Tag Archives: KVH

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.”

The VSAT challenge – be more like Inmarsat?

It’s DigitalShip Athens this week and a welcome chance to take the temperature of the comms market over two days of speeches, debate and I suspect, just a little alcohol. Looking at the programme, one might expect a little unfriendly rivalry between the L-band and VSAT fraternities. Except that for the most part, the latter are not there this year.

True, we can expect some disruptive talk from the first few speakers – Inmarsat’s Frank Coles, Globecomm’s Gregor Ross and Thuraya’s Geoff Davidson in particular – but for the most part the VSAT crowd will be in the audience or in the exhibition.

There at least they will be joined by owners who are presumably getting ready to sling more Greek fire on Inmarsat for promising not to raise prices on FleetBroadband but then raising them pretty much everywhere else.

But the fact that Inmarsat will likely dominate proceedings is not just down to history or sponsorship dollars in my view. Recent conversations about the nature of the maritime market and the satellite supply chain suggest to me that biggest problem VSAT has in more deeply penetrating the maritime market is as much about brand and marketing as it is about service delivery.

Put bluntly, there are too many VSAT re-sellers chasing maritime dollars – by some estimates perhaps as many as 90 of them – but since there are not that many satellites in the sky, the majority of these vendors are really consolidators, re-selling bandwidth from the other satellite operators.

The big names in the FSS market, including Intelsat, SES Astra and Eutelsat provide the capacity and like Inmarsat et al, use distributors to sell to maritime and other mobility users. But not all of these have a solid appreciation of the market or much of an idea about how to address it.

Even so, they are targeting mobility users – in part because they have read about the growth potential in maritime and figured that it is better to get on the boat, wherever its destination.

But more problematic for buyers and airtime providers alike is that these vendors lack the unified approach that Inmarsat – and Iridium and Thuraya for that matter – can offer the market.

This leads to a somewhat exasperating situation whereby a shipowner may have on his desk three proposals for FleetBroadband which will all be more or less the same, give or take a few cents here and some megabytes there. In another pile will be the VSAT proposals; all different, possibly contradictory and probably more complex.

It’s hardly surprising that for shipowners of a certain kind, the commodity market approach of the L-band airtime vendors has made it very easy for service partners to sell their products when compared to what appears a more complex and initially more expensive alternative.

There are only a few VSAT distributors – Astrium is one and KVH another – that appear to understand the need to sell solutions, not equipment and airtime and that they need to do it under a single unified brand that their customers understand. The traditional maritime solution has been ‘take this pain away from me’ but nowadays it’s more likely to be ‘I need something or crew calling: tell me why I need VSAT and what is this HTS thing is all about’.

I still think that while IT managers and perhaps other senior staff want or need to know what they are using and where, the average seafarer genuinely cares little. It’s a little like turning on the tap – as long as you get clean water at the right pressure, then all is well.

It’s for that reason too that the more maritime-focussed VSAT re-sellers have been buying extended coverage in busy ocean regions. They understand that one of the reasons why users buy Inmarsat is because people look and the coverage map and conclude they would be stupid to buy a version that looks as if Dr Frankenstein has stitched it together (and is still working on patching the holes).

However successful, Inmarsat’s direct sales efforts have been, that advantage applies to XpressLink because even though what sits behind it is the same as the other VSAT vendors, the brand has immediate recognition and implied value. It transfers to Inmarsat GX too, although, just like FleetBroadband, the deployment of coverage will take time to be fully in place and even once it is, the data rates are not going to be anything like the sticker speed for most people.

Shipping, despite what its detractors say, is a commodity business and as anyone who has tried to sell a shipowner anything will tell you, pricing reflects that. It may be possible as Frank Coles believes, to get owners to spend more money on their communications. To some extent the success of VSAT in penetrating the market for high end owners has proven that.

How ironic then if those VSAT vendors, having first disrupted the market are unable to capitalise on the upswing in demand for higher bandwidth services for want of the scale they need to do so. Especially since they kicked open the door in the first place.

Lights out for the territory

During last week’s Nor-Shipping when the talk was mostly of offshore support vessels and optimisation, a small but significant nugget slipped into the public domain. Amid all the kite-flying about Arctic shipping, sub-sea risk management and the Northern Sea Route, it emerged that this week’s Maritime Safety Committee at the IMO will include a submission by the United States on behalf of Iridium.

In the typically windy prose of the IMO, the submission notifies the committee that it intends to ask the newly-merged NCSR sub-committee (formerly NAV and COMSAR) to verify that the Iridium satellite constellation meets the criteria necessary to be used for the Global Distress and Safety System (GMDSS) and that the sub-committee recommends that the MSC recognises the system for such use.

What the committee makes of this remains to be seen. But presumably the distinguished delegates’ attention will first be drawn to the assertion that the Iridium constellation provides ‘at least 99% availability’.

Making this submission may require something of a procedural waiver since there is disagreement across the industry as to whether the Iridium network does indeed achieve this magic number.

This is not the first time that Iridium has tilted at the right to run GMDSS in addition to incumbent Inmarsat. When I shared the news with a maritime journalist at Nor-Shipping, their reaction was ‘oh no, not again’.

Why now appears to be the key question and the answer appears to be topical: concerns by the US Coast Guard that coverage of the polar regions is too patchy to give it the level of security it seeks as the ice retreats and the Northern Sea Route opens up to summer shipping.

Anyone attending the Nor-Shipping event in Oslo last week would identify with that, but it is important to remember that such conditions are not expected before 2050, depending on the rate of growth of CO2 emissions.

Last year there were less than 40 transits of the NSR – though that level has grown fast – and pundits who fancy themselves Arctic experts like to talk of days to be shaved off the Asia-Europe run by transiting the pole. Sober heads are less sure, pointing to the Russian attitudes to ‘cost recovery’ the lack of port infrastructure, pilotage, icebreaking tonnage and digital charts as potential icebergs.

Not to mention the fact that cutting service times for containerised cargoes would pretty much denude the existing supply chain and cause more stress to earnings. In wet and dry bulk it would rip up the tonne-mile rulebook too but that’s another story.

So the question again – why now? Perhaps the answer is more about building visibility and credibility in the next few years as Iridium seeks to raise the money needed to build and launch IridiumNext. And IridiumNext would probably be a stronger platform on which to build a GMDSS-capable network.

It’s no insult to call the current constellation the Ford F150 of maritime satellite – in fact it’s a compliment. It’s cheap, plentiful, easy to work with and users like it, though reliability is not all it should be by some accounts. Is that the criteria for a global maritime safety service? Practical concerns aired around the industry include whether the coverage is uniform enough to support GMDSS.

Sources at the MSC say that Inmarsat has wasted no time in writing to delegates welcoming competition (they would say that wouldn’t they) but pointing out that such competition will have to based on a level playing field.
Inmarsat spends an estimated $5m a year on network administration of GMDSS and has said it wants to continue investing to provide the service at a claimed 99.99%.

Its own figures show Iridium achieving no better than 96.2% in 2012 and presumably thinks that the criteria it must meet to operate GMDSS is being waived on Iridium’s behalf. It’s in the way of things that Iridium will doubtless contest those numbers and probably accuse Inmarsat of manipulating its own.

One way or the other, the committee must either be assured or change the starting criteria. Detail is what the Maritime Safety Committee is there for and there surely can be no surprise if it asks Iridium to either work on its performance or come back when Next is available.

What will be interesting to see is whether Inmarsat reacts accordingly and puts in place a plan for improved polar coverage in future. This last remaining gap is also being eyed by Telenor and KVH. The former has coverage planned in support of Norwegian offshore ambitions and the latter recently struck a deal with Iridium to use it as back up for ships sailing out of VSAT coverage, not for the first time either.

The irony of this situation is not that Inmarsat is concerned by a competitor muscling in on its (IMO-mandated) territory. It is that the same competitors who accuse Inmarsat of sharp practice, clearly sense an opportunity to get one over on the old lady by resorting to a little ‘diplomacy’ of their own.

Owners speak – and you might not like everything they have to say

I was commissioned out of the blue earlier this year to write an article for Via Satellite magazine. I was flattered to be asked frankly – time for writing is a rare luxury these days – hence the lack of updates here recently.

The one thing the editor was clear on was that I couldn’t speak to any airtime providers – or at least couldn’t include any of their comments in the article. The piece had to be purely on the developments in the market and how owners and managers were responding.

What I found was largely what I expected – a movement towards Ku-band VSAT among the higher end owners and a period of adjustment elsewhere as buyers transition off older and increasingly expensive L-band systems and onto lower per MB packages as a positional move ahead of HTS systems becoming available within the next few years.

There is some mixing and matching of systems going on, based on areas of operation and there is the usual trade-off between the coverage and higher bandwidth models. The more specialist the operator of course, the more focussed the usage, with ferry operator Stena Rederi using hybrid services to cover crew, passenger and business use. It also has a service agreement that effectively transfers a lot of the performance risk onto its provider, but Stena says the relationship has prospered as a result.

For the tanker owners such as Laurin Maritime, crew usage is unsurprisingly cited as the primary driver for VSAT contracts and business use remains a secondary consideration for the most part.

What they mostly think is that satcoms are still too expensive – or at least that they expect the landside model to prevail – guaranteed performance up to a point, faster services and lower prices resulting from stronger competition.

In the process of upgrading its fleet, Intership Navigation of Cyprus also sought even more flexibility, the ability to conclude short term rental agreements rather than make purchases or conclude long term leases.

That seems surprising when airtime suppliers are pricing so aggressively to win business from each other, but it might make sense if suppliers could provide a service that gives the owner a completely new level of flexibility.

There is also a sense that buyers are risk averse, sensing that the shift from L-Band to VSAT and on to HTS carries the risk of the unknown that in the current climate could be a risk too far. This might be conservatism and it might be experience.

One owner reminded me of the Connexion by Boeing debacle, when the mainstream satellite market once again eyed maritime as some kind of untapped opportunity. Its complete failure made for great copy at the time but a salutory warning.

Shipowners have long memories as well as big problems and shallow pockets. Selling to this market will take a golden touch. The idea of being first to market is less appealing than in the heady days pre-2008. Expensive mistakes are not an option.

Oh and by the way in case you are wondering, I didnt choose the headline – my suggestion was a lot more sanguine – but I hope you enjoy the article.

“Stop, hey what’s that sound? Everybody look what’s going down”

In real shooting wars, spring is traditionally the start of campaigning season. Soldiers emerge from their dugouts and form up, ready to receive orders of the new offensive. Weapons are cleaned and primed, provisions re-stocked, maps updated.

In maritime communications almost the opposite is happening. Having fought a year-long campaign in 2012 and a bitter winter engagement into the first quarter of this year, something close to peace appears to have broken out between satcom’s warring factions.

It’s like the scene in many a war movie when the NCO turns to the officer and says “I don’t like it sir, it’s too quiet.” The recent Sea-Asia show was a case in point.

There were some nice Widgets from SingTel (which also had a stand to gladden the eye of many a sea-dog, while arguably doing somewhat less for gender equality) and some contract announcements here and there, but apart from that not much to set the heart racing.

Many of the familiar players were there but the message seemed to be more ‘keep calm and carry on’ than ‘once more into the breach’.

That makes sense. Consider the situation across what we might at a stretch call the Rebel Alliance. Intelsat looked to have timed the equity market rally right but its IPO eventually priced below expectations. Whether that or its recent launch failure have any impact on its plans for EPIC remains open to some question.

Iridium used the recent Satellite 2013 conference to firm up plans for Iridium Next, laying out ambitious schedules for the build programme but seems to be as focussed on Aireon and the aero sector right now as maritime.

Globalstar too appears confident it can restructure itself sufficiently to secure the funding it needs to put its launch plans into practice, though it seems to be testing investors’ patience.

At this point it would make sense to comment on O3B but since they consistently ignore any requests for information (and seem to have instructed their clients to do the same) we’ll have to assume that plans for cruise market domination continue to take shape in the dormant volcano (or similar) that they use for an HQ.

The news from KVH suggests reinforcement too – a deal with Iridium to provide a connection in polar regions when users are outside VSAT or FB coverage areas. From their point of view a neat way to work around the price rises on FB pay as you go, though you can’t help thinking they have spiked their own guns rather than turning them on the old lady.

Having asked Inmarsat what they were up to during the Singapore show, the answer was ‘business development’ rather than ‘marketing offensive’. The appearance of Frank Coles on SinoShip’s Maritime CEO column doesn’t really change that in my view.

There is a good reason for that. At the CMA Shipping 2013 conference last month Coles sat at the end of a very long panel speakers about maritime technology innovation. Each was interesting in their own way and most had a story to tell of the kind of operational insights and efficiencies that could be gained from greater use of data. Oh and the tidal wave of data that could be generated by crew communications if only they were given unrestricted web access.

Coles had the task for once of delivering the reality check – some of this was possible now, some would come in due course and some might not happen any time soon. It was a salutary lesson for the dreamers and a reminder to regular students of this subject that cart and horse must be in the right order to pull ammunition to the troops in the front line as well as hauling away the casualties.

I didn’t attend the ACI Maritime Communications conference at the end of March but I understand from those that were there that the face-off between Coles and self-styled nemesis Alan Gottleib was more phoney war than shock and awe.

There are solid reasons why this is a positive development. The next few years will see the maritime industry begin to emerge from the downturn but this will happen in a piecemeal and messy way. Anyone imagining there will be a return to the good old days where all boats rise on the incoming tide should probably get out now.

That gives the satellite industry and its technology partners some breathing space in which to actually do the work necessary to deliver the next generation of services about which it has been talking for so long. As noted above, financing has to be nailed down, orders placed, satellites built and launched, ancillary systems developed and some cases technologies created for the first time.

Alliances and treaties need to be shored up too – between vendors, distributors and partners – and in the process we could see some of the mergers and consolidation so long predicted.

This peace cannot be expected to last forever of course. In early June the DigitalShip roadshow moves on to Oslo and Nor-Shipping, where the first Maritime CIO Forum will be held on 5 June. There will be some presentations but the afternoon session will see a high level debate with representatives from the vendors and partners and I hope industry users, moderated by me since the editor will by then be knee-deep in nappies.

By then perhaps we will have heard more about what happens next but even so I think we should be prepared to sit this one out for a while longer. There may be a temporary ceasefire but the war is far from over.

Or as Stephen Stills put it so eloquently in Buffalo Springfield’s ‘For What It’s Worth’ “…battle lines been drawn, nobody’s right when everybody’s wrong…”

The battle lines are drawn – but who really wins?

Next week sees the DigitalShip conference bandwagon land in Hamburg and the scene is set for another confrontation in the ongoing battle between Inmarsat, shipowners and competing vendors on the issue of price rises on its PAYG and E&E services.

I should declare an interest immediately and say that DigitalShip has invited me to chair day two of the conference so I expect to picking up some body parts. But apart from packing my thermals to prepare me for the bitter winds that apparently blow through the Magnushall, what else should we expect?

Well, we know that Inmarsat Maritime CEO Frank Coles will be there but his nemesis Alan Gottleib will not be, though it would be foolish to write off some interventions from his mischief-making comrades at KVH.

And for anyone who still doubts it, we will hear again that Inmarsat is a (very) commercial provider of satcoms to maritime, aero and land mobile markets. Its decision to raise prices on E&E and PAYG services represents a desire to improve earnings and so reward shareholders for whom shipping is another commodity business among many.

It may piss people off – and it has – but anyone that calls Inmarsat a monopoly in this era of choice and competition is missing the point. Inmarsat has been called many things: the biggest player in the market, certainly; the best-looking girl at the dance, perhaps; but the fact is that it operates a network that enables users to connect globally and at prices which are readily and transparently available from their re-sellers.

Is it throttling smaller customers? So its detractors claim. But the fact is that DPs and SPs (and not just Stratos) continue to offer small MB packages for owners that prefer to work that way. What confuses me (and perhaps owners too) is that Inmarsat is accused of removing small data plans by the same people who also want to upsell them to large data bundles.

Are Inmarsat’s motives hidden? Does it plan to corner both the airtime market and that for applications as has been suggested elsewhere this week? It’s possible, but I think doubtful. If nothing else, Inmarsat understands its place in the satcoms universe.

It could even be said that the amount of attention Frank Coles has drawn to the spoutings of KVH and others on LinkedIn overstates their importance. Preaching to the choir, like picking one’s nose, generates limited returns.

And besides, there are too many competing options to allow for complacency.

When I covered Inmarsat for Lloyd’s List in the 2000s, just as VSAT was starting to nibble away at the edges of L-Band, Inmarsat was a more timid beast, fearful of being assertive and risk backlash and censure. The competition liked that because it gave them room for manoeuvre.

What we have now is the opposite – a confident company with a strategy which is less focussed on chasing road warriors than it is serving a core maritime demographic. Does that piss off the competition and its consultants? Of course.

So what to expect next week? A bullish defence from Inmarsat for sure, but will we see an insurrection from users? The evidence suggests not. As the saying goes, you get what you pay for and that doesn’t mean that prices stay the same for ever.

In a couple of weeks hence, Coles meets Gottleib at the rather more commercial ACI satcoms event and perhaps there we will see (self-styled) David take on Goliath.

But I still wonder what the core takeaway message will be from both events. I think it is this. Users do have choice and they also have dollars, if fewer to spare than once they did. To focus on cost above value without any reference to the bigger picture is to miss a gaping opportunity.

But there is change already apparent.

After all, at DS Athens, it was the IT departments who came forward to say that they needed to work more closely with the ops and chartering department, to break out of their silos and upsell the opportunity that better communications presents.

It seems to me that regardless of the channel they use, grasping the opportunity to save costs and drive efficiencies is more profitable than simply comparing competing offers. Quality of service, reliability and coverage should be the determining factors.

And from a quick glance at the programme for next week it becomes clear that the industry is already grasping the opportunities that better communications presents. Airtime providers should do themselves a favour and focus on their customers rather than each other.

Ku or Ka? Wide or Narrow? Clarity or… More on Intelsat’s maritime ambitions

In the second part of my interview with James Collett, Director Mobility Services at Intelsat, we talk more on coverage, capacity and confidence from the buyer’s and user’s viewpoints. There is also some de-mystification on the subject of Ku and Ka bands and even a view on why clarity matters more than mudslinging.

MI: Coming back to the user perspective, the traditional view runs along the lines of mariners like Inmarsat because it gives them a global coverage network. They can negotiate with the supplier on price and get it to a point where they are happy. But if I’m a spot trading shipowner can I use Epic and feel confident that I’m going to get the same global coverage?

James Collett: “I think the important question for shipowners is, can they can use Intelsat’s network and be safe that they have got coverage in the right places? Today we have a very extensive global Ku-band footprint based on wide beam technology. We’ve got our launch of Intelsat 27 early next year which will complete what we call our global Ku-band mobility platform.

“Let me put it in context of a major maritime VSAT operator with a mature customer base of offshore, commercial and fisheries customers and who would say that 3% of their requirements are not covered by their Ku-band footprint. The coverage improvement on Ku-band has been dramatic. Intelsat has particularly been focused on the mobility segment, and decided that we would incrementally improve our global Ku coverage. So I think we’re starting from a good place where we could put global Ku band in front of the typical shipowner, and it would cover 97% of their traffic requirements.

“Another prevalent sales objection for Ku-band VSAT is ’I need a path into next generation Ka-band’.  That’s where Epic comes in, because we’re not saying to the customer, you’ve just got to stick with today’s wide Ku-beams. We are delivering an overlay network which will allow them to derive a service which is a blend across two Intelsat networks. We’re already providing very fast services in our wide Ku-band beams, so you will either be able to go faster or you will have a more cost effective service when you have the benefit of Epic coverage.

“Our distributors and integrators will create packages that bring the benefits of Epic to the regions where they have most vessels, thereby delivering a cost per bit improvement in the right places. Our aim is to put the capacity where people most need it.

“So from a maritime user’s perspective his Intelsat service will look exactly the same whether the vessel’s in a wide beam or in an Epic narrow spot beam. More importantly though in the parts of the world where shipping densities are highest that Intelsat Epic NG spot beam could support much higher levels of aggregate traffic.”

But doesn’t that work only as long as all ships and all aircraft look at your coverage maps before they set out and go well we’ve got to go this way to stay in the footprint?

“With the Intelsat network, ships will sit in the wide beams ordinarily, and because they’ll be more dispersed in those beams, we can give them plenty of capacity. But where they’re all concentrated in the same area, we’ll have additional capacity in the shape of the Epic narrow beams. The two Intelsat Epic NG satellites we have announced are not the start and finish of the EPIC network – it’s a capability which we can bring to any new satellite.”

So would it be fair to speculate that the customer would be getting better throughput for about the same price as they might be paying for Global Xpress?

“The true metric is the cost of moving a bit from shore to ship or ship to shore. The design of Epic will have 8-10 times the throughput of a standard satellites, allowing for cost efficient high throughput transmission Customers will see higher performance through lower cost per bit.”

From what you’re saying, I wonder if the Ka vs Ku debate is getting to be a slightly pointless level of comparison?

“I think that’s a fair observation, and I don’t think Intelsat has never said that Ka-band isn’t a good solution. In fact, we fly some Ka capability today. By the same token the Epic platform will incorporate C-band, Ku-band and Ka-band payloads, and I think there’s enough evidence today that high throughput is not about the band but it’s about the way you deploy the network.”

The recent Panasonic white paper seemed to say the answer is it depends on what you’re using it for, how you’re using it, what you’re trying to do.

“What I took from that paper is that it’s not Ku versus Ka, its narrow spot beams versus wide spot beams. And once you put K-anything into narrow spot beams you get a huge throughput advantage.”

What I also can’t help but feel is that the whole Alan Gottleib vs Inmarsat debate is a diversion too. It doesn’t actually help the mariner or the satcoms buyer, the shipmanager, or the superintendent. I find most of what is being said redundant and pretty unhelpful.

“I completely agree. In my mind I bring it back to a couple of key things that will determine success in this area. Firstly, enabling more cost effective solutions for the shipowner and the shipmanager, where ultimately we as an industry are able to drive an increased spend on communication by really delivering value at the ship level.”

“And secondly I think the other big industry debate and what will govern success or failure, is engaging and enrolling distributors to be able to profitably market the creative solutions that are going to drive that utilisation. Ultimately if you can deliver value to the end user through a motivated and creative distribution channel, then I think you can be successful.”

Epic stuff – James Collett on Intelsat, Inmarsat and what really matters in maritime

To leafy Chiswick in West London and the offices of Intelsat for a wide-ranging conversation with James Collett, late of Inmarsat and now Director of Mobility Services at Intelsat, charged with building its rival’s maritime business on promising foundations.

In a quiet period ahead of its planned IPO, we were obliged to steer clear of forward looking statements and much as in conversations with Inmarsat, there was no firm detail on costs of the system and its throughput. But that didn’t prevent us from discussing the merits of Global Xpress as well as EPICNG, Intelsat’s HTS programme that offers GX its most concerted competition.

It became clear as we talk that Intelsat’s ambitions are to move beyond the high end segments and attack the mainstream maritime market too. Also that Intelsat sees its DP and ISP relationships as key to success in the maritime market. Also clear was that Collett personally has little time for the back and forth that seems to obsess some satcom commentators.

Indeed, his understanding of Inmarsat’s business as well his plans for Intelsat speaks volumes for what will be an interesting couple of years for satellite operators with a strong, scalable offer and a firm grasp on the realities of the market.

Maritime Insight: Let’s talk about Intelsat and I guess Intelsat EpicNG is the thing that is of interest as an HTS solution. Do you see it as a competitor to Global Xpress?

James Collett “I think it’s fair to say that our customers will build solutions that are competitive to Global Xpress by leveraging Epic. However it’s not in itself a competitive response to Global Xpress – it’s an evolution of our technology, the embracing of High Throughput Satellite by Intelsat, and is really a route for us to grow with our customers in the regions we serve today. We worked closely with our customers to develop this platform.

“There are obviously a lot of similarities because we are in the same sectors as Inmarsat. We see the same drivers, we see the same opportunities, we have access to the same space technology as they do, and we are also continually in an investment phase in terms of replenishing our fleet.”

You are certainly both on the same trend in terms of putting up High Throughput Satellite (HTS) services?

“Yes, HTS is what everyone is talking about but we’ve come at it in very different ways. In L-band, and typically for Inmarsat, it’s been about looking into the future, and creating an offering that you think is going to have wide appeal. The FSS operator’s approach is more around what demand do I see from my customers today, where are my customers heading, and how can I continue to grow with them?

“The deals that we’ve announced on EPIC – MTN for cruise and Harris CapRock for oil and gas – are both based on meeting the customer’s growing future requirements with the Epic network. Outside of maritime and offshore, we have announced Panasonic Avionics as a leading aviation service provider for whom Epic technology will allow them to reach the next level with their customers.

“Having those customers leading from the front really solidified our case for going ahead with this technology.  Subsequently it’s become a question of how do we make the capability enabled by Epic more accessible in the marketplace, and how do we drive that capability to the maritime users who we think will benefit most from those new services.”

So you’re in a similar position to the old Inmarsat model if I can call it that, in that your partners act as DPs or ISPs, adding value to your signal?

“We feel we have always benefited from the richness and the diversity that the distributors of the Intelsat service provide to maritime users. Intelsat has traditionally been seen as a fixed satellite services operator where the value-add has been around teleports and our IntelsatOne terrestrial network and the value-added services that those distributors offer. Our model for Epic allows those integrators and distributors to carry on in that mode of working.

“We feel that it’s not our skill and our competence to define the specific services that a maritime end user should be buying. Similarly we won’t define the price points at which they should be sold. We’ve clearly got distributors that are far more expert in that, whether it’s Astrium Services, MTN, Harris CapRock, Globe Wireless or KVH, who are all experts in that domain, and whose business is absolutely built on differentiation.

“That’s the interesting bit for me and where the Inmarsat and the Intelsat paths are very divergent. There have been observations that with Global Xpress, the latitude and opportunity for a distributor is being squeezed since you’ve got retail prices being set by the wholesaler. You’ve also got a flattening of the distribution channel in that players who previously were second tier are now effectively direct to Inmarsat.

“On top of all that you’ve now got value-added solutions being provided by the satellite operator, so I think some people in the value chain will be asking ‘what’s left for me?’ If a distributor has a choice between selling one service which makes them a fixed margin, with another that gives them more flexibility over the contribution it makes, then there’s no surprise which one they will push.”

Intelsat has agreements in the very high end segments where there is big demand from energy and offshore cruiseships – but can you scale it down in effect, for mainstream merchant shipping?

“Those are customers and segments that we are very strong in today, and ones in which we see further growth. At the same time we’re not ignoring the market opportunity that exists in commercial shipping, because that is largely a new market for Ku-band VSAT. There’s obviously been some well publicised incursions into that, such as the Maersk, Ericsson/Globecomm deal.

“We do see more opportunity coming in that area. So I don’t think there is this natural segmentation in the market which will keep us apart, I think just as Inmarsat is keen to make it clear that they’re coming after the VSAT market, then Ku-band VSAT has been after the Inmarsat market for a long time.”

GX projections keep Inmarsat bandwagon rolling along

Last week’s Inmarsat Investor Day has received reasonably positive reviews from analysts and observers, with the headlines taken by the deal with CISCO to build the ‘enablement platform’ for GX (which may or may not include shopping via satellite) and the group’s optimistic take on Global Xpress as the platform of choice for future mobile satellite communications.

It could afford to be optimistic given that the first announcement of the day was that third quarter trading was in line with 2Q and that maritime had provided strong growth despite the impact of the price rises earlier this year and the downturn in the market.

Adding another 2,100 FleetBroadband units in the third quarter was above the net additions for previous quarters said ceo Rupert Pearce and he added that maritime revenues were helped by traction from XpressLink, its Ku-band VSAT ‘bridge’ which was developing a ‘positive grip’ on the sector.

Inmarsat chose some optimistic forecasts too of VSAT growth on which to base its prediction that the wholesale market for VSAT bandwidth was worth about $1.9bn in 2010 and is growing at 7% per year. By 2019, its fifth year of service, GX would be generating at least $500m in wholesale revenues, according to Inmarsat GX MD Leo Mondale.

There was plenty of opportunity to talk down the opposition too – especially as they had in many places, got their retaliation in first. Mondale described Ku-band VSAT as ‘a patchwork of differing quality beams’, with peak performance that would be lower than GX and only available in a few locations.

Yes, new capacity was coming onstream but this was augmenting the patchwork rather than providing global seamless coverage designed for mobility that GX promised. If others described XpressLink as an inelegant solution then Ku VSAT was an even more ugly duckling with as many as 25 ground stations to GX’s three.

Intelsat EPIC got a similar kicking, not least for the vague assertions of what satellites would be launched and when but for its patchy ability to cover the north Atlantic, overlaying Ka on a Ku system that was ‘cobbled together’ over a period of years.

Mondale asserted that adaptive coding and modulation would take care of any Ka rain fade issues and there would be a ‘negligible difference’ between the two – availability would be more of a question for EPIC to answer.

The decider, Mondale said, was that 20% of cumulative GX plan revenues to 2019 were already booked in, which gives Inmarsat a solid footing to proceed. This includes XpressLink customers with a free upgrade to GX of course but it can’t hurt that its biggest customer, the US military is abandoning Ku band for Ka-band.

It does however, reinforce the assertion made by Marlink recently that it might be hard for mainstream maritime users to get on these high capacity beams so in reality, GX throughput for maritime users would be better than L-Band but not the leap that they might be expecting.

Some analysts thought that $500m GX revenue estimate an ambitious number – how much would Inmarsat take away from competitors and how much would come from growing the market in general, they wondered. Mondale naturally, went for growth, pointing out that a continuation of the recent compound annual growth rate in VSAT would take the total market’s value closer to $3.5bn by 2019.

That seems to sum up the ‘think big-build-big’ attitude inside 99 City Road at present. And it runs from the very biggest picture – the satellites themselves – down to Inmarsat’s relationships with the DPs and the end users. In an upcoming post we’ll look at what the messages of the Investor Day mean for partners and customers too but meantime, one analyst wondered, how soon would GX start eating FB revenues?

Mondale said the company was ‘agnostic’ as to what element of cannibalisation took place between GX and FB but even though it would be a small component ‘at the price for Ka services, migration is an opportunity not a threat – it’s upside not downside.’

Sounds simple, but if that growth prediction at the top of the page comes at a cost of much higher user charges, then the pressure really is on Inmarsat’s maritime business to deliver and keep delivering.