Category Archives: VSAT

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.

Crew retention is the tip of the digital iceberg

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Almost 12 months ago an ambitious project began to take shape. Roger Adamson of Stark Moore Macmillan, Vizada (now Astrium Services) and two of the largest crewing agencies in the world, Philippine Transmarine Carriers and CF Sharp, joined forces to embark on the most comprehensive survey of crew and their attitudes towards and use of communications at sea ever undertaken.

The resulting report has generated considerable interest. But while Adamson says it is encouraging to see so many shipmanagers and operators recognising the operational benefits of improved communications from a crew retention perspective, in this guest blog, he lays out why he believes there is a wider opportunity which comparatively few in the industry are really grasping.

Considering the enduring importance of crew retention it may seem surprising that until last year no organisation had commissioned definitive independent research into the communications requirements and habits of seafarers.

However, when confronted with the logistics of reaching, collecting and analysing the written, paper responses of almost 1,000 officers and ratings, this lack of comprehensive research becomes rather more understandable.

Key to any research project is the quality of the data and the sample. Had we not been working with PTC and CF Sharp which between them send over 47,000 crew each year to over 1,000 vessels in the commercial cargo and passenger sectors, it is unlikely such a survey would have been possible.

It certainly wouldn’t have produced such high quality data and responses. With the total market for satellite based crew communications estimated at approximately 925,000 individuals, our sample represents in the region of 1% of the market – making the dataset both fascinating and statistically significant.

One of the headline results has been that 68% of seafarers now have access to communications whilst at sea either all or most of the time with only 2% reporting that they never have access to communications. However those headline figures mask a wide variance between different sectors. For instance the passengership sector, despite having the highest levels of communications equipment on board, provides the lowest levels of free crew communications of any sector.

In common with the passenger sector, offshore vessels have very high levels of equipment, but neither of these are principally driven by crew communications requirements. For the passenger sector, high-bandwidth communications systems are major revenue generators with the penetration of VSAT extremely high.

Similarly, the offshore sector is well penetrated with VSAT systems as charterer requirements dictate high-bandwidth be available, but in contrast to the passenger sector, offshore vessels offer far better access to free and paid-for communications, most likely a reflection of the scarcity of qualified offshore crew.

Across the sectors 46% of crew are not provided with any form of free communications at all. In the context of crew retention that figure should be raising eyebrows.

As a regular speaker at the Informa Manning & Training conference, where this year I’ve been asked to speak to delegates in Dubrovnik about crew communications, I consistently hear managers and operators wrestling with the issue of crew retention.

I’m repeatedly being told that the expense of training crew means that retaining them offers real dollar savings and competitive advantage. When one considers the noise VSAT has been making over the past several years it is curious that we are still in a situation where almost half of all seafarers have no access to free communications, when the ability to provide them with such would not only assist in their retention, but also offer broader opportunities to ship managers and operators.

I think this is where the real issues lie. Traditionally the expense of satellite communications together with the necessity for robust equipment and reliability in an environment where mission-critical literally equates to life and death, has always meant failure wasn’t an option and experimentation challenging.

As one of the most regulated industries in the world, shipping is about compliance and meeting minimum requirements. In many respects it is a unique industry, but it is not immune from the digital revolution which has swept up every other.

With the IMO advocating an over-arching e-navigation strategy combining ECDIS with new technologies converging across navigation, IT and communications, the landscape of maritime business is changing fast.

The opportunities for forward thinking ship managers and operators are highly significant, but unlocking maritime’s digital promise will require a major shift in thinking. IT, communications and digital technologies have the potential to drive cost savings, service improvements and the all-important crew retention.

In my experience shipmanagers and operators are hungry to understand how and where their businesses can implement and benefit from these changes, but as yet suppliers aren’t creating the cross-businesses value propositions to help them.

By commissioning the Crew Communications 2012 survey Astrium have signaled their intention to address this need. The wealth of information it has provided to shipmanagers and operators about the crew they depend upon is extremely valuable, but it’s only the beginning of what’s required.

Case studies have always been the primary tool in the maritime salesperson’s armoury, but what’s needed now are more independent, in-depth studies and analysis which can inform both suppliers, and ship managers and operators.

The advent of new High Throughput Satellite systems, from Intelsat EPIC to Inmarsat’s GlobalXpress, O3B to Iridium NEXT, means bandwidth and speeds will accelerate further. But without the context of operational implementation and potential cost efficiencies these systems are just adding a new level of complexity for ship managers and operators.

We are approaching an era of real technology convergence in maritime which has the potential to transform the industry for the better. Doing so will require technology suppliers to gain a far more holistic and in-depth understanding of the shipping business. And for ship managers and operators to help them.

A condensed version of the Stark Moore McMillan report, Crew Communications 2012 is available for download from here.

A year has gone by…

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…since I started MaritimeInsight and March again finds me in Stamford once again, where the Connecticut Maritime Association moves and shakes for the next three days.

Over the last year I’ve tried to unpick the main issues impacting communications and technology. I probably haven’t always got it right but my guiding principle was to provide a forum for neutral debate on where the sector is going and how that fits with the wider industry.

That commitment remains because the 12 months have shown that left to the marketing men, there is as much spin and smoke around as there is clear guiding information. And because the next couple of years will likely define who survives and who falls by the wayside.

As I have noted it in recent posts, communications is a market in the midst of an upheaval and one for which the future will look somewhat like the past but there will be fundamental changes too. The next challenge is probably less about selecting systems and more about empowering and enabling crew to ensure that the users can extract real value from them.

One need only look at the latest DigitalShip to see that VSAT has gone from a nice to have to a must-have for owners of high quality tonnage. The emergence of the HTS era will see that trend strengthen but there are big questions to be asked and answered.

Will Inmarsat continue to gain enough traction on XpressLink to cement the take up of GlobalXpress? Will Intelsat get its IPO away and EPIC in service? and will Iridium NEXT get off the ground? Will Globalstar’s second-generation play come good? I recently authored an article for Via Satellite on the step change in satellite comms and I couldn’t get O3B to tell me anything so I guess they are busy.

How far will Ku-band VSAT be able to keep up the pressure on all these? And what happens to L-band spectrum as owners begin to move away from their comfort zone?

As Maersk Maritime Technology’s Bo Cerup Simonsen put it at last week’s GreenShip Technology conference, the biggest challenge is not technology, or financing or sustainability, it is ‘survivability’ and whether shipping companies and their suppliers have the financial stability to last the course.

Maersk of course is the industry’s bellwether, a company which defines engagement with the core shipping issues, principally the need to get a handle on big data and in the process improve operational efficiency.

The Maersk fleet of 870 large containerships ships is already reporting into a single database, with data flowing almost continuously on an automated basis, helping the company develop performance benchmarks on people and ships alike.

That means that big blue can sharpen its competitive edge, assessing the impact of fuel saving technologies and comparing vessel performance, dropping poorly performing chartered tonnage and bringing in younger ships as necessary. Crew are incentivised to improve performance within safe working limits.

“It’s a case of deciding if you are going to do the minimum or the best, to work beyond what is regulated and maintain your vision,” Simonsen said. “The key aspect for us is to make sure that the data and software burden are not placed on the crew. We monitor and measure then discuss with the crew what the implications are.”

Properly resourcing crew training was fundamental to this – there was no point in investing in technology without helping crew get the most out of it. So once again we are back to the humanware. Software, technology, systems, these are just means to an end. The real challenge is to educate and change mindsets.

Cold winds and tough times

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Last week’s DigitalShip Hamburg conference was a living testament to the troubles that are threatening to wash away many shipping companies. Registration was strong but attendance was a little lower than previous years. Ask anyone about that and they would reply ‘these guys have other things to worry about’.

They are right. The insolvency of three single-ship KG companies associated with Hamburg’s Vega Reederei the same week underlined the fact that the German shipping market and the finance system that supports it are under serious threat.

The picture is the same globally, though owners have managed to defer the worst effects by burning through the cash piles amassed pre-2008 and because the banks (another group with rather bigger things on their mind) haven’t moved to repossess because interest rates have been so low.

That is changing and satellite communications may not escape unscathed as the market tightens. For a SOLAS universe of either 40,000 or perhaps closer to 70,000 merchant ships, there are at least three MSS airtime providers, dozens of DPs and SPs and rivals from FSS who moved into maritime a few years ago.

As Marlink’s Knut Natvig mentioned in his first-day introduction, the SP is the glue between the airtime provider and the customer – they have the crucial role of getting pricing right and adding value.

Now, the usual suspects will already be saying that Inmarsat is doing a pretty good job of putting smaller SPs out of business by raising PAYG prices, but looked at dispassionately, something will have to change.

Indeed, it has already changed. An SP of my acquaintance is fond of remarking that selling airtime may have been the past but certainly won’t be the future. When an OEM or a software vendor can also be an airtime provider, the fight gets too tough for many.

This will force the SPs to get better at what they already do – squeezing value out of L-Band even while they decide whether to take the bigger bet on Ku or Ka-band VSAT. And if rumours going around Hamburg that one big and well-known SP is indeed up for sale are correct, the evidence is that change is already observable.

And if the market pre-GX was tough, the market after could be tougher still. As DPs, SPs and OEMs sign up to the SEP and GX and accept everything that goes with that, the mid-size players, or simply those not fleet enough of foot, will be left to scrap it out even as the big boys pull further away.

For the Marlinks of this world, that may be less of a problem as they are hedged across all the products as are others, so customers can order a la carte or table d’hôte.

It was said once again in Hamburg that the IT department needs to get out from behind their desks and understand more clearly what is happening in chartering and operations.

As Pietro Amorusi of D’Amico noted, “Shipowners don’t want to take care of solutions, they want to forget about problems. When you go to buy a drill, what you really need is a hole – this should be the approach.”

And that goes the other way. DPs and SPs should be on their customers like glue, talking about the future, describing scenarios and laying out options.

They will still have a hard job. Inmarsat’s direct sales strategy is increasing pricing pressure but the other DPs and SPs are at it too. Inmarsat Maritime President Frank Coles told the audience he expected some kind of consolidation over the next couple of years and that he didn’t think there would be any ‘unlimited’ bandwidth packages on offer in maritime in future if demand continued to increase.

Zeev Steinluaf from Station711 said he could see the day when the majority of crew access was free at point of use, either subsidised by the owner, the DP/SP or supported by advertising.

So the trick of it, just as in the shipping piece itself, is relationships. What the L-Band DPs and SPs have that the VSAT vendors don’t by and large is the relationships – in some cases built up over years. The VSAT vendors can talk service speed and capacity, but you wonder sometimes if they are as close to the market as they claim.

Still, another DS done and we have reasonable clarity on what we might expect over the next year and into 2014 by which time we will have a first glimpse of what GX might be capable of. All shipowners and managers have to do know is call with great accuracy the timing and extent of the market’s recovery in their particular sector and we are home and dry…

Satcoms buyer – heal thyself

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Kevin Tester of MITE was right to warn last week that buyers tread a minefield in specifying maritime satellite communications systems. There has never been greater choice in terms of airtime, band and bandwidth, hardware and value-add solutions and never more clamouring voices trying to flog you unlimited this and unrestricted that.

I’d like to put a parallel point of view, not because I disagree with him, but because it’s one that bears repeating. Put simply, owners and managers have to do more than shop comparatively and in doing so drive down price to the lowest possible level.

At the heart of the problem lies a chronic but typically shipping industry mismatch. Owners want the moon on a stick (OK well, fuel savings) but insist on holding down the comms budget and making it hard for the entrepreneurs Kevin talks about to provide the value adds that might actually save them money.

Who is stopping that engine condition monitoring data getting ashore? Yes it’s the owner. Who is wasting money (as Giampiero Soncini regularly contends) on inventory because they cannot replicate databases or make RFQs from the ship. Right again. The list goes on and on.

Some owners go the other way. Dualog told last year’s DS Athens of the Norwegian anchor handling workboat which burned through 40-60GB a month but had no IT policy in place, resulting in congestion so bad that the bridge team couldn’t communicate when they needed to, risking put the ship off-hire.

For the most part, though it’s famine not feast that is the problem. Service providers can talk all they like about the potential of higher bandwidth, faster speeds and HTS services – owners still see cost not value. As a result, the majority of the SOLAS fleet is living in a world closer to 256kb or even lower than to megabits per second. Some send a few hundred megabits of data per month and are happy with that.

This by the way, rather undermines the argument that owners are simultaneously being starved of small volume options while at the same time demanding boundless volume at ever faster speeds. This is not a one size fits all market.

What owners want is uptime and dependability and if they have their eyes on the ball, they will be thinking about the value-added options available to them and weighing these against trading opportunities.

But no-one should imagine that vast numbers of existing bulk carriers or tankers will be re-fitting with VSAT or FleetBroadband. The fact that many owners have entered zombie territory – reliant on the goodwill of their banks but with little forward earnings momentum – means that all available costs will be cut.

Still satcoms makes up a tiny part of day to day operating expenses, marginal when compared to the cost of 50 tonnes of fuel a day burned by a Capesize bulk carrier hauling ore from Brazil to China.

Almost a year ago, Inmarsat Maritime President Frank Coles suggested the VSAT opportunity might be applicable to perhaps 20,000 of the SOLAS fleet, which by some counts is close to 70,000 vessels. That suggests that the remainder will be divided between higher spending owners and more technical ships and a large rump of users who are happy to use lower volumes at lower prices.

But in fact if owners are prepared to look even a little they will find a universe of applications already optimised for satellite, which can hold down bandwidth usage and cost. If they are serious about increasing data traffic, then there has never been a better time.

Let’s not mistake this for utopia – fair usage policies, committed information rates and the like mean that the internet experience at sea will never be like the experience ashore.

But the fact remains that owners who aren’t prepared to spend money on business communications are missing a trick. Owners who aren’t prepared to offer crew communications will see a direct correlation in the quality of the personnel available to them.

And there is another reason to look beyond the short term timeline. As managed VSAT services supplant L-Band, a new universe of services, applications and traffic management is increasingly opened up.

To continue to believe, even as that era begins to open up, that spending on communications is a necessary evil rather than an opportunity to be grasped, would be an enormous mistake.

 

Guest Blog: MITE editor Kevin Tester on why buyers should (still) beware

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I’m very pleased to post this piece from Kevin Tester, editor of MITE, with whom I have been knocking around the challenges facing satcoms buyers and the role of suppliers and service providers in creating solutions. Given our conversations he agreed to post this piece below, which will be the leader in the Feb/Mar 2013 edition of the magazine.

Caveat Emptor

When it comes to maritime satcoms, as with anything in life, you get what you pay for. Regardless of the technologies involved – traditional L-band services, conventional Ku-band VSAT or the new crop of high-performance Ka-band services that are due to start coming on stream from next year –  it is still very much a case of caveat emptor or buyer beware.

The biggest challenge confronting any vessel owner looking to upgrade their on-board communications facilities is to sift through and decode all the marketing messages spouted by vendors and determine what exactly it is they are getting. And then reaching a decision on whether the value it delivers matches cost. In theory nothing could be simpler. But in practice it is a very different story.

Satellite operators and airtime providers can contort, dynamically assign and apply a host of controls to pretty much any service offering.  They also tend to be very adept in ‘framing’ the message, the art of telling prospective customers what they want to hear, while carefully sidestepping any limitations of their ‘solutions’.

More than anywhere, this is evident in packages advertised as ‘unlimited’ or ‘unrestricted’. Invariably, these words are followed by an asterisk referring to some small-print, which, thanks to the wonderful invention of Fair Use Policies (FUPs), reveal a very different meaning to these words than you would ever find in the Oxford English Dictionary. These FUPs routinely block streaming video, VoIP services and other modern web applications deemed to be bandwidth hogs.

The airtime provider’s rationale for doing this is understandable. In historical terms, satellite bandwidth is cheaper than it has ever been. The fact we routinely compare airtime packages in terms of Gb – not Mb – is testament to the dramatic improvements that have taken place in a remarkably short period. But, it is not free.  No provider can stay in business if it delivers more bandwidth than it has negotiated from the satellite operator.

Vendors resort to these smoke and mirrors tactics in order to differentiate themselves and tempt prospective new business in what is a very cut-throat market. And, one supposes, to conceal the fact that broadband is increasingly turning into a commodity product. While individually their actions may be driven by commercial necessity, at the same time, collectively they risk damaging the industry’s reputation. What these trends do highlight is the need for greater transparency.

Matters are further complicated by the multi-tiered structure of the marketplace, comprising satellite operators, airtime providers, and countless different grades of resellers. How, for instance, do officially appointed ‘distribution partners’ differ from officially appointed ‘supply partners’? What do these badges mean to the end-user?

And what of the much vaunted value-add? Bundling an email client or utilities for managing crew calling/web-browsing really isn’t going to cut it anymore. In this respect, MTN Satellite and Marlink deserve credit for identifying opportunities where they can really help ship-owners deliver an improved performance. It is notable that the extra value they are offering cruise ships and passenger ferry operators derives from linking satellite to terrestrial wireless infrastructure.

Vendors retort that ship-owners know the price of everything, but the value of nothing. Inmarsat’s Frank Coles has openly criticised ship owners and managers for penny-pinching and haggling over trivial amounts, which pale into insignificance when compared to a vessel’s total running costs. And, to be fair, there is some truth in this.

In the upcoming issue of MITE, Parker-Kitiwake, a specialist provider of fuel condition monitoring services, says it could develop more sophisticated analysis tools, which would cut the risk of an unexpected engine failure and hefty repair bill, if it could get data off ships in a more timely fashion (see p18). Yet today, it is typically not allowed to send emails larger than 300k back to shore. And God forbid if you suggest adding an attachment. It makes you wonder whether the maritime industry is ready for – or indeed needs – an all-weather super-charged 50Mbps Ka-band satellite link.

Inmarsat raises prices again – by how much depends on who you talk to

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Yes it’s that time again. There’s snow in the air, frost on the ground and Inmarsat is raising its prices. But just as last year, there is a need to divine some facts from the sales messages of its competitors.

There will be a longer piece on this subject in due course but for now, initial conversations with Inmarsat and others about the scale and extent of the price increases and their implications have yielded the following.

Some prices are indeed rising. On the Standard (pay as you go) 10MB plan, the approx $150 (retail) price a month price is the same as 2012 (when it rose from $100). What goes up is the per megabyte cost over that 10MB allowance, from $12 to $14 retail from March 1, 2013.

So it’s not so much pay as you go but pay if you want to. If you chose to use that plan for 40MB of data then as I understand it, you’d pay $150 for the first 10MB of data plus $14 per MB thereafter.

Clearly Inmarsat’s intent is to encourage customers off PAYG and onto the 200MB Entry plan, which retails around the $800 per month mark and gives much lower per megabyte rates. But are many owners using PAYG for their day-to-day communications? If so they really would be costing themselves money unnecessarily.

Inmarsat has already been upfront that it doesn’t like FB being used as a backup for VSAT and that’s also a motivation for increasing the per MB price on PAYG this time.

I also understand that prices for Inmarsat Fleet (also pay as you go) data will go up 10% from March 1 but the other E&E services, Inmarsat-B and mini-M stay the same. Inmarsat blames the cost of maintaining the I-3 and I-4 network for that.

As I understand it there are no price increases on the other bundles, 2GB, 6GB and All You Can Eat.

The other point to note is that the 25MB or 50MB bundles offered by Inmarsat distribution partners (including Stratos which it owns) are not being withdrawn – at least not by Inmarsat. These are put together by partners, including Stratos among others, from the Inmarsat Pay As You Go (Standard) plan, so if they wanted to keep offering them they could do. But since Inmarsat doesn’t market these it’s a bit of a moot point.

More to come on this subject and I’m looking forward to the debate at DigitalShip Hamburg. Let’s hope we can have it on its merits and let users decide – after all they are the ones with the buying power.

Managing the data shipboard load and creating low/high end opportunities

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In the first part of my interview with Roger Adamson, the Stark Moore McMillan ceo laid out some of the issues that face the bandwidth vendors in 2013 and beyond. In the second part we discuss how owners and managers are adapting to the changing landscape of systems and services.

Among the issues discussed are how companies cope with the data flow that will increasingly come off the ship, whether there are opportunities at the ‘low end’ of the market for GSM services and what can we expect in the near term, especially from Inmarsat and the introduction of Global Xpress.

MI: We were talking before about the trend towards more data being available ‘off the ship’ and you mentioned that optimisation is an engrained requirement in shipping. Does that mean that either large amounts of data are not actually needed or that the optimisation means that volumes will never hit the gold rush levels we are hearing about? It seems to me that in many cases, shipmanagers can actually function perfectly well with a hundred megabits a month or less. If they organise well enough, they probably don’t need a huge amount so I’m not sure whether again it bears the VSAT argument out?

RA: “In some of the research we’ve done, around 70-100MB a month was average for a FleetBroadband user and around about 10-20Gb was average for a VSAT user.  That 70-100MB is primarily operational data. But once you start going up into the gigabyte level then you’re probably talking only 10 or 20% of that being operational traffic, it’s a few gigabytes, and could be a lot less.

“The rest is taken up with crew access: browsing and a lot of people using things like Skype which is incredibly bandwidth inefficient but they’re using it because they think it’s free. They’re using it over a data circuit but it is just totally inefficient, so it’s chewing up bandwidth and distorting the figures.”

MI: Is there an issue too with the data collected and transmitted? High bandwidth promises more throughput and increased reporting but where does the data go and who uses it?

RA: “What vendors are basically saying is we’ll give you a big high bandwidth pipe and you can send all kinds of data from ship to shore. The trouble is you’ve got two or three people that are looking after each ship, or a fleet or a number of ships and these guys don’t have the bandwidth to be able to look at the data, interpret it or make decisions on it.

“A few people that I’ve heard from and spoken with are saying it’s great, it’s fantastic all this data coming back, but we just don’t have the time to look at it, what do we do with this stuff? They are busy trying to just manage the ships without getting into building the efficiency themselves and I don’t think there are that many ship operators with the level of staff that can make those decisions.”

MI: Looking at maritime satcoms from the other end of the telescope, there seems to be renewed interest in GSM and wireless services. Could pressure on the middle come the other way and give owners or operators at the low end an option so that they don’t need to kind of upgrade to higher bandwidth satellite?

“A few operators that I’ve talked to are using GSM services primarily in short sea trades and for container operators on liner routes, who know that they’re going to be within 3G coverage will work in certain places. We are starting to see some like European wide SIM cards where there’s one flat rate across Europe now.

“The problem if you like with GSM is making the business model work with a crew of 15 or 20 people. The concept is great, because people would rather be able to sit in their cabin and use their mobile phones, but getting the kit on board can create another administrative burden for shipowners and managers.

“Also the dynamics have changed. In the Philippines and in Northern Europe as well, users are moving away from SMS traffic in favour of social media and instant messaging. The previous business models were focussed not so much on voice but on SMS because the profit margin was better.”

MI: OK, looking into your crystal ball it would be interesting to know what you think are the trends that we should be looking out for in 2013. Aside from the consolidation and changing the sales focus, are there other major trends that you perceive in the market over the next couple of years?

“It’s an interesting time at the moment seeing Inmarsat try to go direct and go via the channel. It’s quite a juggling act and I think there will always be distributors who will get them into places in the market that would be very difficult for themselves to get to directly, because of the existing relationships.

“Certainly the danger is that you hack off your loyal distributors, or that they don’t have the margins they need in order to make it a profitable business to stay in so don’t put the same level of resource behind it as they once did.

“That said, the way Global Xpress looks, I can see them having a lot of success in the same way as they’ve had with FleetBroadband. Some 32,000 FB terminals in, let’s say, five years on the market and VSAT has been around since the mid to late 1990s and we’re up to 11-12,000 installations, it’s clear what works.

MI: What about the simple versus complex argument. I think users are beginning to grasp that buying GX won’t be the same as buying Fleet or Fleetbroadband?

RA: “Yes, what led people to buy Inmarsat equipment in the last few years was the simplicity and the understanding of the network. VSAT is more complex, with far more variables: which antenna do I have, what levels of coverage do I have, the key thing is the network operator or there could be four or five network operators that we’ve knitted together a patchwork.

“The model has been simple for people to understand and if that stays there, then GX will be quite difficult to match. We’ve seen that with the EPIC NG offering, which comes back to conditioning for the market and who you’re selling to but if you’re a ship owner or an operator what is EPIC?

“The Inmarsat model means one network, a smaller number of manufacturers and below deck and the above deck equipment in the one package.  If they replicate that model and putting aside rain fade and Ka/Ku band issues, if they get the business model right then I can see that it is path of least resistance for VSAT going forward.”