Tag Archives: Global VSAT Forum

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.”

Five things it would be good to hear at Satellite 2015

Young people tell me that the listicle is the way to go (flexible length, no need to build narrative flow) so here’s what I’m hoping for from Satellite 2015 next week.

From a maritime industry perspective, few of these things are likely: Satellite is peer-to-peer show more concerned with orbital insertion and the potential of nanosats than the niceties of maritime. That will get a lot more play the next week during CMA when the industry will talk about almost everything except communications.

  1. Less about HTS. The satellite industry is obsessed with HTS and its potential. And so they should be, since it brings potential communication speed out of the early 1990s dial-up era and into the early broadband era of the 2000s. In satellite that kind of improvement is worthy of this much fuss. Satellite is hard, expensive and tough to deliver to moving targets but the maritime industry for one is going to take some convincing that the next big thing is just that. It’s worth remembering the Stark Moore McMillan (as was) survey of a few years ago that found the majority of the maritime industry still working at 9.6kbps with thousands of seafarers still unconnected. HTS isn’t going to lift those people out of bandwidth poverty.
  1. More about end-users. If any of Satellite’s delegates have been paying attention, they will have noticed the Baltic Dry Index hitting its record low, all but a few containership operators bleeding red ink and global trade demand prospects so poor that even those who said this slump is not as bad as the 1980s are now keeping quiet. With the exception of tanker trades driven by low oil prices, the industry is in the toilet, so it’s not a great time to sell them new shiny things unless they are mandated by regulation. That doesn’t mean they won’t buy, just that satellite people have to listen first, sell second. The maritime satellite providers have talked a good game on the need for monitoring, telematics and chart updates but it would be good to see a little more evidence-based data of the need.
  1. Easier to buy VSAT. This is happening – KVH will say it has already happened – but if the industry is to take to VSAT in large numbers it needs to be a commodity sale just like L-Band has been. Owners are unsure about VSAT because they see a large per month expenditure, sometimes with expensive equipment on top and are unsure whether they can make it pay. Deciding whether or not they will monetise or incentivise their crew makes that clearer and I tend to think that crew would pay for a good service. The headlines tell us more and more owners are signing up for VSAT but they are still in the minority. No one issues a PR that says ‘Fleet77 unit still working, if pricey’.
  1. Making value added a reality. Shipping likes the idea of added value. Ship suppliers, classification societies, even satellite service providers use it to differentiate even though it means different things to them and their customers. Without it they are selling the same thing and price is the only thing that counts. But shipping is good at bolt-ons; telemedicine, e-learning, weather routeing and so on. When this stuff moves beyond the ‘bursty’ and into a continuous stream – then there is a supply-demand gap. Seafarers want it – and some companies too – but it is hard to get the bandwidth required to make it happen without confidence that your connection is robust enough to support it.
  2. Choice that is easier to choose. The maritime industry has seen satellite providers grow from IMO-mandated monopoly to duopoly then to a free market with a wealth of choice. But something has prevented them from seeing this as real choice.
    Perhaps it is a lack of inertia because ‘no-one-ever got fired for buying Inmarsat’, perhaps that the alternatives on offer really weren’t that much better. And where the incumbent used to respond to market changes slowly, it is now pushing them to stay in contention not just at sea but in the air and on land. Between the remaining L-band providers and the FSS VSAT companies who think there is a gold mine awaiting them in shipping, there is a lot of interest in carving out territory. But there is also an imbalance between the very large service/distribution partners, some of whom run satellites themselves and the traditional SPs whose value lies in experienced people who also have a handy way with a spanner. Ultimately this is an ‘out of town supermarket versus the high street’ scenario. One may have a preference, but from this side of the pond, it’s pretty easy to see how that one ended.

See you at the show and if you are free on Tuesday at 16:30 come along to the MSUA-12 maritime session. Full details:  www.satshow.com.

More threats (and opportunities) for the VSAT vendors

A final dispatch from the recent GVF seminar in London, not because it didn’t bear reporting sooner, more that it might serve as a springboard going forward.

Amid optimistic forecasts of a doubling of maritime satellite communications terminals over the next decade and the rush towards High Throughput Satellite offerings by Inmarsat, Intelsat, O3B and others, it always pays to listen the person who has run the numbers on the demand side.

Roger Adamson whose company Stark Moore McMillan, has been running a rule over the maritime market for a couple of years with help from iDirect, used his speaking slot to point out that a ‘re-acquaintance’ with the maritime market would always be an illuminating process.

Adamson’s most salient point was to remind the vendors that shipping is still a highly fragmented market – with some 9,000 owners out there, 4,000 of which own but a single ship.

The cruise sector, VSAT’s traditional arena of operation, is far more consolidated with some 300 vessels, 175 of which are controlled by three players. Similarly the offshore support vessel segment is spoken of as a VSAT hunting ground. But as Adamson pointed out, even though the OSV sector has close to 10,000 ships, at least half are idle or laid up and 30% are 25 years or older.

The even more interesting news for those selling fat pipe solutions is that vendors of VSAT and L-band alike – are selling into a market that is at a high level at least, far from sophisticated.

SMM’s survey found that 48% of owners are still using the obsolete Inmarsat-B, 75% of them for primary voice communications. As Adamson pointed out, “we are dealing with a market that is still at 9.6kbps data.”

Spending on L-band is stable at around $1,000 per vessel per month, whether on B, Fleet or FleetBroadband. In 2010 VSAT customers were spending $3,500 per month on average. By this year that had fallen to $2,600 reflecting price pressure and increased competition.

Despite the increased incentives, Adamson said, the realities of today’s market would constrain a wholesale move towards VSAT on grounds of price.

“The slower growth in VSAT market is partly due to market conditions. The niche is becoming well penetrated, but it is also down to VSAT industry not communicating ROI properly. Sales have to be on quantifiable benefits not on functionality,” he said.

“The shipping industry is in survival mode in most sectors and it is not focussed on IT and comms, unless you can provide them with clear ROI benefits as to why they should be moving to VSAT and spending 2.5 times more than they are currently spending,” he went on.

Trouble is, Adamson thinks VSAT vendors are not communicating the benefits effectively enough. Not only is there a reluctance to invest in technology, there is a genuine aversion to the kind of long fixed-term contracts that characterise VSAT. He noted the newest kid on the block O3B was offering “fixed terms of 5-10 years and to be honest that’s not where the market is. They may take a few off the top, but it’s unlikely to find much sympathy in the broader commercial market”.

In bulk, tankers and containers, owners are likely to be laying up tonnage, so there is little appetite to pay for airtime when the ship is idle. Even when they are sailing – often below operating costs – the benefits are hard to quantify.

“When iDirect asked customers whether fitting VSAT had generated cost savings, 60% said no, 20% said yes and 20% said not sure,” he continued. “I’m convinced that that VSAT can deliver savings but nobody has as yet started to look closely at the process.”

The difference is that where Inmarsat was an easy sell to IT managers and superintendents, the cost and complexity of VSAT needs to be sold at board level, where a story that frames the potential efficiency gains across whole business can gain wider approval.

The next uncomfortable fact is that the majority of tier two owners – regional or coastal players – are unlikely go to VSAT while GSM coverage in coastal waters continues to improve.

“My take on where VSAT is going is beyond offshore and cruise and into the tanker sector. There is a huge charterer requirement for data coming off the vessel and this could be the next big market for VSAT providers. There are 15,000 ships in the clean and products trades and they are starting to become receptive to the VSAT business case.”

But there was a twist in the tail – or perhaps just another contradiction in this most fickle of markets. The SMM survey found a big increase in data usage, but the majority of the new traffic on L-Band and VSAT is for crew welfare rather than for shipmanagement applications.

“The effect is even becoming pronounced for VSAT users,” Adamson noted. “Where business efficiency was the killer app in 2010, the importance of crew welfare had increased by 2012, with VSAT a driver to increased retention for crews wanting to use instant messaging and other social media applications.”

You’ve never had it so good – as long as you aren’t at sea

To judge by many of the presentations at the Global VSAT Forum event in London last week, the shipping industry has never had it so good – in terms of communications at least. Prices are falling, choice is broadening and access to social media is growing, overturning decades in which patchy and expensive communications were the norm.

Not so fast, says Mark Woodhead, managing director of Headland Media. We may be living in a golden age of communications on land but it’s not the same at sea. As a demonstration, he got the audience to acknowledge who had made a call, checked, email, surfed the web or used social media in the course of the first conference session.

By contrast, most seafarers he said are ‘living in the late 1990s’ in terms of communications infrastructure and the fact that we take our connectivity for granted should not stop us forgetting that few seafarers enjoy anything like this level of connectedness. Given the importance that the IMO for one places on the ‘human element’ in shipping, this is something we should be concerned about.

“The first thing I did when planning this speech was to turn off all my gadgets and work out what I was going to say. That is the life that many seafarers have today,” he said. Headland has a daily relationship with 9,000 vessels and 200,000 seafarers, distributing news and entertainment as well as training and safety films.

Woodhead turned his connections back on to email questions on the opportunities that technology and connectivity presented to Headland Media’s clients and got 100 replies,  some running to multiple pages. As this was not a formal process, he backed it up with the ITF’s 2010 seafarer survey, but the results were closely aligned.

“From what I got, I conclude that between 10 and 50% of seafarers have access to email onboard ship. Hardly any have private email accounts, they are usually fixed to the ship and accessed by master. Hardly any have access to attachments,” he said.

Where email is provided, messages are often restricted to 3,000 characters. Some are charged for sending and receiving emails and these are almost always batched, meaning they go off the ship in a pre-determined time window rather than real-time.

“If that was how we were getting our email on land, we’d have a different attitude and we’d use it in a very different way,” he observed wryly. If he was surprised by that response, there was worse to come. “For internet access, by which I mean the ability to surf the web, the ITF found that almost 20% had access. From the information we got, it is less than 10%. Some have access in port but most are going to seamen’s mission or internet cafés.”

One anecdote he harvested was of a seafarer who got off a vessel and sat on the pavement for three hours to get into an internet café. The harbour side bars opposite were mostly empty while people queued up for web access.

“All this makes you realise this isn’t just something seafarers want, it’s beginning to be fundamental. Even though merchant shipping is going through hard times, retention and recruitment are still very difficult. Most of the people in that 10% with web access told me they would never sign contract for a ship which didn’t have internet access. Three or four were happy to sign a nine month contract on ships with internet access rather than six months on ships that didn’t,” he added.

The killer app here is Skype, the modern-day phone call and text machine in one – most seafarers never used its video calling functionality. Seafarers also want to be able to use email afloat as they do ashore – in private with attachments. They also want to be entertained, with social media, instant messaging, video, film and news from home.

But as Woodhead pointed out, his respondents were equally as interested in what they could use this connectivity for professionally as personally.

“They want chart updates, information on piracy, safety and security information, updates on regulations, trends in shipping. More and more of them realise that regulations are increasingly important and serious for them. They also want to use connections to research answers to problems onboard. They would rather search forums or the web than phone the office,” he added.

There are a handful of intriguing statements to unpack there, but the main takeaway is that better connectivity might help to save time (and therefore money) and improve performance and safety and boost quality of life. That’s a good deal for a few megabytes of data per month.

What is stopping greater connectivity can basically be defined as cost and control. Neither should stand in the way of better availability of services to crew, Woodhead reckoned. The competitive nature of market is driving down costs and control, either through bandwidth management to separate business from leisure traffic, or means to control virus and unauthorised access risk, is commonly available.

“Modern routers and software can easily sort the bandwidth problem out. It’s also easy to establish a walled garden that pushes users to approved sites. We act as ISP for 600 vessels providing spam filtering and anti-virus and we have not had a problem. Probably a bigger issue for the content owners at least, is copyright.”

As Woodhead sees it, if there is a responsibility to control the technology, there is a greater responsibility to provide the access. To a shipping company it can make a difference to whether or not they attract and retain the seafarers they need. Access to communications also forms part of the guidelines to the Maritime Labour Convention. Responsible managers will want to be seen as compliant and in any case the direction of travel is set.

“We are at a tipping point, the first time where cost, regulations infrastructure and seafarer demand are all pulling the same direction. It’s time we trust the crew to use these services responsibly. Welfare is a key element but better connectivity offers significant entertainment and professional opportunities too.”

You want to get where? Well, I wouldn’t start from here…

Intermanager secretary-general Kuba Szymanski has what might be described as a ‘combative’ style. This is the man who once made a presentation on risk management comparing the chartering process to dating his teenage daughter, leaving no-one in any doubt on what would be required to prove one’s suitability.

He’s no stranger to a challenge either. A couple of week-ends ago, he completed an 85 mile ‘Parish Walk’ around the Isle of Man for charity in 23 hours 50 minutes. At the GVF Maritime Insights 2012 event last week, Szymanski took another challenge: telling a roomful of VSAT vendors that they needed to up their game if they wanted to sell systems to shipmanagers and owners.

He began with a prescient comparison. The sextant is still a compulsory piece of equipment onboard, yet it is rarely if ever used. Szymanski admitted only his personal stubbornness meant that he still used one at all.

“I needed 18 months of training to be qualified on something haven’t used in anger in 20 years. But I could use the VSAT 100 times a day. How much training do I have on VSAT? Zero. Without VSAT we can still navigate, but take away the sextant and we cannot.”

The VSAT vendors needed a reality check, he suggested. Why was there no certificate of proficiency for computers? If VSAT is so important why is there no training? It is little use telling managers that an eight year old could use VSAT because a 48 year old would struggle.

For comparison, when Szymanski was at sea in 1985 the latest cutting edge computer was the ZX Spectrum and computer use onboard ship was barely heard of. The speed of change since then has surpassed all expectations but inside the shipping industry some things haven’t changed at all.

A master, he explained works on contract, is highly paid, works long hours – is expected to get on with things and expects things to work. This was relatively simple when GMDSS was introduced because Inmarsat’s regulated status meant high reliability, a standard seafarers became used to.

“We still whinged about it, but it was reliable. But all of sudden new systems appeared. Our expectation was similar, but this equipment does 40-60% of what was promised. It has immediately got a bad name because it was sold on the premise that it would be the same if not better than Inmarsat and it never was. We cannot get the same reliability from VSAT that our charterers expect from us,” he said.

If VSAT was sold in the same way as charters were negotiated, he said, then users would be defaulting on their bills. Part of the problem he said was that there is no definition of broadband.

“You would all have one but they wouldn’t all agree. You can’t deliver on something you can’t define. If I am paying $3,000 a month for 24/7 broadband but you are delivering 23.59/7 then I shouldn’t be paying you,” he declared.

This, as you might expect didn’t go down terribly well with the assembled VSAT sellers and I felt more than a twinge of sympathy for them. Szymanski got a lesson from delegates on ‘best effort’, contention ratios, maximum information rates and the rest, but he was not to be deflected. This was a challenge that was turning into a crusade.

“Our expectations are not flexible. This is what we wanted and you haven’t delivered. The problem is you don’t know the industry you are selling to. You haven’t done your homework so it is not a surprise that our expectations are not met,” he continued.

Those who know and admire Szymanski of course knew where this was driving: the Key Performance Indicators project that he has embarked on for Intermanager, based on his experience that it is pretty difficult to measure something if you don’t know where to hold one end of the tape. This is not to say that he did not want the VSAT guys to succeed – this was the Global VSAT Forum after all – and the whole point is to encourage better, cost-effective solutions that are easy for owners to adopt and use.

GVF will be looking into how to run a similar KPI programme on VSAT and by the next event, I suspect we will see the vendors come back with reinforcements – they will need some pretty heavy weapons.

“When seafarers can choose between a ship with internet and one without for the same salary, then there is a good argument for VSAT, but unfortunately there is nothing tangible to go with. We need to call a spade a spade and to know how big the glass is.

“I can only see benefits but we need to show a baseline. We have never measured how much it costs when you lose a master and VSAT makes this kind of difference. At the moment, you are selling something we can’t measure.”

It’s not (just) about the money

So what did we learn from the first day of the GVF conference in London? Enough for plenty of future blog posts – but the over-riding takeaway from Wednesday was that satcom vendors need to understand more about shipping.

And on the flip side, shipowners and managers need to understand more about satcoms.

This double negative effect – whereby the vendor has little idea about what the owner really needs and prefers to seal a deal at any price, while the buyer is more likely a superintendent than an IT specialist – is creating problems once the kit is delivered and onboard.

Several times yesterday, the sheer number of satellite acronyms and numbers per second demonstrated what makes satcoms people tick. They are geeks. That’s not meant as an insult – they just have more in common with The Big Bang Theory than they do with, say, The Six Million Dollar Man.

Buyers, it seems are equally in the dark about what they need to do the job and how reliable and effective it is going to be once they are on the ocean. At times nervous of what their ignorance might reveal – also price driven and advised seemingly by what they read in the maritime press as much as by their own research – they sometimes make bad decisions.

It’s not all bad. Demetris Makaritis of Navigator Gas said his company was pleased to get a fixed monthly price for a mini-VSAT installation but observed wryly that the service was good ‘when it worked’. He also said the coverage was not what he had been led to believe, in part because he had fitted an antenna smaller than the recommended size.

Perhaps, a few of us pondered, that was an oversight, perhaps a cost saving, perhaps an absent-minded error. But it left him, not exactly back where he started, but longing for better system uptime and reliability.

Navigator’s LPG ships are pretty hi-tech and having done his own cost analysis, he was pleased with the 30% reduction in comms bills he achieved. But he admitted he would ‘happily pay more for bandwidth’ if the service was more reliable.

Finding out that India to Singapore was pretty much missing from the coverage, along with parts of the Mediterranean is not a nice feeling to have, one which left him to advise, ‘if you don’t can’t guarantee the coverage, don’t put it in your marketing’.

In an aside that certainly made him the most popular man in the lunch break, he said these doubts meant that he was far from certain which solution to go for on six LPG newbuildings.

How Makaritis and perhaps many another owner and manager found themselves with a system that wasn’t all it promised, was illustrated by Kaushik Roy of MOL LNG.

MOL is, like Navigator, a quality operator that invests in operation efficiency and crew welfare alike, but Roy was frank enough to say that owners would sometimes end up specifying systems because they lacked the knowledge to challenge what they were being sold.

There was not enough benchmarking or gap analysis and expectations on either side were often not known or understood clearly. Equally, he said the satcom sales person often had little or no technical knowledge about shipping or shipmanagement they ‘just wanted the contract’.

Again the issue is not entirely about money. Roy said MOL LNG’s move to VSAT had seen its comms costs rise modestly, but this was a price it was willing to pay for the value that the fatter pipe brought the company.

As conference co-chair Kuba Szymanski of Intermanager pointed out, it was something of a tragedy that more Radio Officers, which were ‘retired’ as computers replaced wireless onboard ship did not find employment with satcom companies.

If they had, both sides might be talking the same language.