Intelsat EPIC under the spotlight
The era of HTS communications is coming ever closer, with players including Inmarsat, Iridium, Intelsat and newcomer O3B all planning launches of next generation satellite capacity in coming years.
Just how much of that capacity actually gets launched remains to be seen, but the difference this makes for the maritime industry is that for the first time Inmarsat could have meaningful competition in its broadband satellite business.
As anyone with an interest can hardly have failed to notice, the FSS providers, eager to eat into the incumbent’s business think that maritime presents a golden opportunity to provide fresh bandwidth services to eager customers.
That ignores several factors of course, not least that as Inmarsat itself has found, the recession in the shipping industry is denting demand just at the time when government and military business is also contracting.
As the NSR webinar alluded to last week, it is customers, not provision of sheer capacity that make for a successful business. Relationships, reliability and pedigree count for a lot with maritime customers, something that none of the players should forget.
The new boys are dipping their toes in the water just at the point when it is shallowest and also because they need new markets beyond terrestrial broadcast and business applications, which are also suffering because of the flat global economy.
Not a great time to try and get an IPO away of course, which makes Intelsat’s EPIC NG offer look an intriguing, if not altogether convincing prospect.
Take a closer look at Intelsat’s announcement of EPIC NG and it mentions selecting a satellite manufacturer in due course to launch one satellite in 2015 and another in 2016, providing an overlay for its regional multiband service by 2017.
With one new satellite at 29E over the Americas and another at 33E over EMEA, Intelsat does not claim to be providing a global system and on this timeline, the new satellites will be in operation a couple of years after Inmarsat Global Xpress has got going. The earliest date for service start, assuming no delays is 2015.
In addition to its existing C and Ku band coverage, the new element in EPIC is Ka band capacity, using spot beams probably comparable in size to Global Xpress.
These beams will deliver similar capacity to GX but over a very limited region. The satellite at 29E will cover North Atlantic maritime routes but not much else of interest to shipping players trading globally. For the EMEA satellite – particularly given the agreement with Panasonic – the coverage looks more like a play for new aeronautical routes and land mobile business rather than shipping.
That keeps them in direct competition with Viasat, HNS Echostar, Eutelsat and Avanti for aero and land-mobile business but means little useful Atlantic maritime coverage – and virtually none over the Pacific.
The EPIC announcement says that Intelsat is in discussion with satellite manufacturers so a further announcement will be forthcoming. What is certain is that its new birds will be complex and not identical, and as a result more expensive. The Intelsat units will have a combination of C, Ku and Ka band tubes – something that will increase the non-recurring costs over the life of the build.
What service level EPIC delivers will remain to be seen – the talk has been of 50mbps from a wide spot beam but from what will be a highly contended service at the centre of the beam, that will take some doing.
Intelsat has an anchor customer in MTN Satellite Communications but again, this is for cruise business (never Inmarsat’s strength) rather than deep-sea merchant shipping.
The information is somewhat vague because Intelsat is in a quiet period, preparing for a $1.75bn IPO, the proceeds of which will be used to pay down its debt burden. Epic NG is a crucial part of the investor story and Intelsat will doubtless tell investors that the maritime industry is an opportunity for it to make money in Inmarsat’s sweet spot.
So far there is little evidence that it knows where that sweet spot is, or how to get there.