Tag Archives: satcoms

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.”

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.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Smarter shipping means having communications you can rely on

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.”