Tag Archives: Intelsat

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…

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…”

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.

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.”

Ku or Ka? Wide or Narrow? Clarity or… More on Intelsat’s maritime ambitions

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In the second part of my interview with James Collett, Director Mobility Services at Intelsat, we talk more on coverage, capacity and confidence from the buyer’s and user’s viewpoints. There is also some de-mystification on the subject of Ku and Ka bands and even a view on why clarity matters more than mudslinging.

MI: Coming back to the user perspective, the traditional view runs along the lines of mariners like Inmarsat because it gives them a global coverage network. They can negotiate with the supplier on price and get it to a point where they are happy. But if I’m a spot trading shipowner can I use Epic and feel confident that I’m going to get the same global coverage?

James Collett: “I think the important question for shipowners is, can they can use Intelsat’s network and be safe that they have got coverage in the right places? Today we have a very extensive global Ku-band footprint based on wide beam technology. We’ve got our launch of Intelsat 27 early next year which will complete what we call our global Ku-band mobility platform.

“Let me put it in context of a major maritime VSAT operator with a mature customer base of offshore, commercial and fisheries customers and who would say that 3% of their requirements are not covered by their Ku-band footprint. The coverage improvement on Ku-band has been dramatic. Intelsat has particularly been focused on the mobility segment, and decided that we would incrementally improve our global Ku coverage. So I think we’re starting from a good place where we could put global Ku band in front of the typical shipowner, and it would cover 97% of their traffic requirements.

“Another prevalent sales objection for Ku-band VSAT is ’I need a path into next generation Ka-band’.  That’s where Epic comes in, because we’re not saying to the customer, you’ve just got to stick with today’s wide Ku-beams. We are delivering an overlay network which will allow them to derive a service which is a blend across two Intelsat networks. We’re already providing very fast services in our wide Ku-band beams, so you will either be able to go faster or you will have a more cost effective service when you have the benefit of Epic coverage.

“Our distributors and integrators will create packages that bring the benefits of Epic to the regions where they have most vessels, thereby delivering a cost per bit improvement in the right places. Our aim is to put the capacity where people most need it.

“So from a maritime user’s perspective his Intelsat service will look exactly the same whether the vessel’s in a wide beam or in an Epic narrow spot beam. More importantly though in the parts of the world where shipping densities are highest that Intelsat Epic NG spot beam could support much higher levels of aggregate traffic.”

But doesn’t that work only as long as all ships and all aircraft look at your coverage maps before they set out and go well we’ve got to go this way to stay in the footprint?

“With the Intelsat network, ships will sit in the wide beams ordinarily, and because they’ll be more dispersed in those beams, we can give them plenty of capacity. But where they’re all concentrated in the same area, we’ll have additional capacity in the shape of the Epic narrow beams. The two Intelsat Epic NG satellites we have announced are not the start and finish of the EPIC network – it’s a capability which we can bring to any new satellite.”

So would it be fair to speculate that the customer would be getting better throughput for about the same price as they might be paying for Global Xpress?

“The true metric is the cost of moving a bit from shore to ship or ship to shore. The design of Epic will have 8-10 times the throughput of a standard satellites, allowing for cost efficient high throughput transmission Customers will see higher performance through lower cost per bit.”

From what you’re saying, I wonder if the Ka vs Ku debate is getting to be a slightly pointless level of comparison?

“I think that’s a fair observation, and I don’t think Intelsat has never said that Ka-band isn’t a good solution. In fact, we fly some Ka capability today. By the same token the Epic platform will incorporate C-band, Ku-band and Ka-band payloads, and I think there’s enough evidence today that high throughput is not about the band but it’s about the way you deploy the network.”

The recent Panasonic white paper seemed to say the answer is it depends on what you’re using it for, how you’re using it, what you’re trying to do.

“What I took from that paper is that it’s not Ku versus Ka, its narrow spot beams versus wide spot beams. And once you put K-anything into narrow spot beams you get a huge throughput advantage.”

What I also can’t help but feel is that the whole Alan Gottleib vs Inmarsat debate is a diversion too. It doesn’t actually help the mariner or the satcoms buyer, the shipmanager, or the superintendent. I find most of what is being said redundant and pretty unhelpful.

“I completely agree. In my mind I bring it back to a couple of key things that will determine success in this area. Firstly, enabling more cost effective solutions for the shipowner and the shipmanager, where ultimately we as an industry are able to drive an increased spend on communication by really delivering value at the ship level.”

“And secondly I think the other big industry debate and what will govern success or failure, is engaging and enrolling distributors to be able to profitably market the creative solutions that are going to drive that utilisation. Ultimately if you can deliver value to the end user through a motivated and creative distribution channel, then I think you can be successful.”

Epic stuff – James Collett on Intelsat, Inmarsat and what really matters in maritime

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To leafy Chiswick in West London and the offices of Intelsat for a wide-ranging conversation with James Collett, late of Inmarsat and now Director of Mobility Services at Intelsat, charged with building its rival’s maritime business on promising foundations.

In a quiet period ahead of its planned IPO, we were obliged to steer clear of forward looking statements and much as in conversations with Inmarsat, there was no firm detail on costs of the system and its throughput. But that didn’t prevent us from discussing the merits of Global Xpress as well as EPICNG, Intelsat’s HTS programme that offers GX its most concerted competition.

It became clear as we talk that Intelsat’s ambitions are to move beyond the high end segments and attack the mainstream maritime market too. Also that Intelsat sees its DP and ISP relationships as key to success in the maritime market. Also clear was that Collett personally has little time for the back and forth that seems to obsess some satcom commentators.

Indeed, his understanding of Inmarsat’s business as well his plans for Intelsat speaks volumes for what will be an interesting couple of years for satellite operators with a strong, scalable offer and a firm grasp on the realities of the market.

Maritime Insight: Let’s talk about Intelsat and I guess Intelsat EpicNG is the thing that is of interest as an HTS solution. Do you see it as a competitor to Global Xpress?

James Collett “I think it’s fair to say that our customers will build solutions that are competitive to Global Xpress by leveraging Epic. However it’s not in itself a competitive response to Global Xpress – it’s an evolution of our technology, the embracing of High Throughput Satellite by Intelsat, and is really a route for us to grow with our customers in the regions we serve today. We worked closely with our customers to develop this platform.

“There are obviously a lot of similarities because we are in the same sectors as Inmarsat. We see the same drivers, we see the same opportunities, we have access to the same space technology as they do, and we are also continually in an investment phase in terms of replenishing our fleet.”

You are certainly both on the same trend in terms of putting up High Throughput Satellite (HTS) services?

“Yes, HTS is what everyone is talking about but we’ve come at it in very different ways. In L-band, and typically for Inmarsat, it’s been about looking into the future, and creating an offering that you think is going to have wide appeal. The FSS operator’s approach is more around what demand do I see from my customers today, where are my customers heading, and how can I continue to grow with them?

“The deals that we’ve announced on EPIC – MTN for cruise and Harris CapRock for oil and gas – are both based on meeting the customer’s growing future requirements with the Epic network. Outside of maritime and offshore, we have announced Panasonic Avionics as a leading aviation service provider for whom Epic technology will allow them to reach the next level with their customers.

“Having those customers leading from the front really solidified our case for going ahead with this technology.  Subsequently it’s become a question of how do we make the capability enabled by Epic more accessible in the marketplace, and how do we drive that capability to the maritime users who we think will benefit most from those new services.”

So you’re in a similar position to the old Inmarsat model if I can call it that, in that your partners act as DPs or ISPs, adding value to your signal?

“We feel we have always benefited from the richness and the diversity that the distributors of the Intelsat service provide to maritime users. Intelsat has traditionally been seen as a fixed satellite services operator where the value-add has been around teleports and our IntelsatOne terrestrial network and the value-added services that those distributors offer. Our model for Epic allows those integrators and distributors to carry on in that mode of working.

“We feel that it’s not our skill and our competence to define the specific services that a maritime end user should be buying. Similarly we won’t define the price points at which they should be sold. We’ve clearly got distributors that are far more expert in that, whether it’s Astrium Services, MTN, Harris CapRock, Globe Wireless or KVH, who are all experts in that domain, and whose business is absolutely built on differentiation.

“That’s the interesting bit for me and where the Inmarsat and the Intelsat paths are very divergent. There have been observations that with Global Xpress, the latitude and opportunity for a distributor is being squeezed since you’ve got retail prices being set by the wholesaler. You’ve also got a flattening of the distribution channel in that players who previously were second tier are now effectively direct to Inmarsat.

“On top of all that you’ve now got value-added solutions being provided by the satellite operator, so I think some people in the value chain will be asking ‘what’s left for me?’ If a distributor has a choice between selling one service which makes them a fixed margin, with another that gives them more flexibility over the contribution it makes, then there’s no surprise which one they will push.”

Intelsat has agreements in the very high end segments where there is big demand from energy and offshore cruiseships – but can you scale it down in effect, for mainstream merchant shipping?

“Those are customers and segments that we are very strong in today, and ones in which we see further growth. At the same time we’re not ignoring the market opportunity that exists in commercial shipping, because that is largely a new market for Ku-band VSAT. There’s obviously been some well publicised incursions into that, such as the Maersk, Ericsson/Globecomm deal.

“We do see more opportunity coming in that area. So I don’t think there is this natural segmentation in the market which will keep us apart, I think just as Inmarsat is keen to make it clear that they’re coming after the VSAT market, then Ku-band VSAT has been after the Inmarsat market for a long time.”

GX projections keep Inmarsat bandwagon rolling along

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Last week’s Inmarsat Investor Day has received reasonably positive reviews from analysts and observers, with the headlines taken by the deal with CISCO to build the ‘enablement platform’ for GX (which may or may not include shopping via satellite) and the group’s optimistic take on Global Xpress as the platform of choice for future mobile satellite communications.

It could afford to be optimistic given that the first announcement of the day was that third quarter trading was in line with 2Q and that maritime had provided strong growth despite the impact of the price rises earlier this year and the downturn in the market.

Adding another 2,100 FleetBroadband units in the third quarter was above the net additions for previous quarters said ceo Rupert Pearce and he added that maritime revenues were helped by traction from XpressLink, its Ku-band VSAT ‘bridge’ which was developing a ‘positive grip’ on the sector.

Inmarsat chose some optimistic forecasts too of VSAT growth on which to base its prediction that the wholesale market for VSAT bandwidth was worth about $1.9bn in 2010 and is growing at 7% per year. By 2019, its fifth year of service, GX would be generating at least $500m in wholesale revenues, according to Inmarsat GX MD Leo Mondale.

There was plenty of opportunity to talk down the opposition too – especially as they had in many places, got their retaliation in first. Mondale described Ku-band VSAT as ‘a patchwork of differing quality beams’, with peak performance that would be lower than GX and only available in a few locations.

Yes, new capacity was coming onstream but this was augmenting the patchwork rather than providing global seamless coverage designed for mobility that GX promised. If others described XpressLink as an inelegant solution then Ku VSAT was an even more ugly duckling with as many as 25 ground stations to GX’s three.

Intelsat EPIC got a similar kicking, not least for the vague assertions of what satellites would be launched and when but for its patchy ability to cover the north Atlantic, overlaying Ka on a Ku system that was ‘cobbled together’ over a period of years.

Mondale asserted that adaptive coding and modulation would take care of any Ka rain fade issues and there would be a ‘negligible difference’ between the two – availability would be more of a question for EPIC to answer.

The decider, Mondale said, was that 20% of cumulative GX plan revenues to 2019 were already booked in, which gives Inmarsat a solid footing to proceed. This includes XpressLink customers with a free upgrade to GX of course but it can’t hurt that its biggest customer, the US military is abandoning Ku band for Ka-band.

It does however, reinforce the assertion made by Marlink recently that it might be hard for mainstream maritime users to get on these high capacity beams so in reality, GX throughput for maritime users would be better than L-Band but not the leap that they might be expecting.

Some analysts thought that $500m GX revenue estimate an ambitious number – how much would Inmarsat take away from competitors and how much would come from growing the market in general, they wondered. Mondale naturally, went for growth, pointing out that a continuation of the recent compound annual growth rate in VSAT would take the total market’s value closer to $3.5bn by 2019.

That seems to sum up the ‘think big-build-big’ attitude inside 99 City Road at present. And it runs from the very biggest picture – the satellites themselves – down to Inmarsat’s relationships with the DPs and the end users. In an upcoming post we’ll look at what the messages of the Investor Day mean for partners and customers too but meantime, one analyst wondered, how soon would GX start eating FB revenues?

Mondale said the company was ‘agnostic’ as to what element of cannibalisation took place between GX and FB but even though it would be a small component ‘at the price for Ka services, migration is an opportunity not a threat – it’s upside not downside.’

Sounds simple, but if that growth prediction at the top of the page comes at a cost of much higher user charges, then the pressure really is on Inmarsat’s maritime business to deliver and keep delivering.

Marlink: Inmarsat Global Xpress part of the mix – but not at any price

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As DigitalShip’s Rob O’Dwyer pointed out at the Marlink-Astrium SMM press conference, without Marlink, Inmarsat is going to struggle to sell its Global Xpress VSAT offering.

But as O’Dwyer also noted, Marlink needs Inmarsat too, despite its market penetration – it claims that one in every two ships sailing uses data provided via Vizada or Marlink, the former now rebranded as Astrium.

It’s also because Marlink has the power to effectively take business away from Global Xpress if the two fail to strike an agreement, given its portfolio approach of competing VSAT and L-band offers.

As Marlink ceo Tore Morten Olsen pointed out, as the market gets more complicated, its offer is about simplifying choice for users. If that means Inmarsat, Intelsat, Iridium or another, they can tailor the pipe and the applications that act as added value.

And in addition to new capacity booked on Intelsat’s Ku-band mobility infrastructure and an entry-level VSAT service, Marlink has some nice add-ons. These range from the relatively common VSAT/L-band auto-switching to nifty iPhone and iPad user management control interfaces and integration of Microsoft Outlook into its SkyFile email package, with 500 merchant vessels slated for upgrade.

Its WaveCall VSAT services are also being sold on a MSS-like basis, with access and bandwidth bundles priced to allow users to dip their toes in the water and ‘open up to all you can eat’ any time they are ready.

Astrium said it had already sold more than 200 such bundles – double its projected target. As Morten Olsen quipped, “the industry has realised it is raining and it will continue to rain for a while. Owners need to keep going until the rain goes away. Business decisions are being made on operational efficiency gains”. For once this wasn’t about rain fade.

All good stuff but what about the bigger picture? Morten Olsen pointedly said the company would ‘maintain our loyalty to both customers and partners’ a swipe at Inmarsat’s new policy of ‘you’re either with us or against us’.

Even so, he revealed that Astrium was negotiating with Inmarsat to become a GX distribution partner, in line with its ‘multi-technology’ approach. To some extent he said this was less about Ka or Ku band, but rather about being able to offer the best and broadest range of services.

Negotiations are ongoing and Marlink’s aim he said was to ‘be able to build a sustainable business model for GX and a future for Astrium and our partners. A major part of this business is with our distribution channel so we are not just negotiating for Astrium in this agreement”.

And he added that the negotiations were unlikely to succeed solely on the basis of price. It was ‘critical’ he said that any agreement was based on services. If Inmarsat continued to insist that maritime was a one market, one service sector, then it failed to understand the ecosystem that supports it. Marlink’s pitch would be for value-adds and that the technology connection to the ‘solution layer’ should be independent of the connectivity provided. The era of open source satcoms is upon us.

And in case that seemed too neutral, there was a final swipe at the announcement the day previously of Inmarsat’s unlimited FleetBroadband package – an offer he said was most likely dreamt up to counter its WaveCall offer.

“We have lot of experience with the one customer [Maersk] which has unlimited FleetBroadband so we have a good idea of how many vessels of that type can connect to the network before it cracks up. That’s the next question to ask Inmarsat.”