‘Following a ship around with a satellite beam is not a business’

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In part two of my conversation with consultant, analyst and blogger Tim Farrar, we dive a little deeper into the undergrowth: what the HTS upgrade path looks like and how to tell perception from reality, how the recent competition stacks up to the incumbent and what new opportunities may be out there for those prepared to seek new markets.

MI: I’ve had conversations recently with end users who have said, ‘I’m really interested in HTS but I sure as hell don’t want to be first through the gate, I want to see it up and running, I want other people to be signed up and using it before I consider moving. Again I’m speculating but I’m assuming that Inmarsat will make it attractive financially for users to upgrade to GX but are there other drivers too?

TF: “For new customers, every VSAT terminal they install from now is upgradeable, straightforwardly. When you go back to the investor day last October they said, ‘We’ve got 20% of our business plan committed and they included all 1100 ShipEquip VSAT terminals in that. Despite the fact that only 300 of those have actually gone to XpressLink.

“Probably only 100-200 of them actually have a compatible terminal, maybe even less than that last October because the compatible terminals have only been available for a short period of time. So quite how you square that circle and you say to those people, they [Inmarsat] will turn off Ku-Band by whatever date is an interesting question.

“But certainly, from a financial point of view, Inmarsat’s sending the message to its investors that it intends to cut back its Ku-Band leases as rapidly as possible so it can shift people over to its own system and obviously have a dramatically higher gross margin.”

Do you find it as hard as I do to make like for like comparisons? Inmarsat talks about 32,000 active FB terminals, KVH talks about terminals shipped. So it’s actually quite difficult to really get hard usage analysis of who’s really using what beyond what the airtime vendors are telling us or am I being too naïve about that?

“The VSAT industry has always been one where people tend to exaggerate a little bit and they like to tell you shipped or committed or whatever rather than actively revenue-generating terminals.

“People have their own definitions and it’s one of those things that’s self-reinforcing. If you think you’ve got a bigger market share than your competitor and your competitor is saying a number that is stretching it slightly then you’re going to have to stretch your number a little bit too.

“So people will quote numbers that are what they hope for when they’ve got through their backlog rather than what they actually have that are revenue generating right now.”

Certainly the view from Inmarsat seems to be that they are keeping their heads down and to some extent downplaying the penetration of XpressLink and the impact they expect Global Xpress to have.

“That’s because the 40-50% [market share] figure can’t be reconciled with reality (laughs). I don’t know how they came out with that. [At last year’s investor day, Inmarsat claimed to have won 50% of all high-end VSAT contracts] it’s a number that appears to relate to a selected period of time excluding KVH and a bunch of other things.

“I think they tried to downplay that number just because it’s hard to reconcile with reality over a more extended period of time. And is excluding KVH from your numbers the right way to go? Especially given the issue of where GX is going to be pitched in terms of the low end versus the high end and all those sort of things.”

“There hasn’t been necessarily huge amounts of growth in the VSAT business, it’s been a little bit slow. It’s not easy at that high end of the business either, at least in merchant shipping due to the economic climate.”

And as people like Roger Adamson have said recently there’s either two ways, either to fulfill crew calling demand or get in at the boardroom level and sell to a much higher level.

“Yes that’s right and at the board level, it’s a very difficult. They have many, many preoccupations right now other than just details of how you implement your communications.”

You touched previously on Inmarsat’s other competitors, Iridium and Thuraya. I don’t hear so much from Iridium these days but from what I do hear is that people like using Iridium OpenPort because it’s cheap and simple and the crew can install it but reliability is an issue. For Thuraya, they have a strong play albeit regionally, so I guess my question is, how far from death is the legacy L-Band market. In fact does it actually get a bit of a new lease of life if the others can carve themselves out a nice niche there?

“Well the question is how far down the spend level is VSAT going to go? I guess you could say, a KVH solution at $600 has some place in the mix. But the reality is I think that I see sub-thousand dollar a month customers being dominated by L-Band for the foreseeable future.

“But yes, OpenPort is a good cheap and cheerful solution, it has had some challenges, Thuraya has tried to become more of a FleetBroadband competitor. It has tried before and it didn’t quite work out but I’m sure that they’ll try again with another maritime broadband-type product on a regional basis.

“And obviously IridiumNext could give Iridium something more directly comparable to FleetBroadband so I think there’s potential for competition to FBB in future. Inmarsat is sort of opening itself up to that by leaving a gap between the pay as you go and the entry level type bundle.

“The people who only want to spend three, four, five hundred dollars a month, they don’t have the greatest set of options for the data at this point in time. Because how much can 10 or 20MB a month really give you? I’ve heard people say, should I bother upgrading my old Mini-M terminals, do we really want to upgrade them to FB150, because I’m not really sure what we do with 10 or 20MB a month – would that get us any further forward?

“I think Inmarsat’s pricing bracket strategy is good because it gives them lots of differentiation and once people are in those buckets you can push the bucket a little bit in terms of pricing and you won’t have people jump out of it.”

“One of their key issues is going to be now they’ve got a 2GB package how do they shift those people up from spending $1,600 to $2,000 so that they’re going to then feel that they don’t have to spend any more for VSAT. It does leave them open to a bit more competition once better alternatives are in the market.”

“You put all that together and it seems obvious there will be more competition at that lower end of the market from other L-Band solutions in the future.”

I’m interested in the comparison between Intelsat Epic and GX – what’s your take on whether you feel EPIC is going to get much traction beyond the energy, offshore and cruise markets.

“I think it definitely is directed at that higher end of the market. The challenge for GX is just the limits on what you can do in any one beam. If you have 50Mbps, you could put two carriers in one beam and get 100Mbps when it’s not raining.

“But it’s pretty much constrained to that and you think about it from the point of view of a cruiseship, you can’t really dedicate 20Mbps because if you do that to more than a couple of users and all those cruise ships end up in the same part of the Caribbean, then you run out of capacity. And when do cruise passengers want to use the internet? Normally when it starts raining outside and they can’t sit out in the sun so that’s not helping you a whole lot.

“So there’s obviously a desire to stick with Ku-Band to work around rain fade. It’s one of the limitations of GX that it’s designed for coverage, it’s not designed for lots of capacity in a given area.

“So what Intelsat is doing with Ku-band, as I understand it is working the flexibility to add capacity in particular spots, and it’s really designing it around these big pre-committed buyers [MTN and Harris CapRock] who have come along said they want X amount of capacity in the Caribbean. Or Panasonic would say they want X amount across the North Atlantic and that’s what they can put there.

“So it’s been very closely designed in conjunction with those really big players. Whether it will exactly match what a mid-tier maritime player wants, hard to know. For Inmarsat the limitation is how much capacity it can provide in any one area. It also has to manage the capacity itself to some degree. It doesn’t want to be dedicating capacity to a service provider, unless it’s for the government and you want your dedicated beam.”

In terms of other newcomers, O3B is a bit of a mystery to me.

“Yes there must be business there but I’m not sure how it will work out for them. If your market is cruiseships with more than six thousand passengers then there’s a dozen of them then it’s just bizarre. Following cruiseships around with a single beam is not a business. I don’t know how much the cruise ships are actually paying but if you track back to O3B’s numbers their original business plan said they were trying to get something like $4M per beam in revenue and I’m sure that a single cruise ship’s not paying four million dollars per year for capacity.

“I suspect that if they’re paying $1m per year that would be the high end of what I would expect. So you look at it like that it’s not exactly a wonderful business, it’s come back a long way from what they’d hoped.”

Lights out for the territory

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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.

Not the end of history: some ruminations on maritime communications

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Tim Farrar is an analyst and blogger who has been covering the satellite industry since the mid-1990s. We had crossed paths before, notably discussing his End of History blog and when he posted again about Inmarsat‘s moves in maritime, the time seemed right to have a proper chat with the man for his views on the evolving maritime satcomms space and how the main players were shaping up.

Some time passed (my fault) but what follows is our conversation around those topics and Tim’s views on the major contenders’ plans in maritime. Not a shipping person himself, he is still objective on the offers, how they are priced and how they differentiate in a market that is lining up on different sides of the beam for a struggle for market share and territory in L, Ku and Ka-bands.

MI: I was interested to read one of your recent blog posts which seemed to be coming back to a familiar theme over the last couple of years of castigating Inmarsat somewhat for throwing its weight around. I was writing about LESO-hopping and the lack of transparency and price sensitivity maybe 10 years ago. How’s the current situation different and why is it more important now?

TF: “Well I wasn’t necessarily being critical, I was just noting a shift from what I perceive to be Inmarsat’s reluctance in the past to be as aggressive. Obviously when Inmarsat was not in the retail business it left all of that fighting to the LESOs. And Inmarsat didn’t need to dirty its hands with that competitive stuff.

“So really I think the issue in my mind is not that this should be a surprise, it’s just that it is a difference, Inmarsat is being more aggressive itself. And it has been somewhat reluctant to do that in the past because of it being such a big player. It was all very well for Iridium or other smaller players to come along and offer prices 20% lower than Inmarsat’s and take some of the business.

“Inmarsat is fighting back and saying, ‘I’m going to go very directly after other people’s pricing and offer big incentives’.That’s the difference and when you’re by far the biggest player in the market you wonder whether that will come back to bite them later if for example Inmarsat wants to acquire anyone in this business.

“Let’s think about what happens with LightSquared over the next year. If they want to get out of the business, Inmarsat wants to buy their assets, you could see that aggressive competitive behaviour could be something that would be cited to raise concerns about that.”

As you said they’re not the only people doing it but they are doing it to a greater degree than previously. So does it suggest that this is more of a game for keeps with HTS coming?

“I think you’ve remarked on it in some of your blog posts about how Inmarsat is being more active in that regard from a competitive standpoint. Taking a step back from MSS specifically but just generally, a small player can be aggressive from a competitive situation, and that may not be terribly disruptive to the market.

“If the big player ends up being very aggressive from a competitive front, that’s more likely to end up in a price war type situation. We just we don’t know whether that will happen.

“Clearly Inmarsat have got the resources to outlast some of their competitors if we do get in to a price war. Other people obviously have more financial challenges. If they drive a competitor out of business, that might help Inmarsat in the short term. But as I say it may end up raising issues downstream, especially if Inmarsat ends up picking up the pieces.”

If I can ask you to speculate for a minute do you feel it’s likely that Inmarsat will try to drive some more consolidation in the airtime segment?

“Well I think being over in this part of the world [the US] you naturally have to ask what happens with LightSquared downstream? If it ends up in the hands of its debt holders, they’re hedge funds and they don’t want to be running a satellite business.

“Further downstream you could say maybe Thuraya has to make decisions about what they do with future systems, again they are L-Band and potentially compatible with Inmarsat. It might be quite hard to strike a deal because Thuraya probably want to stay in the satellite business. But there’s possibilities there.

“We can probably rule out Inmarsat and Iridium but on the L-Band front it’s just a situation where many other players are having a relatively tough time and if they ultimately do exit, then is Inmarsat going to want to pick up the pieces?

And do you think it is all about price or is there a degree to which the users signing these contracts are also going with Inmarsat on a bit of a comfort factor – because of who it is, because of its heritage potentially rather than they’ve maybe read about existing reliability and throughput of VSAT?

“On the VSAT side I think there is clearly a pricing issue and there’s a terms issue as well. Inmarsat started off with XpressLink saying it was five year contracts and you’re committing to upgrade to GlobalXpress. It’s far from clear that all of those conditions are being held to, so price is one part of it, flexibility’s another. And yes, adding an L-Band back-up is another differentiator.

“It’s a mixture of all of those, and I think if Inmarsat is stuck with trying to get people to agree to sign up for five years and commit to moving to GlobalXpress whenever they [Inmarsat] want so they can turn off their Ku-Band leases, then those sorts of things, regardless of the price, may have made it a lot more difficult to get people to commit.”

I may have this wrong but I had understood until last year that signing up for XpressLink didn’t just mean a complimentary upgrade to GX, it was a mandatory upgrade. I understand that from a marketing point of view but as you say, it gives little room for manoeuvre.

“And it’s not clear that that happened because the way at least the press releases read, it said Inmarsat would offer you double bandwidth when you moved to Global Xpress so it’s not like saying you’re moving regardless. It’s saying, you will have a better service if you upgrade. It’s not clear if they’re going to go back to clients who already have non-GX compatible terminals and proactively replace those so that they’re ready to turn on to GX or whether they wait for a decision point downstream.

“Obviously they’ve been somewhat constrained in terms of installers, and they’re hiring more and they’ll have more ability to do stuff there, but it’s a question of whether it is worth it to proactively change those old terminals now as opposed to waiting until later.”

Part two follows – on HTS, comparing Inmarsat and VSAT and how to sell either or both…

Who’s afraid of disruptive change?

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Guest contributor Kevin Tester of Marine IT and Electronics has kindly shared this post written to cover the recent Gordon Hodge Memorial Lecture given by Nick Lambert of the UKHO.

Lambert makes some interesting points – some indeed already covered by yours truly on the Admiralty blog over the last couple of years – that shipping ultimately won’t avoid the wave of technology coming down the pipe.

The best example of this is ECDIS where the UKHO has tried to increase recognition of the challenges not just of getting to grips with electronic navigation but of the larger forces in play, some of which he references here.

The last point about GPS is also timely, not least because eLoran is finally in operation but because the issues of jamming and spoofing seem as relevant as ever however long they seem to have been reported.

There’s a link to the video here, too. You can follow Kevin at @MITEeditor.

Embrace disruptive change – Gordon Hodge Memorial Lecture

By Kevin Tester

‘Radical new technologies are approaching the maritime industry on a steady bearing and it is time to respond.’ This was the key message former National Hydrographer of the UK, Rear Admiral Nick Lambert sought to deliver as he addressed an audience of marine engineers of all ages, which had descended on Trinity House, London for the IMarEST Gordon Hodge Memorial lecture on 22 May 2013.

The maritime sector is undergoing a seismic shift, he announced. After decades of being left on the periphery, there is a new found recognition of the so-called ‘Blue Economy’. Getting the most from this new economy will require a host of new ‘Blue Technologies’, some of which already exist, but many others are still in their infancy.

Despite this new wave of optimism, the maritime industry is often accused of being inherently conservative. It is criticised for being slow-moving, slow-thinking and generally wary of change however understandable that may be. Depending on who you ask, it is 10, 20 or even 30 years behind the likes of the aviation or automotive industries. To prosper and succeed, the inertia and aversion to change that are these apparent hallmarks of shipping must be addressed. Moreover, embracing change will not only allow the industry to ride the wave, but also help shape it and take charge where it matters most.

So what changes are we talking about? The shift to electronic navigation is perhaps the most apparent and, because it is already underway, perhaps the most instructive of the challenges that lie ahead. But there are others: remote and autonomous control and 3D printing have been bubbling under the surface for a number of years now and have recently entered the wider public consciousness.

Glimpsing the future

Today remote controlled drones are routinely deployed in Afghanistan and theatres of war elsewhere in the Middle East. Autonomous drones – normally taking the form of lightweight quadcopters – are becoming ever more sophisticated and intelligent, escaping the confines of lab environments and increasingly capable of exploring the real-world. Earlier this month BAe demonstrated a remotely controlled commercial equivalent plane in controlled airspace: arguably, a natural progression from the fly-by-wire control systems that are de rigeur in commercial aviation. Google has been experimenting and is making rapid progress with driverless cars. These advances are gradually seeping into maritime space. And at IMDEX Asia earlier this year the Singaporean Navy gave delegates a glimpse of its unmanned surface craft, which is already patrolling waters near the island city state.

So unmanned surface craft are out there patrolling a seaspace.  What are the implications?  How are they controlled, what is the training and experience for the operators and are such operations effectively administered by the COLREGS?  It may be the case that COLREGS are fine for the time being but should we begin the debate about updating them in light of emerging technology?

The rise of 3D printing, at first glance, would appear distant from the maritime industry. However ignoring it completely, warns Lambert, would be a mistake. If the development of this technology continues on its current trajectory, it could bring about a revolution in how and where manufacturing takes place. Why churn out toys from a factory in China when it could be done with a quicker turnaround locally? This would have implications on the pattern of trade that has traditionally provided the backbone of today’s shipping industry.

Staying in charge

But arguably what is more important than the hardware is how we – the users – interact with it. Drawing from his time at UKHO, Lambert flashes up a slide of an ECDIS console adorned with countless Post-It notes for the benefit of its human-users. This, he says, is due to a lack of user-centred design. ‘Whilst a big step forward in capability, the technology is not always doing what the user needs it to do,’ he states.

Drawing on the lessons of ECDIS implementation he suggests that learned bodies, such as IMarEST, are well-positioned to help steer the evolution of new technologies and ensure that the user is in charge of the machine and not vice-versa.

Lambert went on to explore the differences between ‘digital immigrants’, the generation that has adopted the Internet (sometimes reluctantly) as an adult, and ‘digital natives’, referring to those who grew up with the Internet and who can’t imagine a world without it. Notably, whereas ‘immigrants’ were brought up to learn and memorise, ‘natives’ expect to simply ‘look-up’ information as and when required. The two groups differ also in their attitudes to privacy and information sharing.

While neither approach is better or worse than the other, this shift, Lambert argues, impacts on how people interact with technology. ‘The younger generation is more likely to implicitly trust what machines tell them, without necessarily understanding the limitations of that information or the technology producing it. The classic example here is the anecdote of a motorist blindly following his satnav and driving off a quay into a canal. The consequences of a similar error of judgement at the helm of 200,000gt tanker would, unfortunately, be rather less comical.’

A Rake Too Far?

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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?

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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

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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.

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

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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”

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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…”

Thuraya and ITU provide powerful partnership in disaster relief

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I wrote the following for Thuraya based on an interview with the ITU discussing their work providing connectivity to disaster relief zones – good work that has been recognised with the first award of the ITU Humanitarian Award last year.

In the first minutes and hours following a natural disaster, the terror of what has just occurred is tinged with chaos. Power, water and communications networks are often knocked out, citizens scramble to save themselves, their family and friends, while governments struggle to maintain order and provide assistance.

But as relief groups and government agencies begin to put together their response, they have a powerful alliance on their side, the International Telecommunications Union (ITU) and Thuraya Telecommunications.

Thuraya has a longstanding relationship with the ITU, through which it provides free  satellite terminals including both handheld satphones and broadband terminals to support communications during disaster recovery. And as the ITU’s Chief of Department, Project Support and Knowledge Management, Dr Cosmas Zavazava points out, the relationship provides a vital first link in supporting governments, NGOs and victims.

“I have been there myself in the immediate aftermath of a disaster and in the first hours you find that people are totally disorientated at every level, right up to the government,” he explains. “Usually the power has failed and communications are non-existent. The Thuraya equipment gives us some connectivity which we can share with governments so that they can co-ordinate their functions. At the same time we also provide the units to as many humanitarian agencies as possible.”

The aid agencies will use the equipment themselves and also make them available to survivors. “There are often queues of people who desperately want to call their loved ones. It may seem a small thing but in practice we have found it reduces anxiety and it really touches the core of the family.”

Satellite communications is the ideal channel for connectivity when terrestrial networks are disrupted. The agreement between Thuraya and  ITU sees the Dubai-based company donate the hardware and the ITU contribute towards the costs of airtime as well as maintaining the units and shipping them to and from affected areas.

“When a disaster happens, we react immediately, dispatching the equipment wherever it is needed and training users on the spot. They normally keep the equipment up to three months but it depends to some extent on the magnitude of the disaster,” he explains.

Once on the ground, the phones are deployed in initial search and rescue, co-ordination of humanitarian and refugee logistics, managing the delivery of food and shelter and the delivery of medication. The phones are capable of both voice and data communications and Dr Zavazava says the quality of the Thuraya network is crucial in giving confidence that key agencies will stay online in the first days after the disaster.

The quality and reliability of the satellite signal makes a huge difference. We are pleased to note that we have not experienced any congestion problems with Thuraya equipment and network,  even during a major disaster when a lot of people are using it,” he says.

Applications vary from regular voice calls to data and videoconferencing in support of the relief effort. Aid agencies can call colleagues and request particular medicines or equipment and he has no doubt that having reliable communications in place can be the difference between life and death.

“Having such equipment in place can absolutely make a difference between saving and losing lives. People who might have died of infection can get the right medicines on time. It is also vital for search and rescue efforts as the GPS functionality helps rescue teams find and help survivors as quickly as possible.”

The ITU works with government agencies, the private sector, and NGOs to protect human life when disasters strike. A lot of emphasis is put on developing concise and clear standard operating procedures that define who does what, when and how. Human and institutional capacity building is an integral part of the disaster management effort.

“In a catastrophe, investments and infrastructure that took years for governments and businesses to build can disappear in a matter of moments.  Reliable uninterrupted communications is vital before, during and in the immediate aftermath of disasters.

To deliver this safety net requires a strong relationship between governments, the private sector, United Nations Agencies, NGOs, and communities.  “The relationship we have with Thuraya and other private sector partners is there for others to emulate. A true relationship is like the ripening of a fruit, it takes many years to build and it needs patience and nurturing.”

So much so in fact that the ITU last year awarded Thuraya the first ITU Humanitarian Award in recognition of the company’s generous contributions to saving lives during emergencies.

The ITU’s position as a leading UN Specialized Agency in telecommunications/information and communication technologies recently saw it support UN aid agencies providing humanitarian assistance to victims of civil strife in Mali particularly internally displaced persons and refugees in camps in Mali, Niger and Burkina Faso.

The agency maintains a firmly non-political stance. Dr Zavazava says operationally, the ITU’s main role is intervention in natural disasters, but it also assists other UN Agencies as they fulfil their mandate helping support disaster victims.

“Our primary concern is to save lives using all means of communications. The ITU founding fathers put in our Constitution that telecommunications must save life in the air, on land and at sea. We take this calling very seriously.”