Tag Archives: Global Xpress

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.”

M2M and mad cows – through the mobility looking glass

Can satellite ever really go mainstream? It’s a nice idea, but one that has already claimed some scalps among those who have modelled the concept only to find the reality rather different. Two of those (fully resuscitated) examples were present on the MSS CEO panel at Satellite 2014 along with Inmarsat and Thuraya. Iridium and Globalstar are these days talking a strong book with launches tabled and new services in the pipeline.

Even if the low cost satphone in your pocket remains something of a chimera, the session provided a useful glimpse of what the roadmap looks like for the mobility majors.

So much so in fact that Iridium CEO Matt Desch offered to double his bet with Globalstar’s Jay Monroe that his new network would be up and running before Globalstar’s – a wager he offered to settle in Iridium stock. He subsequently agreed that the NEXT schedule had slipped somewhat but insisted he was not in hurry, despite wanting to bring new services on. Such is the mirror world of mobility satellite.

Though rumours persist that Globalstar is waiting to be acquired by an internet company keen to use its spectrum rights for the delivery of more day to day goods and services, Monroe insisted that the potential to address a market unserved by cellular with a $100 product was still realistic.

Desch and Samer Halawi disagreed – the former probably through bitter experience – the latter because Thuraya’s BYOD play the SatSleeve has attracted so much attention by extending two already successful brands.

Halawi thought that lack of standardisation made it hard to achieve a consumer market opportunity Monroe thought was ‘worth millions’, though he again asserted that SatSleeve’s mission was to liven up a “somewhat dull MSS market”.

Desch agreed that low initial costs would always tend to rise and “making a commodity product that Best Buy would want to list for $30 would be hard to make a success for partners and channels too”.

Inmarsat’s Rupert Pearce has the new iSat 2 handheld in the game but said their model was enterprise users with heavier usage and better average revenue per user. “We are business to business and business to government. Consumer is a bridge too far.”

Away from the user the threat to all their businesses is the apparent desire of mobile phone operators to grab back spectrum it thinks mobile satellite is not using to its fullest extent, including the L-Band the industry ‘doesn’t need’ as it moves increasingly to Ku and Ka.

GVF has already done a lot of work on the political lobbying and Pearce was unequivocal. This was a bubble that needed to be burst “it will be hyper-politicised [at the ITU’s World Radio Council 15 meeting] and we need a coalition of the willing to lobby on the need for critical satellite services”. He didn’t add ‘rather than more leisure users’ but one sensed that’s what he meant.

Moderator Tim Farrar pondered by how much GX was delayed or on track – rather a moot point for maritime users – but important for the company’s reporting and financials. Despite suggestions of delays to the iDirect hub component, Pearce said the core equipment and satellites were aligned and said that “more than 30% of GX revenues were already committed, including the 1,000 XpressLink installs which are ready to move to GX”.

The surprise purchase of Globe Wireless is among a series of ‘quick buys’ Inmarsat has made to help its channel cover Ku to Ka conversions over first 18-24 months. He mentioned the Globe iFusion box as being a component of the value that Globe brings to Inmarsat, though  how that dovetails with the CISCO Router that lies at the heart of GX connectivity was not made clear.

For Desch, Iridium’s strategy remains little changed – evolutionary compatible products in which broadband remains an upside to the ‘low-end’ segment it serves, one he feels can grow further. Iridium he said would be providing new capability before its NEXT network is finished and speeds would increase too but “it’s not worth chasing commodity broadband because that market is going to look different in three to five years from how it looks now – we are going to take a bigger chunk of what we do with more capability”.

For Halawi, the future means considerations on how to design and build next generation satellites, though the Thuraya CEO insisted time was on his side. Thuraya has said for some time that its next generation concept is under development but it won’t be a ‘me-too’ system. “We are looking at future applications, how people will use technology 10 or 15 years from now and how technology can support that. There will be more clarity by next year but it won’t be a system similar to the ones being planned for today,” he said.

Pearce has new launches in mind too, but in this case he meant the Inmarsat I-6, the next generation of L-Band satellites to complement the GX service. He said its potential users understood that a dollar spent on better communications could deliver $10 into the enterprise and he also pointed out that most of Inmarsat customers won’t be moving to GX and will need to be supported by the i6 constellation.

Pearce was lightly pressed on Inmarsat’s E&E and FBB price rises over the past two years but insisted that prices had fallen by more than they had risen when compared to the newer FBB bundles. Calling the price rises ‘a win-win’ and a ‘virtuous cycle’ was probably pushing it for users and SPs who had been squeezed as a result, but the continued evidence of users ‘marching up the packages as they understand the value’ was as close as we would get to an explanation.

He must have known the channel question would be next and he suggested that indirect sales remained the priority, with direct sales reduced by 2% per over five years and a stronger focus on controlling where the company goes direct, primarily maritime GX where the learning curve is steep.  “We are trying to work out where network ends where channel adds value,” he said.

Desch countered that price rises had enabled Iridium to work with SPs and their end-users frustrated by lack of price control. Iridium has no desire to go direct he said, but the potential lack of trust in Inmarsat created a continuing opportunity.

Where the satellite industry certainly sees value is the M2M market, with acquisition and expansion on the slate for the MSS operators. Monroe memorably described this as ‘data heroin’ – with tracking as a gateway drug that led on to heavier and heavier usage.

Desch agreed on the growth potential but said ARPU was ‘more interesting than it is attractive’ and no-one would be making millions from M2M anytime soon. “We have natural advantages and we will see it grow but we need our standards to be compatible with what is being written in the terrestrial world.

Farrar quipped about projections for huge growth, everything from cargo monitoring to tracking cows in Brazil or sheep in Scandinavia. Monroe replied that this was far from a pipe dream.

“The projections are for tens of millions of units but there is a real example. Brazil spends millions every year trying to combat mad cow disease. Now, could you track the herds, segregate the infected stock and treat them? They are looking at it seriously.”

The internet of animals – it might have smelled like bullshit, but it was a suitably enigmatic note on which to ponder what the future would really look like for mobility and whether it would really that dull after all.

Maritime HTS: revolution or business as usual?

To mark the publication of its most recent maritime analysis, Maritime Satellite Markets on Cusp of Bandwidth Revolution, I asked Senior NSR Analyst Brad Grady to give MaritimeInsight readers an introduction to the report. With the level of background noise down a little this year – how should owners prepare for the introduction of High Throughput Satellite services?

Recent news reports – since vehemently denied by Inmarsat – suggesting the start of its Global Xpress service has been delayed, do not change the fact that the maritime markets are poised for a bandwidth revolution.

Nearly all segments of the maritime market feel the need for greater throughput to enable critical business and crew communications, despite – or perhaps because of – facing continuing pressures to cut costs and increase productivity.

With the on-coming wave of new High Throughput Satellites (HTS) entering the market, what changes should end-users expect?  Is this new capacity business as usual, or should maritime customers really expect a revolution?

As the NSR report makes clear, between now and 2022, narrowband MSS will account for a majority of maritime satellite terminals, enabling everything from engine monitoring, to safety and distress. However, broadband continues to be a major driver of revenues and in-service units across all maritime market sectors. FSS C-band continues to grow but is vastly outpaced by FSS Ku-band and HTS solutions. Between 2012 and 2022, GEO HTS will add almost as many in-service units as FSS Ku-band.

HTS, a term coined by NSR, is any satellite or satellite payload that has at least twice the throughput of a traditional FSS satellite for the same amount of allocated frequency on orbit, can use any frequency and almost exclusively makes use of frequency reuse and multiple spot beams to increase throughput and reduce the price per bit delivered.

Upcoming satellite services such as Intelsat’s EpicNG, Telenor’s Thor-7, Inmarsat’s Global Xpress, and O3b’s constellation (amongst others) fall into this group.  Combined, they will have capacity available to maritime customers across C/Ku/Ka-bands, and will have a significant impact on maritime customers over the next 10 years.

Globally, HTS will supply upwards of 2.3 terrabits per second (tbps) by 2022; a significant increase over current satellite throughput.  For the maritime market that means greater access to applications such as video conferencing from remote vessels to shore-based centers, faster database replication between the onboard server and onshore datacenter and more bandwidth for social media to communicate with family onshore.

While all of these applications can be found now in the maritime market, HTS launches aim to enable these bandwidth-hungry services more cost-effectively than current [mostly L-band] satellite services.

But what should end-users look out for when considering these HTS-enabled services?

‘More bits for the same bucks’ is – the in simplest terms – the key take-away from industry-laden conversations typical of any reference to HTS.  While the satellite industry continues to discuss Ka-band versus Ku-band, wide versus small spot-beams and open architecture versus closed platforms, end-users are left wondering – how much of this revolution should I worry about, and should I join this HTS revolution?

Scientific evidence supports the argument that Ka-band suffers from ‘rain-fade’ more than other frequencies, but new modulation techniques and hybrid network designs help mitigate those impacts.  Spot-beam size and overall network throughputs are debates best left in the hands of service providers and satellite operators. End-users instead should focus on Service Level Agreements and Quality of Service requirements.  Perhaps the biggest issue end-users should focus on, is that of open versus closed architecture networks.

Open architecture networks, such as Intelsat’s EpicNG, allow greater compatibility with existing remote terminals and equipment.  Closed architecture networks, such as Inmarsat’s Global Xpress have a narrower set of terminal compatibility – usually requiring an upgrade at the vessel to enable the HTS service.

While one might equate the term open with better, in fact, the conversation is much more nuanced.

More so than traditional FSS networks, deployments of HTS-enabled services need to take a holistic approach – from vessel movements, and application criticality, to deck space, current VSAT equipment, and overall bandwidth needs.

Globally-trading vessels will likely favor an Inmarsat-based HTS solution whose coverage mirrors the existing Inmarsat L-band network.  Vessel owners with significant investment into current equipment might lean towards an Intelsat-based solution due to the open-network design of EpicNG. Those with extremely high bandwidth or low latency needs such as cruise ships, offshore or government vessels might further lean towards an O3b-based solution.

In short, the conversation starts with the vessel’s current or prospective maritime service provider.

The bottom line is this. HTS promises a revolution both in throughput and total cost of ownership.  Paired with a strong SLA and a close relationship with the service provider, end-users should have no trouble adopting HTS-based solutions.

However, end-users and service providers alike need to continue to match the best service for the given application – this might sometimes be HTS, sometimes FSS, sometimes MSS – and sometimes it might be all of the above.

Brad Grady is a Senior Analyst at Northern Sky Research, a leading international market research and consulting firm with a core focus on the satellite sector and related industries.  He is the author of NSR’s latest report – Maritime Markets via Satellite, 1st Edition. Further information about NSR and Maritime Markets via Satellite can be found at www.nsr.com

A Rake Too Far?

Trying to keep my head above water pre-Nor-Shipping but I was passed this blog post by a longtime colleague who drew a parallel with the Inmarsat Service Enablement Platform which will manage access to software and services once Global Xpress is up and running.

This was with the benefit of his company having been involved with early vendor meetings and having come out scratching his head.

This will be one of the ‘other’ tests for Inmarsat, its service partners and the market as a whole after the launch of GX – how far it can leverage an advantage from the SEP and deliver real value without getting greedy and risking alienating both its partners and end users.

The piece is not maritime satellite-specific but it discusses the successes and failures in other markets and how software and hardware makers react when they realise what the impact of the rake will be on their business. Set aside a little time as this is a long, if thoughtful and insightful read.

Gems abound, from the practical: “High volume combined with a modest rake is the perfect formula for a true organic marketplace and a sustainable competitive advantage,” to the cautionary: “There is a big difference between what you can extract versus what you should extract” and the Zen-like: “Water runs downhill.”

CrewComms_infographic

Crew retention is the tip of the digital iceberg

Almost 12 months ago an ambitious project began to take shape. Roger Adamson of Stark Moore Macmillan, Vizada (now Astrium Services) and two of the largest crewing agencies in the world, Philippine Transmarine Carriers and CF Sharp, joined forces to embark on the most comprehensive survey of crew and their attitudes towards and use of communications at sea ever undertaken.

The resulting report has generated considerable interest. But while Adamson says it is encouraging to see so many shipmanagers and operators recognising the operational benefits of improved communications from a crew retention perspective, in this guest blog, he lays out why he believes there is a wider opportunity which comparatively few in the industry are really grasping.

Considering the enduring importance of crew retention it may seem surprising that until last year no organisation had commissioned definitive independent research into the communications requirements and habits of seafarers.

However, when confronted with the logistics of reaching, collecting and analysing the written, paper responses of almost 1,000 officers and ratings, this lack of comprehensive research becomes rather more understandable.

Key to any research project is the quality of the data and the sample. Had we not been working with PTC and CF Sharp which between them send over 47,000 crew each year to over 1,000 vessels in the commercial cargo and passenger sectors, it is unlikely such a survey would have been possible.

It certainly wouldn’t have produced such high quality data and responses. With the total market for satellite based crew communications estimated at approximately 925,000 individuals, our sample represents in the region of 1% of the market – making the dataset both fascinating and statistically significant.

One of the headline results has been that 68% of seafarers now have access to communications whilst at sea either all or most of the time with only 2% reporting that they never have access to communications. However those headline figures mask a wide variance between different sectors. For instance the passengership sector, despite having the highest levels of communications equipment on board, provides the lowest levels of free crew communications of any sector.

In common with the passenger sector, offshore vessels have very high levels of equipment, but neither of these are principally driven by crew communications requirements. For the passenger sector, high-bandwidth communications systems are major revenue generators with the penetration of VSAT extremely high.

Similarly, the offshore sector is well penetrated with VSAT systems as charterer requirements dictate high-bandwidth be available, but in contrast to the passenger sector, offshore vessels offer far better access to free and paid-for communications, most likely a reflection of the scarcity of qualified offshore crew.

Across the sectors 46% of crew are not provided with any form of free communications at all. In the context of crew retention that figure should be raising eyebrows.

As a regular speaker at the Informa Manning & Training conference, where this year I’ve been asked to speak to delegates in Dubrovnik about crew communications, I consistently hear managers and operators wrestling with the issue of crew retention.

I’m repeatedly being told that the expense of training crew means that retaining them offers real dollar savings and competitive advantage. When one considers the noise VSAT has been making over the past several years it is curious that we are still in a situation where almost half of all seafarers have no access to free communications, when the ability to provide them with such would not only assist in their retention, but also offer broader opportunities to ship managers and operators.

I think this is where the real issues lie. Traditionally the expense of satellite communications together with the necessity for robust equipment and reliability in an environment where mission-critical literally equates to life and death, has always meant failure wasn’t an option and experimentation challenging.

As one of the most regulated industries in the world, shipping is about compliance and meeting minimum requirements. In many respects it is a unique industry, but it is not immune from the digital revolution which has swept up every other.

With the IMO advocating an over-arching e-navigation strategy combining ECDIS with new technologies converging across navigation, IT and communications, the landscape of maritime business is changing fast.

The opportunities for forward thinking ship managers and operators are highly significant, but unlocking maritime’s digital promise will require a major shift in thinking. IT, communications and digital technologies have the potential to drive cost savings, service improvements and the all-important crew retention.

In my experience shipmanagers and operators are hungry to understand how and where their businesses can implement and benefit from these changes, but as yet suppliers aren’t creating the cross-businesses value propositions to help them.

By commissioning the Crew Communications 2012 survey Astrium have signaled their intention to address this need. The wealth of information it has provided to shipmanagers and operators about the crew they depend upon is extremely valuable, but it’s only the beginning of what’s required.

Case studies have always been the primary tool in the maritime salesperson’s armoury, but what’s needed now are more independent, in-depth studies and analysis which can inform both suppliers, and ship managers and operators.

The advent of new High Throughput Satellite systems, from Intelsat EPIC to Inmarsat’s GlobalXpress, O3B to Iridium NEXT, means bandwidth and speeds will accelerate further. But without the context of operational implementation and potential cost efficiencies these systems are just adding a new level of complexity for ship managers and operators.

We are approaching an era of real technology convergence in maritime which has the potential to transform the industry for the better. Doing so will require technology suppliers to gain a far more holistic and in-depth understanding of the shipping business. And for ship managers and operators to help them.

A condensed version of the Stark Moore McMillan report, Crew Communications 2012 is available for download from here.

A year has gone by…

…since I started MaritimeInsight and March again finds me in Stamford once again, where the Connecticut Maritime Association moves and shakes for the next three days.

Over the last year I’ve tried to unpick the main issues impacting communications and technology. I probably haven’t always got it right but my guiding principle was to provide a forum for neutral debate on where the sector is going and how that fits with the wider industry.

That commitment remains because the 12 months have shown that left to the marketing men, there is as much spin and smoke around as there is clear guiding information. And because the next couple of years will likely define who survives and who falls by the wayside.

As I have noted it in recent posts, communications is a market in the midst of an upheaval and one for which the future will look somewhat like the past but there will be fundamental changes too. The next challenge is probably less about selecting systems and more about empowering and enabling crew to ensure that the users can extract real value from them.

One need only look at the latest DigitalShip to see that VSAT has gone from a nice to have to a must-have for owners of high quality tonnage. The emergence of the HTS era will see that trend strengthen but there are big questions to be asked and answered.

Will Inmarsat continue to gain enough traction on XpressLink to cement the take up of GlobalXpress? Will Intelsat get its IPO away and EPIC in service? and will Iridium NEXT get off the ground? Will Globalstar’s second-generation play come good? I recently authored an article for Via Satellite on the step change in satellite comms and I couldn’t get O3B to tell me anything so I guess they are busy.

How far will Ku-band VSAT be able to keep up the pressure on all these? And what happens to L-band spectrum as owners begin to move away from their comfort zone?

As Maersk Maritime Technology’s Bo Cerup Simonsen put it at last week’s GreenShip Technology conference, the biggest challenge is not technology, or financing or sustainability, it is ‘survivability’ and whether shipping companies and their suppliers have the financial stability to last the course.

Maersk of course is the industry’s bellwether, a company which defines engagement with the core shipping issues, principally the need to get a handle on big data and in the process improve operational efficiency.

The Maersk fleet of 870 large containerships ships is already reporting into a single database, with data flowing almost continuously on an automated basis, helping the company develop performance benchmarks on people and ships alike.

That means that big blue can sharpen its competitive edge, assessing the impact of fuel saving technologies and comparing vessel performance, dropping poorly performing chartered tonnage and bringing in younger ships as necessary. Crew are incentivised to improve performance within safe working limits.

“It’s a case of deciding if you are going to do the minimum or the best, to work beyond what is regulated and maintain your vision,” Simonsen said. “The key aspect for us is to make sure that the data and software burden are not placed on the crew. We monitor and measure then discuss with the crew what the implications are.”

Properly resourcing crew training was fundamental to this – there was no point in investing in technology without helping crew get the most out of it. So once again we are back to the humanware. Software, technology, systems, these are just means to an end. The real challenge is to educate and change mindsets.

Cold winds and tough times

Last week’s DigitalShip Hamburg conference was a living testament to the troubles that are threatening to wash away many shipping companies. Registration was strong but attendance was a little lower than previous years. Ask anyone about that and they would reply ‘these guys have other things to worry about’.

They are right. The insolvency of three single-ship KG companies associated with Hamburg’s Vega Reederei the same week underlined the fact that the German shipping market and the finance system that supports it are under serious threat.

The picture is the same globally, though owners have managed to defer the worst effects by burning through the cash piles amassed pre-2008 and because the banks (another group with rather bigger things on their mind) haven’t moved to repossess because interest rates have been so low.

That is changing and satellite communications may not escape unscathed as the market tightens. For a SOLAS universe of either 40,000 or perhaps closer to 70,000 merchant ships, there are at least three MSS airtime providers, dozens of DPs and SPs and rivals from FSS who moved into maritime a few years ago.

As Marlink’s Knut Natvig mentioned in his first-day introduction, the SP is the glue between the airtime provider and the customer – they have the crucial role of getting pricing right and adding value.

Now, the usual suspects will already be saying that Inmarsat is doing a pretty good job of putting smaller SPs out of business by raising PAYG prices, but looked at dispassionately, something will have to change.

Indeed, it has already changed. An SP of my acquaintance is fond of remarking that selling airtime may have been the past but certainly won’t be the future. When an OEM or a software vendor can also be an airtime provider, the fight gets too tough for many.

This will force the SPs to get better at what they already do – squeezing value out of L-Band even while they decide whether to take the bigger bet on Ku or Ka-band VSAT. And if rumours going around Hamburg that one big and well-known SP is indeed up for sale are correct, the evidence is that change is already observable.

And if the market pre-GX was tough, the market after could be tougher still. As DPs, SPs and OEMs sign up to the SEP and GX and accept everything that goes with that, the mid-size players, or simply those not fleet enough of foot, will be left to scrap it out even as the big boys pull further away.

For the Marlinks of this world, that may be less of a problem as they are hedged across all the products as are others, so customers can order a la carte or table d’hôte.

It was said once again in Hamburg that the IT department needs to get out from behind their desks and understand more clearly what is happening in chartering and operations.

As Pietro Amorusi of D’Amico noted, “Shipowners don’t want to take care of solutions, they want to forget about problems. When you go to buy a drill, what you really need is a hole – this should be the approach.”

And that goes the other way. DPs and SPs should be on their customers like glue, talking about the future, describing scenarios and laying out options.

They will still have a hard job. Inmarsat’s direct sales strategy is increasing pricing pressure but the other DPs and SPs are at it too. Inmarsat Maritime President Frank Coles told the audience he expected some kind of consolidation over the next couple of years and that he didn’t think there would be any ‘unlimited’ bandwidth packages on offer in maritime in future if demand continued to increase.

Zeev Steinluaf from Station711 said he could see the day when the majority of crew access was free at point of use, either subsidised by the owner, the DP/SP or supported by advertising.

So the trick of it, just as in the shipping piece itself, is relationships. What the L-Band DPs and SPs have that the VSAT vendors don’t by and large is the relationships – in some cases built up over years. The VSAT vendors can talk service speed and capacity, but you wonder sometimes if they are as close to the market as they claim.

Still, another DS done and we have reasonable clarity on what we might expect over the next year and into 2014 by which time we will have a first glimpse of what GX might be capable of. All shipowners and managers have to do know is call with great accuracy the timing and extent of the market’s recovery in their particular sector and we are home and dry…

Managing the data shipboard load and creating low/high end opportunities

In the first part of my interview with Roger Adamson, the Stark Moore McMillan ceo laid out some of the issues that face the bandwidth vendors in 2013 and beyond. In the second part we discuss how owners and managers are adapting to the changing landscape of systems and services.

Among the issues discussed are how companies cope with the data flow that will increasingly come off the ship, whether there are opportunities at the ‘low end’ of the market for GSM services and what can we expect in the near term, especially from Inmarsat and the introduction of Global Xpress.

MI: We were talking before about the trend towards more data being available ‘off the ship’ and you mentioned that optimisation is an engrained requirement in shipping. Does that mean that either large amounts of data are not actually needed or that the optimisation means that volumes will never hit the gold rush levels we are hearing about? It seems to me that in many cases, shipmanagers can actually function perfectly well with a hundred megabits a month or less. If they organise well enough, they probably don’t need a huge amount so I’m not sure whether again it bears the VSAT argument out?

RA: “In some of the research we’ve done, around 70-100MB a month was average for a FleetBroadband user and around about 10-20Gb was average for a VSAT user.  That 70-100MB is primarily operational data. But once you start going up into the gigabyte level then you’re probably talking only 10 or 20% of that being operational traffic, it’s a few gigabytes, and could be a lot less.

“The rest is taken up with crew access: browsing and a lot of people using things like Skype which is incredibly bandwidth inefficient but they’re using it because they think it’s free. They’re using it over a data circuit but it is just totally inefficient, so it’s chewing up bandwidth and distorting the figures.”

MI: Is there an issue too with the data collected and transmitted? High bandwidth promises more throughput and increased reporting but where does the data go and who uses it?

RA: “What vendors are basically saying is we’ll give you a big high bandwidth pipe and you can send all kinds of data from ship to shore. The trouble is you’ve got two or three people that are looking after each ship, or a fleet or a number of ships and these guys don’t have the bandwidth to be able to look at the data, interpret it or make decisions on it.

“A few people that I’ve heard from and spoken with are saying it’s great, it’s fantastic all this data coming back, but we just don’t have the time to look at it, what do we do with this stuff? They are busy trying to just manage the ships without getting into building the efficiency themselves and I don’t think there are that many ship operators with the level of staff that can make those decisions.”

MI: Looking at maritime satcoms from the other end of the telescope, there seems to be renewed interest in GSM and wireless services. Could pressure on the middle come the other way and give owners or operators at the low end an option so that they don’t need to kind of upgrade to higher bandwidth satellite?

“A few operators that I’ve talked to are using GSM services primarily in short sea trades and for container operators on liner routes, who know that they’re going to be within 3G coverage will work in certain places. We are starting to see some like European wide SIM cards where there’s one flat rate across Europe now.

“The problem if you like with GSM is making the business model work with a crew of 15 or 20 people. The concept is great, because people would rather be able to sit in their cabin and use their mobile phones, but getting the kit on board can create another administrative burden for shipowners and managers.

“Also the dynamics have changed. In the Philippines and in Northern Europe as well, users are moving away from SMS traffic in favour of social media and instant messaging. The previous business models were focussed not so much on voice but on SMS because the profit margin was better.”

MI: OK, looking into your crystal ball it would be interesting to know what you think are the trends that we should be looking out for in 2013. Aside from the consolidation and changing the sales focus, are there other major trends that you perceive in the market over the next couple of years?

“It’s an interesting time at the moment seeing Inmarsat try to go direct and go via the channel. It’s quite a juggling act and I think there will always be distributors who will get them into places in the market that would be very difficult for themselves to get to directly, because of the existing relationships.

“Certainly the danger is that you hack off your loyal distributors, or that they don’t have the margins they need in order to make it a profitable business to stay in so don’t put the same level of resource behind it as they once did.

“That said, the way Global Xpress looks, I can see them having a lot of success in the same way as they’ve had with FleetBroadband. Some 32,000 FB terminals in, let’s say, five years on the market and VSAT has been around since the mid to late 1990s and we’re up to 11-12,000 installations, it’s clear what works.

MI: What about the simple versus complex argument. I think users are beginning to grasp that buying GX won’t be the same as buying Fleet or Fleetbroadband?

RA: “Yes, what led people to buy Inmarsat equipment in the last few years was the simplicity and the understanding of the network. VSAT is more complex, with far more variables: which antenna do I have, what levels of coverage do I have, the key thing is the network operator or there could be four or five network operators that we’ve knitted together a patchwork.

“The model has been simple for people to understand and if that stays there, then GX will be quite difficult to match. We’ve seen that with the EPIC NG offering, which comes back to conditioning for the market and who you’re selling to but if you’re a ship owner or an operator what is EPIC?

“The Inmarsat model means one network, a smaller number of manufacturers and below deck and the above deck equipment in the one package.  If they replicate that model and putting aside rain fade and Ka/Ku band issues, if they get the business model right then I can see that it is path of least resistance for VSAT going forward.”

Making the maritime satcom market an easier sell for the bandwidth vendors

I caught up with Roger Adamson, chief executive of maritime marketing specialist Stark Moore McMillan just before Christmas after an extended bout of email and phone tag. It’s a testament to how in demand are his services these days.

Adamson has a wealth of experience maritime and satcoms experience, including stints with Rydex and Setfair among others. At last year’s Global VSAT Forum, Adamson was among those urging the VSAT vendors to take a reality check about the market they were addressing.

Not only could they (nor anyone else) view shipping as a homogenous group but Adamson suggested that to gain more ground in maritime, sellers would need to sell their product at a higher level than the IT department.

It seemed a good way to kick of the New Year by looking back a little and forward a little more and dig a little deeper into what he thinks are the big issues for the satcoms industry and what matters to buyers and sellers alike. Part one is below – part two follows.

Maritime Insight: I was interested to ask you about the issue of fragmentation in shipping that you mentioned at GVF last year. Does this mean there are barriers in the way of the future which seems to be coming at us: massive bandwidth, lots of choice and loads of solutions?

Roger Adamson: “Selling satcoms into maritime ought to be a quite straightforward proposition. If you were to say that they were 45,000 ships out there and an average fleet size of 10 vessels per fleet then you’re not talking more than a universe of 4,500 companies. In reality it is probably more like double that.”

“I think the bigger concern is the fact that there are too many players in the satcom market. If we’ve got 90 or 100 VSAT suppliers then it makes sense that you’re going to see some further consolidation taking place, because there isn’t the value in the market. In fact, it’s going to be inevitable.”

Maritime Insight: I guess the other issue is that the value of broadband solutions has changed. Installing VSAT was supposed to be about business communications and now it’s really about crew communications as the main driver. For many owners that’s part of the mix but won’t it be hard to sell a big expensive system when they get by using a Inmarsat L-band product?

RA: “There is certainly a market which will never go to VSAT. We’ve gone through the early adopters of the cruise market, the offshore oil and gas markets are big consumers and you’re starting to see VSAT in bigger numbers in the commercial shipping sector.  I can see sectors like the tanker markets becoming very receptive to that, any kind of tanker with large data transfer requirements.

“For them I can see adoption in relatively large numbers but when we talk about the bulk carrier and containership markets I think that’s going to be more of a struggle for the VSAT guys unless they can demonstrate a strong return on investment. Until that return on investment is actually defined clearly for the buyers they’re going to struggle to see the value proposition there.”

MI: That value proposition is key though isn’t it? The buying and selling of these systems has to change if it’s to really grow. It was mentioned a couple of times at the DigitalShip Athens event last year that shipping IT departments need to improve their understand the rest of the company and the shipping market, rather than letting people come in and sell them systems.

RA: “Certainly for an IT manager, buying VSAT means one less thing to justify every month in terms of why the airtime bill was twice what it was the month before. That fixed price element makes everybody’s life that much more simple.

“But I think there have probably been a number of those business cases put forward within shipowners and operators which have been turned down. You can imagine the conversation: People are saying OK, we’ve got this Inmarsat system in place and it’s costing us $1,000 a month and you’re telling me we need to move to this new thing and it’s $2,500? Give me the justification for that. But the IT guy isn’t best placed to give that justification because it’s not really in his job. Just having a bigger pipe doesn’t equate to two and a half times what they’re paying for comms.”

MI: That’s the buy side but what about the sell-side? How much work do they have to do to raise their game, particularly considering the tough times we are seeing for owners?

RA: “There needs to be a switch away from selling to the IT department on specifications and a start to selling to the ROI benefits into the senior management and board level. That will take a different kind of sales approach and probably a different sales team to what is currently in place within the supply side of the market.

“It’s very much a solution-orientated sale and it’s very much business process re-engineering, almost in the way that SAP sells in ERP and CRM solutions to big organisations.

“You need to be selling to somebody who has an overview of the entire business and can logically establish not just where savings can be made through the implementation of a broadband solution but where they can gain competitive advantage. And with all the best will in the world the IT department aren’t the people to do that, that’s very much board or operational level that has that overview and can see where the benefits are for them.”

MI: But why should owners be that interested in the new stuff that’s coming? Behind all the HTS and VSAT offerings coming to market over the next couple of years surely there’s actually a risk that given state of the market and the poor earnings being made that they’re going to see little incentive to make this investment and buy more airtime?

RA: “I think that comes back to the supply side of the market, understanding and demonstrating the return on investment and I think that’s the only way that this market is going to grow properly, unless we see dramatic price reductions.

“For the foreseeable future, megabits per second will be unusual unless you are in the offshore sector. Megabits or even half a megabit per ship is too costly. The only thing that would make that market jump instantly is if the HTS were on a comparable costs to the Inmarsat solutions, but logically that’s unlikely to be the case.

What about the big driver to ROI and higher spec satcoms solutions, the data avalanche that we hear so much about? The DPs, ISP and middleware vendors are convinced that owners want to use their own applications and devices onboard ship. To what extent and at what pace do you see that happening?

RA: “Seafarers are used to Inmarsat; traditionally an expensive narrowband service, so every piece of software that’s gone onto a ship until very recently has had a lot of time and a lot of money spent optimising it for the bandwidth.

“When you use software that is designed in that way, you’re never going to be pushing large volumes of operational data.  When we start getting into a situation where users start buying off the shelf software to run on the ship then we’re going to see more bandwidth consumed than we have done on shore but then we will run into issues like latency which means it doesn’t operate anywhere near as well as people would like it to.

“I remember in the early days with Rydex [which provided an optimised email solution], we concluded that the shipping sector would always want to optimise the amount of data that it sends between the ship and shore. I’m not sure that there is any other industry out there that has been so caught up in reducing the amount of data that is transmitted from point A to point B.”

Astrium-Inmarsat GX: it’s on – as far as we can tell

In case you don’t get the DigitalShip newsletter – and you really should – here is today’s story on the Astrium-Inmarsat GX tie-up.

http://www.thedigitalship.com/conferences/2006/displaynews.php?NewsID=2462&

Just how an MOU differs from a firm agreement remains to be seen but as Tim Farrar pointed out this afternoon it looks more like a capacity lease agreement than a distribution deal.

And didn’t Astrium express reservations at SMM that the kind of capacity that would make GX attractive was already accounted for?

No doubt we will be put straight in coming days.