While Ka-band appears to be the darling of most industry conferences and op-eds, much still depends on the end user’s individual coverage needs and budget. The general industry observation and debate as this year comes to a close, particularly from a service provider perspective, is that the ubiquitous Ku-band coverage in the maritime sector remains solid despite the much anticipated launch of alternative bandwidths.
“Ship owners are increasingly drawn to VSAT as an always online option and it is a huge step for them to present such connectivity to their crew…owners are installing VSAT on their entire fleet as a default with FBB and Iridium as backup”
Speaking to SatellitePro ME in his Dubai-based office, Magne Remoy, Marlink’s Director Middle East and Africa, states, “With the continued research and investment that’s taken place over the recent few years, satellite operators have been successful in their attempt to massively extend their Ku-band coverage at sea. And this is the right step forward – with the increase in fibre on land – the maritime sector offers a huge growth opportunity for satellite operators. Also, technology has enabled automatic switching between the 17 spot beams that Marlink uses for global Ku-service.”
Like most pundits, Remoy describes the year 2012 as the year of consolidation. And interestingly his company, Marlink, was part of the story with its much-publicised acquisition by Astrium.
Key acquisitions in the maritime sector
“While we have maintained our identity for our end-users, the merger has allowed us, not just access to more robust finances, but the opportunity to explore a range of synergies.
From working with erstwhile Vizada (now part of Astrium Services) colleagues, to deploying the new capacity that has opened owing to the collaboration between Yahsat and Astrium – it has all been positive. Of course, when it comes to reselling in Africa or elsewhere, we are particular with our choice of agents because this agent will have access to a wider range of EADS products in future.”
In 2013, we will concentrate on off-the-shelf solutions that we can deploy quickly because customers need solutions to be deployed urgently and they do not perceive any obstacle if the price is correct
Creating ripples in an otherwise staid Satcom vertical was the acquisition of ShipEquip in April 2011 by Inmarsat. Overall, the industry enjoyed a growth in maritime data revenues in the first half of 2012, owing to the rise in price of the pay-as-you-go FleetBroadband (FBB) services and the elimination of volume discounts on its existing services. As stated in the press, Inmarsat reported an increase in takers for its FleetBroadband service with 4,305 terminals added in the first half. By the end of June 2012, Inmarsat reported that it had more than 30,000 active FBB terminals.
However, there were reasons for disquiet. Industry insiders will tell you that the maritime sector was faced with price rises in the middle of the year – up to 30% – and it unsettled the conservative maritime industry – with end-users now understandably wary of future fluctuations in price.
The story of synergies and consolidation is an evolving one as Inmarsat and Astrium have reportedly signed a distribution deal for the Global Xpress Ka-band service. The ‘MOU on a Strategic Distribution Partnership Agreement for Global Xpress’ is considered a logical step forward, by the trade press, considering that Astrium reportedly contributes to approximately 40% of Inmarsat’s maritime revenues.
Offering solutions ranging from FBB and Iridium to VSAT, Dubai-based Remoy has experienced growth with all the solutions, like the rest of the industry. While partly the growth was due to price increases by
Inmarsat, there have been factors specific to the maritime industry that has also driven demand.
Recessionary pressures in shipping
“It is a well known fact that the shipping industry is facing recessionary pressures. We read in the press that major operators such as Maersk are moving away from shipping to concentrate on oil, drilling rigs and ports operations that Maersk believes are more stable and will generate more profits.”
At the same time with a 16% market share in the container ships sector, the initiatives by Maersk such as the conveyer belt system between selected ports coupled with the slow steaming technique – has reduced margins and profitability for the entire sector. Caught between soaking up the extra capacity due to new vessel deliveries and reducing profits, end-users have posed a unique challenge for Satcom service providers such as Marlink and others. The providers have faced the task of equipping newbuilds without necessarily enjoying the luxury of higher margins.
VSAT is the future
A firm advocate for VSATs, Remoy believes that “ship owners are increasingly drawn to VSAT as an always online option and it is a huge step for them to present such connectivity to their crew for banking purposes and keeping in touch with their family, while at sea. Owners are installing VSAT on their entire fleet as a default with FBB and Iridium as backup. The Comsys VSAT report for 2012 stated there are 12,500 vessels globally with VSAT today and that number within the commercial sector is growing fast. ”
While security concerns have increased the need for connectivity, there is a flip side with countries such as India placing severe restrictions on the use of VSAT owing to threat perceptions. Remoy along with the other local solutions providers believe the situation can be remedied with the ESV-controller that is deployed on ships bound for the US, with other countries following suit with similar regulatory tools.
“Equipped with maps of the US coast, there is automatic switching to a different frequency as authorised by the US coastal authorities or an automatic switch off as the case may be. Many other countries are following the US lead.”
With a maritime industry sensitive about margins, Remoy’s biggest concern is surprisingly not price.
“My greatest concern is failing quality of service. An angry captain in the middle of the sea with equipment failure is not good. As a policy, we will never sell anything that is not 100% tested and validated. Of course, there is the price element and you have to maintain margins while keeping an eye on quality.”
Help to keep prices at a viable level for cost-sensitive customers has come from unexpected sources. Mirroring the consolidation among satellite operators and solutions providers, the antenna suppliers have demonstrated some dramatic corporate alignments with the acquisition of Thrane and Thrane by Cobham.
“We have a range of options,” says Remoy, “and this has only helped us keep our prices competitive for the end-user while not compromising on quality. The better quality of product not only brings stability in use but also a maintenance-free run for four to five years at a time, as long as the antenna gets a yearly control and mechanical parts are checked as default.”
Creating off-the-shelf solutions
Asked about any changes in approach in 2013, Remoy reveals one strategic shift reflective of the changing dynamics among end users who are increasingly savvy about the range of Satcom options available.
“In 2013, we will concentrate on off-the-shelf solutions that we can deploy quickly because customers need solutions to be deployed urgently and they do not perceive any obstacle if the price is correct. More significantly, they fear that crew will jump from one company to another, or from one ship to another within a fleet, depending on connectivity.”
There are obviously pros and cons to both Ku and Ka-band and challenges to face which will put Ka-band to the test. However modulators will no doubt help plus the fact that GX has been designed with fully integrated L-band back-up. The positive factor is that in good weather conditions, the end-user has the possibility of ample bandwidth with a smaller antenna
Legacy equipment is another challenge faced by solutions providers with Remoy saying that there are ships still using the Fleet 77 simply because they do not have time to dock the ship and install more updated equipment. Many companies today are finding that migration from older maritime services are having a negative impact on their rate of growth in maritime sector revenues.
Going forward, Remoy believes VSAT will be the future and the “default system used most of the time”. Interestingly, growth in the Inmarsat Solutions division was primarily driven by the new VSAT service revenues resulting from the acquisition of ShipEquip in April 2011.
The imminent launch of Global Xpress is deemed, across-the-board, as exciting and Remoy seconds the view. He adds, “There is a great deal of market anticipation surrounding this launch and the enhanced coverage it aims to offer. There are obviously pros and cons to both Ku and Ka-band and challenges to face which will put Ka-band to the test. However modulators will no doubt help plus the fact that GX has been designed with fully integrated L-band back-up. The positive factor is that in good weather conditions, the end-user has the possibility of ample bandwidth with a smaller antenna. End-users do not really have to wait and watch. They could sign a contract with a company such as Marlink and not see any need for change for the next three to five years. At the end of the day, it’s less about Ka or Ku-band, and far more about being able to offer the best and broadest range of services.”