Tag Archives: NSR

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.”

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

The more things change…

The future is already here, sci-fi sage William Gibson once mused, it just isn’t very well distributed yet. He might just have been talking about maritime satcoms if such a subject wasn’t a bit a mundane for the man who coined the term cyberspace. In one of Gibson’s later books, a character bemused by the speed of his evolving circumstances remarks ‘well, the more things change…’

As I noted in the last post, the future strategies of the major FSS and MSS satellite operators plan to change the landscape and seascape of the business – and perhaps the businesses they serve in the process.

But as NSR noted in its excellent recent webinar, this is not a case of ‘build it and they will come’. There is no guarantee that the maritime sector neophytes will succeed but their coming means several things for sure – more capacity, greater price pressure, more consolidation and bigger addressable market.

But first some bad news: the short term picture is not rosy. The slowdown in newbuilding orders occasioned by the financial crisis means a slowdown in demand, lay-ups and delays to upgrades and re-provisioning. Some segments are growing – cruise, offshore, gas carriers for example, but in general this is a revolution that has been delayed for a while.

Looking beyond the slump and to put the coming changes in supply into context, NSR’s Claude Rousseau pointed out that the contract announced by O3B Networks with Royal Caribbean Cruise Lines to provide a potential 350MB per second  to a single ship is not just a big step, it is 10 times more capacity than the last banner VSAT contract from MTN for the very same owner.

So what comes first, he asked – capacity or end user needs?

In some ways the answer is obvious – both. In service L-band units reliably remain narrowband for the foreseeable future, vastly outnumbering high bandwidth and broadband units, to some degree driven by more smaller vessels joining the satcoms community. Revenues from L-band will benefit from those additional data subscribers – perhaps growing fourfold before the end of 2021 as 10,000 units or more annually are added to the fleet.

The high end growth comes from a doubling of C Band and Ku band revenues and a tripling of the share from HTS maritime services in the same period, with familiar drivers – the ‘office at sea’, crew welfare, better service plans, smaller equipment and better coverage and after sales service.

That HTS capacity – NSR estimates the first HTS service start next year and a majority share of satellite capacity by 2021 – includes Inmarsat’s Global Xpress, Telenor’s Thor 7, O3B and Intelsat EPIC. But as Rousseau pointed out, much of this capacity is designed to address a wide array of end user markets – not all the new additions were originally intended for maritime customers.

So what will this new highly distributed world look like? Well it is clear that if Inmarsat thinks it has competition now, then it probably ain’t seen nothing yet. Rousseau reckons it should get ready for more aggressive incursions into the maritime market, with stronger head-on competition, using C/Ku-band as the lure and HTS Ku/Ka as the ultimate prize.

This price competition will have a twofold effect – operators will seek increased control of the sales supply chain as they seek to meet their financial commitments. The traditional wholesale-retail model will likely change as the operators reach down the value chain into nearby vertical and horizontal markets. In terms of Inmarsat GX, the suspicion is that the operator is trying to corner its own market – perhaps not the intention, but a possibility nonetheless.

NSR reckons the consolidation trend will continue and pick up speed, with the operators, service providers and equipment manufacturers all playing for share of products, services and bandwidth. Inmarsat’s acquisition of New Wave and ShipEquip giving it global Ku and C band coverage and Cobham’s purchase of Thrane & Thrane are examples of the maritime-specific manoeuvring.

In terms of recouping investments, this scenario seems to favour the maritime incumbent. If, as Rousseau alluded, O3B or Intelsat has to slash prices to gain market share, then the result could be quick wins and long term issues of financial sustainability. Of course Inmarsat risked the wrath of the industry by increasing prices itself earlier this year, so it clearly believes in a value story that the others might find themselves having to emulate when push comes to shove – quality is better value than a low sticker price.

The issue for Inmarsat and the others of operating in such a capital intensive business is that the maritime equivalent of Moore’s Law is being challenged. They must work out how to evolve and refine services mindful of the fact that there is less and less time between evolutions. A combination of a desire for cheaper services and equipment with higher bandwidth is putting pressure on everyone.

To be successful, HTS has to break the rules again – cheaper than traditional capacity but also faster at the same time. Rousseau noted the ‘competitive dynamic’ that HTS is a game changer only if the price is right.

And ultimately, he reminded attendees, maritime is a hard game to change. Reliability has to be written into contracts and education on what is possible is a must. It might sound expensive to be paying $3,000 a month for an Inmarsat package but there is little point paying a lower price for 2MB VSAT and not getting a reliable service. Price, coverage, reliability, customer service and a frequency portfolio are all part of the mix in this brave, but not entirely new world.