, it took the dotcom boom to generate a significant uptick in activity, as software entrepreneurs discovered this ‘untapped’ market.

That ended with the dotcoms going belly up, but the Rubicon had been crossed. There was now a clear realisation that connectivity held the key to better productivity and perhaps even a more efficient supply chain.

Once again, the market was overtaken by events – namely the best earnings many had ever seen – and suddenly no-one cared about saving fuel or improving efficiency, because rates were through the roof.

Another crash followed and suddenly we are back to the future. This time, the recession looks longer, deeper and likely to claim more scalps. The answer? Better connectivity for increased efficiency and improved crew retention.

It’s a change that has not gone un-noticed by the analysts at NSR, whose Brad Grady hosted the big data panel session at the recent DigitalShip CIO Forum in Oslo.

“There is a definite increase in activity and the adoption criteria are expanding. Prices are cheaper, applications are becoming more sophisticated and the number of vessels as good candidates is increasing,” he says. With increased demolition of older ships the newer, better-wired ones are looking for efficiencies.

NSR updated its maritime sector report in May and he says the big change from last year to this is the uptick in merchant fleet activity in terms of new installs, retrofits and upgrades.

“There’s not necessarily an improvement in the economics [of shipping] but its finally coming to an understanding that this is the reality we are living in. Like all processes, it’s about putting something in place that will bear fruit,” he says.

On a longer time horizon he sees interest in the opportunities delivered by HTS and an expected increase in bandwidth uptake. Even with a cheaper fuel environment, owners are still feeling pressure to invest in optimisation and potential efficiencies.

In part the pressure is from the providers who have already delivered a huge amount of bandwidth to the cruise sector and are targeting maritime over offshore, which is also struggling to make money.

“We’re not expecting a tremendous amount of growth in the offshore sector over the next couple of years; growing demand there will be a challenge. Once oil stabilises we might see a return to resources with higher extraction costs and a similar investment in new technologies,” he suggests.

The emerging story in energy is non-geostationary HTS capacity; lower orbiting high capacity services which have much lower latency and therefore an opportunity to support emerging concepts like increased automation with reduced manning. Grady says these could support attempts by oil companies to reduce costs by cutting personnel in favour of high interval reporting.

“The question we don’t have an answer for yet is how many Non-GEO HTS megabits per second will you have to buy from these providers? If you can buy in nominal amounts at low prices then Non-GEO HTS Capacity could be a real game changer. It could have a tremendous impact on the way the market works.”

He thinks the alternative scenario for Non-GEO HTS capacity, which operators would probably prefer, whereby they sell dedicated beam capacity would “price Non GEO-HTS out of most markets, it won’t expand the addressable market size”.

For HTS capacity in geostationary orbit from the likes of Intelsat, SES, Inmarsat, and others, a similar story holds true, will end-users pay a little more and get a whole lot more Mbps, or can they pay less and get the same (or a few more) Mbps?

The bigger challenge is persuading shipowners that greater bandwidth, especially HTS capacity, is going to make enough difference to be worth the investment. Grady agrees this is perfect time for suppliers to get in front of owners but they will have to come with new and increasingly competitive pricing models.

Either way, he thinks HTS will be a higher end market play, but it doesn’t stop him being enthusiastic about its potential. “I don’t think there are technical barriers, it’s more about end-user education. Five years down road, when all the variables are known about HTS , it will be ‘why did we doubt how awesome it was going to be?’”

That doesn’t stop NSR seeing plenty of life in L-Band MSS though. He notes that if Iridium succeeds in getting IMO approval to provide GMDSS then together with its NEXT broadband platform, it will have a package that will be very commercially appealing. “MSS has been a doom and gloom story for a couple of years now, but there’s plenty of life left in it.”

Despite the industry being widely split on whether more consolidation is likely or even desirable in satellite, NSR sees the potential for this as well as greater price competition. Panasonic’s acquisition of ITC is a good example of the former, where a provider with growing aeronautical business who looked at maritime and saw an opportunity, he says.

As Intelsat, SES, KVH and others up their game, to some extent the pressure will be on Inmarsat as the maritime incumbent, to deliver its GX service with the same success it has sold L-Band services.

Part of that success will depend to what extent it opens up GX and allows SPs to act as Virtual Network Operators – enabling them to add their own applications and value and sell to whomever they like – and how much it tries to lock the service down.

“Inmarsat has always been simple from the SP standpoint and there’s a lot to be said for terminal ubiquity, with integrated L-Band for back-up. For some segments we’re pretty bullish on Ka-Band in merchant shipping.”

Inmarsat and KVH have been playing catch up with each other on adding value to their services, with entertainment and learning content available over both, in addition to more typical business applications. As if to underscore their symbiosis, the two announced a cross-selling deal instead of a rumoured merger.

Even though he sees greater levels of activity, Grady is less sure that the addressable market is changing as much and as fast as some claim. “How do you define the size and scale of that is really the question. For example, there are a lot of fishing vessels but their requirements are small narrowband solutions. Can you really convince these users to switch over to higher throughput?”

Operators are keen to talk up the potential, but Grady thinks for SPs it’s still a difficult conversation. Even industrial fishermen run a tight ship and don’t have much time to watch television. The evolution path is reminiscent of merchant maritime.

“The trick for SPs is finding right mix and that might not be streaming video. It could be more like upgrading equipment so they can do email and integrate personal devices. In Africa telecoms skipped wires and went straight to wireless. In fishing, you have to go right to value-add and work backwards from there.”

So poke me. Do seafarers really need always-on communications at sea?

In the second part of my interview with Intermanager Secretary General Kuba Szymanski we get off topic. That is to say, beyond Intermanager’s work with VSAT vendors and into an area of arguably greatest interest for maritime satellite providers: crew communications and the use of social media onboard ship.

The latter appears to have the communications industry captivated. Crew are reportedly demanding greater access to the internet and the industry is responding, citing its importance in retention and the risks of ignoring such requests.

The perceived shortage of skilled and qualified crew is driving demand for bandwidth far in excess of that for business use. In doing so, it skews the VSAT demand figures, not least because the kind of applications seafarers would like to use are so bandwidth hungry.

To Kuba this puts the cart and horse in the wrong order. The potential of social media tools is huge and growing, but to use a shortage of seafarers as a driver to growth is to misunderstand the current situation.

“First of all, I don’t think this effect is happening as much as some journalists say and as much as some shipping industry ‘politicians’ claim. People are saying every day that the younger generation will not go to sea. I’m being very honest with you now, but the younger generation has no choice, because there is no other employment at the moment,” he says.

The popularity of cadetships at the UK’s Trinity House is growing year by year, not least because of the introduction of tuition fees but Kuba says across Europe, the realisation that a junior officer can earn £35,000 a year tax free is enough for them to make the leap and if that means no internet access, so be it.

“I’m not very popular for saying things like this. I’m seen as being controversial but this is how I see it,” he says. “I also believe that a lot of youngsters are clever enough to know how to communicate whenever the vessel is in port or near shore, so the periods with no communication might be quite limited depending on the trade they are in.”

The ‘bring your own device’ trend where more youngsters have their own laptops or smartphones means they are increasingly adept at getting online. But he says lack of signal is only half the problem.

Also at issue is that owners are increasingly looking to crew to share the cost burden of crew calling, providing the best possible way to accurately measure demand. “The owners are saying OK, but you need to pay half or a percentage and that immediately shows you that youngsters can do without it. If it is free of charge then everybody uses it, but as soon as you have to pay something, then all of a sudden you find that they can do without it,” he notes.

He mentions a large tanker company which put a lot of resources into free onboard internet for crew use but found the cost so prohibitive that they were forced to put more and more restrictions in place as the price for free access. The result, to coin a phrase is neither public nor convenient.

But Kuba’s iconoclasm doesn’t stop there. The industry needs to understand the simplest of drivers – supply and demand.

“I think it is very important to understand there is no shortage of seafarers,” he states. “There is a surplus of seafarers, even in the LNG sector. Owners are not struggling to get crew and some are asking why should I go the extra mile, they will come to me anyhow.”

That’s a big statement in an industry where ‘shortage of crew’, like ‘high fuel costs’ and ‘too much regulation’ is an article of faith. Is Kuba really saying the industry has all the skilled and competent seafarers it needs? Just as in communications, you get what you pay for, he thinks.

“If you want a good quality crew they are there. If you want the best, well, that’s hard because everybody is after them. If you pay the bottom of the market, that’s what you will get. It’s like having sex and not imagining you might have a child. Owners are getting very cheap crew and expecting to have excellent standards and quality,” he adds.

But as to their expectations, he sees the potential of social media as the glue that can bind seafarers together, and maybe let their would-be employers in on the game too. He contests whether Facebook and Skype are truly household names onboard ship, but says the effect on seafarers is immediate and obvious.

“If you think from the psychological point of view. I might work with you for four months and then there is a chance then I will never work with you again. But we became friends and we want to keep in touch. Facebook is a beautiful solution to that, which is why seafarers use it so much, along with things like CrewToo or MyShip.”

Intermanager is hardly the first industry body to have a Facebook page but he has noted that it gets double the traffic than the official website, primarily from seafarers.

“I was asking myself the question why and the answer is it comes with age. In shipmanagement, you’ve got people my age or older and onboard the vessels you’ve got people my age or younger and to these guys it’s what they grew up with.”

The desire to keep in touch and the availability of the tools to make it happen provides a natural win for an organisation so interested in the crew that make world trade go around.

“The most successful companies realise that Facebook does not have to be an enemy. It should be a tool to tap into seafarers, so listen to them, see how morale is, what is motivating them, to keep a finger on the pulse,” he suggests.

It is that – rather than outfitting the ship with a fat communications pipe and footing the bill – that he believes will make a difference in getting the best crew to work with your company. And as he adds, compared to Inmarsat or VSAT, the investment is far lower.

“Still, when I talk to people, people say Facebook gives you no return on investment. First of all, the investment is minimal; it’s time not money. But what it brings is a lot of traffic, a lot of interesting stuff. It is difficult to measure, but how much would you pay to get to five thousand people on your database, most of whom are potential employees? All I know is you would have to spend a lot of money on advertising to achieve anything similar.”

Smarter shipping means having communications you can rely on

The opportunity for a conversation with Intermanager Secretary General Kuba Szymanski is not to be missed, but you do have to pick your moment. True, he is to be seen on many a conference platform, but he is equally likely to be en route to another airport and the other side of the world, or even home to his beloved Isle of Man.

My interest for catching up with him was prompted by his having taken part in the recent Satellite 2013 conference in Washington, illustrating a growing interest in communications on behalf of Intermanager members. Some 12 months previously he had given a rather effective dressing down to VSAT providers at the Global VSAT Forum just after MaritimeInsight got going, so I was keen to see what progress he had made in making the process of buying satcoms more transparent.

As always when talking to Kuba, the conversation took in related subjects and included some strong opinions. Nonetheless, this is an organisation that wants to change things, so a straight line is not always the most effective route from A to B.

Intermanager’s interest in satellite communications stems from not just from a desire to shake up the buying process. It is founded on the belief that communications form a vital and undervalued link in the business process as well as in crew welfare.

“Intermanager is always talking about crew and I thought it was time to start walking the talk,” he explains. “We really care about our crew and that means the crew as both a worker and as an employee.”

“What we wanted to bring forward is that communication is also extremely important for the viability of our businesses. Without good communication, without good core connection with vessels we will struggle,” he goes on. As a former fleet General Manager for MOL Tankship, his experience had convinced him that users were not getting what VSAT had promised them.

“For the last few years, we have been, let’s say ‘misled’ and we could not afford that anymore. When we only had Inmarsat everybody knew what the boundaries were, expectations were quite limited but Inmarsat was able to meet these expectations. As soon as VSAT came onboard, expectations have been blown out of proportion by the providers,” he adds.

The biggest problem was the assumption that maritime users made that they would soon be enjoying terrestrial broadband speeds. But his gripe was not that VSAT failed to usher in an era of social media and internet use but that VSAT services failed to do what they said on the tin despite running to big bucks.

“We were told we would get 365 days of connection but they forgot to say there would be no service between Australia and Cape Town. Intermanager said, OK, enough is enough. We can always whinge but this will not improve the situation. So we sat down with GVF and we gave them some very constructive criticism and they were happy to take the feedback.”

Suitably chastened no doubt, GVF got Intermanager involved in its events and brought the organisation together with the providers. Kuba happily admits this was not one way traffic, the managers had to improve their knowledge too.

To be fruitful, this could never be just a question of blaming the VSAT guys, but rather looking for sources of assistance and that meant shipmanagers could help themselves by deciding clearly what they needed.

The organisation commissioned Stark Moore McMillan to undertake a survey to gauge return on investment for shipmanagers, “so we could help our guys to see how much money they have to invest in order to achieve more, what were areas which could benefit most and which might benefit least from good communications” he explains.

In providing a tool to help in decision-making Kuba says managers have moved from ‘an educated guess to an educated management decision’ and he says the vendors have listened and moved too.

“I’m extremely pleased because it shows them we were right! There are cowboys in shipmanagement and the same applies to the VSAT system providers. The name of the game here is listening, so they sat down with us and said OK you tell us what your problems are and we together will try to work out the best possible solutions. That is what I was hoping for three years ago and we are some way to achieving that.”

He agrees there are members who decide they still know better but he says even the switched-on companies need help and advice so the opportunity to work directly with suppliers is welcome.

He says many on the sell-side realised they had to up their game if they wanted to sell to owners bumping along the bottom of a terrible market and for whom the to do list starts with the regulatory must-haves and works down to the nice to have add-ons.

“It’s not only VSAT, some of the bigger providers manage terrestrial communication, GSM, data exchanges so they are able to pull a lot of strings. I didn’t expect some of them to know as much about shipping as they did but I ended talking to one who said ‘what about ECDIS, we’ve got a nice solution for you guys’ and that was the icing on the cake.”

The Intermanager engagement strategy is simple, if demanding: be professional, do your homework, understand what makes a shipmanager tick and what can be done to make their life easier. Without that it’s best not to come to the table.

Isn’t it a problem though, that just as the industry sees light at the end of the tunnel, the broader satellite industry is regarding maritime as a potential pot of gold? The risk is that not just incumbents become more aggressive but that new players steam in and destabilise a market that is just getting back on its feet.

Kuba sees the same trend and a repeat of the original path of VSAT into maritime. Other markets have been already saturated and with revenues from government or land mobile under pressure and aero still emerging, shipping looks like a safe bet.

“A lot of them have a misconception in that they see shipping as the big passenger vessels so it is an eye-opener to discover there are only have 350 of those. That might have put them off but they don’t have many other places to go so suddenly the other 75,000 vessels look very tempting. But just because you can sell one million iPhones doesn’t mean all those ships want or can afford VSAT. Using your iPhone might mean paying $20 dollars a month not $5,000 a month for VSAT,” he says.

The number of commercial aircraft also compares poorly to ships, prompting a revival of interest at the point when potential customer advantage can be gained from better communication.

“Everybody has a vessel, everyone has crew but only very few can provide an excellent communication link with your customers so users now are demanding more. The charterer used to ask the manager or operator where is my vessel, what is the ETA, where should I put my trucks? These days the manager can say ‘don’t ask me, log in and you can see all that information.”

Coming up in Part 2 – why the crew calling trend could be overdone and whether there really is a shortage of seafarers.

Can we make crew internet access work? Yes we can!

Reminding ourselves just how few seafarers have anything like real internet access is good means of self-flagellation and of remembering there are many people less fortunate than ourselves.

But I think it’s time to stop playing that tune. It’s a bit of a one-noter for one thing and the fact is that the barriers to crew calling lie in the hearts, minds and wallets of shipowners and managers rather than in the ability of IT departments, airtime providers or middleware vendors to provide it.

It may not be as easy as just sticking a phone or a PC in the mess and handing out scratch cards – though that has certainly been tried. And as Inmarsat’s Michiel Meijer pointed out at last week’s DigitalShp Athens conference, to be done right would almost certainly require moving to a managed services environment.

What’s that – an airtime provider advising you to spend more on airtime? Who would have thought it. But Meijer’s case was simple – a 2GB FleetBroadband plan would give enough capacity to get a crew connected.

The business case could be made by comparing the high cost of replacing crew – junior or senior and fed up with no access to communications – to the cost of the comms. Add travel and recruitment costs and it looked like a no-brainer.

He accepted the point that management needed to understand the business case – and Globecomm’s Gregor Ross pondered if we weren’t giving seafarers false hope about what the experience would be like. Not the same as ashore certainly, but better than nothing is surely the answer.

And he cited an anectodal example of a Dutch company that at one time contemplated taking email off the ships completely, only to do a 180 degree turn and install internet access across the fleet once they understood the practicalities.

The key he said, was in managing the risks on behalf of owners with dedicated software and solutions that provided a middle ware layer that kept control of costs and delivered genuine services.

Right on cue, up stepped Christian Vakarelis of Navarino with an Infinity box in one hand and bunch of case studies in the other. Focussing on a handful of examples from among the Greek shipping community, he demonstrated how managers could share the cost of the internet access with the crew to the satisfaction of both parties. Such satisfaction required a VLA plan of 10GB plan, a service due for replacement in January 2013 with FleetBroadband Unlimited, he noted.

The longer the voyage, the greater the usage for obvious reasons but owners are mixing and matching – selling PINs to crews that give them very low voice rates and budgeted data access.

Other owners provide a separate system for crew calling, providing Wi-Fi and 25MB PINS good for 5-6 hours of light surfing.

One owner used a combination of business and social applications – running remote monitoring and management reporting systems, filing compliance forms and receiving NTMs and were considering adding Skype to the crew portfolio.

Selling PINs to crew was enough to cover half the cost of a VLA plan which it was also using for purchasing and maintenance and VPN file sharing applications.

A final example was a company that provided a fixed system of 20 cards of 100MB each which were reloaded every week. The seafarers used them or lost them. Visitors and agents were issued 500MB cards but in order to make sure that crew got the required rest and didn’t stay up all night surfing, the cards were time-stamped to be only usable between 17:00 and midnight ship time.

Staying up all night surfing – not a sentence I thought I would be writing this month or any month quite frankly. And what was noticeable here was the huge difference in the amount of crew use to the business communications, the former way ahead of the latter.

It was the same at the GVF VSAT forum earlier this year – business comms form a small part of the data load and crew comms are the driver. It was thought that would make it hard for to make the case to management that such services were needed.

Asked by a member of the audience why Inmarsat did not provide scratchcards for data access in the same way as they did for voice, Meijer replied that the subject was under internal consideration.The evidence from DigitalShip Athens is that this service is selling itself.

Time perhaps for more owners and managers to stop pretending crew calling is expensive or difficult to implement and get with the programme.