Via Satellite

The Coming Wave of Maritime VSAT Growth
Presented By
Boat

The Coming Wave of
Maritime VSAT Growth

Presented By iDirect

VSAT technology is a major deal for the maritime industry. In a very short period of time, VSAT networks have pushed the maritime industry toward significant business modernization. Now with adoption moving full steam ahead, a new wave of technology and service innovation is set to make VSAT more affordable and easier to install, while delivering greater business value.

VSAT technology leader VT iDirect and nine of its maritime partners examine the opportunities ahead for one of the satellite industry’s most vibrant markets.

Not long ago, when a vessel would disembark from port, it would also unplug from the global communications network. Today, an increasing number stay connected with VSAT – providing their crew and passengers with high-speed Internet access and phone service, monitoring weather patterns to cut fuel costs, filing regulatory documents and ordering supplies from sea to save time in port and generating business intelligence through a growing range of software applications.

According to the newly published fourth edition of The comsys Maritime VSAT Report, more than 20,000 vessels are currently online. The addressable market that once stood around 10,000 vessels has surged to more than 51,000, which represents 71% of the total market and equates to significant growth ahead.

Recent market growth has been very healthy, despite the global economic downturn. Between 2012 and 2013, VSAT installations increased by 25%, while service revenues grew by 15%, now totaling $1.3 billion.

Comsys projects significant market growth in vessel adoption. By 2018, there will most likely be 44,242 vessels with VSAT, more than double comsys’ last recorded number in 2013. The largest segments will be commercial freight at 21,595 vessels, followed by yachts at 6,973 and fishing trawlers at 5,660.

Maritime VSAT Market Growth



Total market size: VSAT services across all segments will reach $1.8 billion by 2018. (Comsys)




As maritime operators are realizing the value of VSAT, they are demanding higher throughput services. And this is driving revenue growth from the install base. Comsys reports that VSAT data rates in some segments have skyrocketed from 10Mbps in 2007 to 100Mbps in 2013, largely driven by streaming video and bandwidth-intensive business applications.

Today, we’ve arrived at a point where VSAT technology is growing in value and is undergoing significant innovation to make it easier and more affordable to deploy.

High Throughput Satellite (HTS) operators are set to debut next-generation maritime service. Makers of maritime terminals and antenna systems are introducing more compact and powerful technology offerings that improve hardware economics. And application developers are rolling out new offerings that enable maritime operators to leverage VSAT to run safer, more intelligent and productive operations.

Comsys states that all this spells good news for the maritime industry. The firm’s latest report concludes that “the market has exploded with greater service and airtime innovations, technology developments, hardware price reductions, and more diversity and competitiveness amongst operators… There will be more choice and value than even before for maritime operators.”

In-Service HTS VSAT Units:
46% CAGR over next 10 years (NSR)
"There will be more
choice and value than
ever before for
maritime operators."

Service Provider Partners

What’s driving this growth is that VSAT has fundamentally shifted from a cost center to a cost saver. Historically, maritime companies have been hesitant to invest in onboard communication technology because they were unsure of the Return on Investment (ROI). Yet, many moved to VSAT out of sheer necessity.

For example, large shipping vessels have adopted VSAT to retain crew. Cruise ships have equipped their ocean liners with satellite to meet the growing demand for passenger connectivity. And oil tankers, as well as oil rig service vessels, are using VSAT to improve safety and operational intelligence.

What these maritime operators are discovering is that VSAT service, which typically represents only about 1% of a vessel’s operating costs, does in fact deliver a compelling ROI.

SERVICE PROVIDER PARTNERS

This has become apparent in terms of crew welfare. The need for crew to be connected back to land, especially during long voyages, is a fact of life that maritime operators cannot ignore. Comsys states that many operators experience turnover rates of 35%, and a common reason crew jump ship is to work on a vessel with better connectivity. Replacing crew takes a major toll on acquisition and training costs, which can also include screening, visa arrangement and immigration expenses.

While crew welfare and passenger connectivity were originally the main drivers for VSAT adoption, maritime operators see VSAT’s new value in supporting a wide range of business applications.

SERVICE PROVIDER PARTNERS

With VSAT connectivity, maritime operators can modernize their ship management systems. That is key to improving engine and systems maintenance, navigation, weather information and cargo tracking. Those that are leveraging VSAT in this way can better monitor vessel speeds and fuel consumption, realizing benefits in fuel savings, faster repair times, preventative maintenance and on-time navigation.

Maritime operators also want to shorten their time in ports, which have become increasingly busier and defined by tighter security requirements. With VSAT, vessels can report in advance, and order supplies and spares ahead of time – enabling them to unload and load more quickly and cost-effectively.

Boat

Floating Communities

Cruise is another segment that has relied on VSAT for many years and now demands continually higher data rates. It’s commonly stated that today vessels are floating communities, a dense concentration of thousands of people who want to stay connected at the same level they’ve come to expect on land.

Demand for higher throughput rates is primarily driven by passenger connectivity and services. As traffic demands surge and the number of devices per passenger per ship increases, cruise liners are upgrading their VSAT networks to support higher-speed Internet, onboard wireless service, entertainment and streaming video. Comsys projects that by 2018 the cruise market will be valued at $135 million in service revenues.

Boat

Rigged Up

One of the highest adopters of VSAT technology is the oil and gas segment. Downtime on an oil rig comes at an exorbitant cost, so the value proposition for VSAT has never been in question. And today, according to comsys, 100% of the world’s oil rigs are running VSAT networks.

This segment is experiencing new growth driven by skyrocketing throughput requirements to support heavy-bandwidth applications. This includes extensive use of live video for rig monitoring and remote collaboration, and the transfer of heavy data files, such as seismic data. It also extends to asset tracking, crew training, systems automation and cloud computing. By 2018, comsys projects that VSAT service revenues for oil rigs will top $285 million and reach $213 million for oil and gas maritime vessels, totaling $498 million.

Boat

A Big Catch

Fishing is another large market by vessel count. Comsys puts the addressable market at 7,381 with a 22.3% penetration rate. To date, fishing has been a tough market to crack as most fishing vessels remain within cellular coverage or simply are not away from land long enough to justify the investment in satellite.

Despite this fact, the market could grow based on new applications that bring commerce on board. For example, VSAT connectivity could drive online sales of catches and auctions. And VSAT could also be leveraged for regulatory reporting, vessel monitoring and telemedicine.

Boat

All Aboard

The maritime market is seeing two distinct forms of growth. Some segments are ready to adopt VSAT on a larger scale in response to improved economics and broader applications. And other segments require faster throughput levels for increasingly higher traffic networks.

Representing the former, comsys states that VSAT has made a breakthrough in the commercial shipping segment, which exceeds 100,000 vessels, according to the Lloyd's Register. About 10,000 of those vessels are currently using VSAT – mainly tankers and container ships. But now the larger market is opening. Some of the world’s largest container fleets and freight companies are deploying VSAT, having seen the value VSAT has delivered to early adopters.

Commercial shipping is the single largest growth opportunity for the satellite industry. Comsys projects that commercial freight service revenues will most likely reach $506 million by 2018, accounting for approximately one third of the total maritime market. Key applications for growth will be crew welfare, electronic charting and weather, remote IT services and electronic port and customs documentation. HTS services could drive significant adoption with better coverage, more affordable bandwidth and lower-cost equipment.

Satellite Operators Partners

The maritime VSAT industry is enjoying vibrant growth as its value proposition becomes increasingly attractive across broader market segments. There are now more than 150 service providers, and that has brought more competitive offerings and value-added services. The makers of VSAT antenna systems have grown from three major providers a few years ago to 15 today, and they are introducing more compact systems, making VSAT more affordable and easier to install.

The most significant development, however, is the introduction of HTS capacity. While adoption has surged, market growth has been threatened by a shortage of capacity over the world’s oceans and seas. This problem is linked to several other VSAT challenges – namely, costly service fees and the difficulty of providing integrated, global coverage.

Comsys states it this way: “The single largest issue that all VSAT operators have faced over the last 10 years has been the rising price and lack of availability of satellite capacity. Those operators specializing in maritime VSAT services are no different and, in some ways, have an even greater problem.”

Satellite operators like Inmarsat, Intelsat and Telenor are launching new HTS constellations targeted at the maritime sector, putting the capacity issue and its related challenges firmly in the past. For end users, HTS lowers the cost of capacity per MB, which is projected to make VSAT service more economical, along with higher data rates and more affordable, compact terminals and antennas.

Northern Sky Research (NSR) projects that nearly 30 Gbps of HTS capacity will come online from GEO and Non-GEO orbits across C-, Ku- and Ka-bands – with an average compound annual growth across both orbits and frequencies of 40%.

SATELLITE OPERATOR PARTNERS

NSR further sees an average 46% compound annual growth rate for HTS VSAT in-service units over the next 10 years. The number of units will soar to nearly 16,000 units by 2024, from around 100 units in 2014. And HTS VSAT revenues will jump from around $10 million in 2014 to more than $1.2 billion by 2024.

All new growth won’t come from HTS. NSR projects that HSS capacity will nearly double to 150 TPEs by 2024 compared to 80 TPEs of FSS capacity in 2014. FSS VSAT will account for $1.8 billion in retail revenues by 2024, which is up from $900 million in 2014.

New HTS programs offer a range of business models that service providers can leverage to pursue new opportunities. Inmarsat Global Xpress will provide seamless global coverage over Ka-band based on a managed service model. With GX, service providers can procure high-speed capacity over any maritime route, delivering a consistent network experience. And they can do so without needing to manage HTS ground infrastructure, which can be very complex and capital-intensive due to spot-beam architectures.

Intelsat has just announced its new IntelsatOne Flex network, a high-performance managed service that leverages Intelsat’s new Epic fleet of spot-beam satellites, along with its existing global Ku-band fleet. The Intelsat offering will allow service providers to manage the customization, contention and prioritization of sub networks and end-user terminals with tiered Committed Information Rate (CIR) plans.

Telenor is taking a regional approach with THOR 7, which will deliver a Ka-band HTS payload of up to nine Gbps of throughput across 25 spot beams over the North, Mediterranean and Baltic Seas.

Leadership

As the market advances, iDirect is playing a critical role along with its partners in leading the way. iDirect’s Evolution® TDMA platform has revolutionized maritime VSAT communication. Service providers can cost-effectively share bandwidth across multiple vessels, while prioritizing each ship’s dynamic requirements without compromising quality and reliability.

More Than 50%
of all VSAT Remotes deployed on vessels are made by iDirect


8 OF THE TOP-10 maritime service providers by revenue use iDirect

Today, more than 50% of all VSAT remotes deployed on vessels are made by iDirect. And 8 of the 10 largest maritime VSAT service providers by revenue rely on iDirect’s Evolution platform to run their networks. Evolution will continue to foster growth with further advancements in remote performance, bandwidth efficiencies and network scalability.

Now with the debut of enterprise HTS services, iDirect is innovating further through its new iDirect Velocity™ platform. iDirect Velocity is designed to enable the global delivery of high-performance capacity over spot-beam satellites. Inmarsat, Intelsat and Telenor are each taking their HTS solutions to market over iDirect Velocity – expanding iDirect’s technology leadership role to a new class of customers and a new generation of VSAT services.

iDirect Velocity builds on iDirect’s legacy of providing bandwidth-efficient, shared-network systems. With iDirect Velocity’s global bandwidth management technology, satellite operators can stitch together multiple spot beams as one unified bandwidth pool. This allows satellite operators the ability to offer managed Mega bits per second (Mbps) services to their customers across the total bandwidth pool rather than operating strictly within individual beams. Service providers can operate simultaneously on both Evolution and iDirect Velocity, managing a blended portfolio using dual-mode remotes.

Industry Progress

After nearly two decades of steady growth, VSAT connectivity is generating significant new value across the maritime industry through a range of business, operations, crew and passenger applications. At the same time, VSAT economics are improving from both a hardware and service perspective.

Having more connectivity onboard is a major development – especially when you consider that maritime companies transport nearly all goods produced around the world, advance global energy production, increase our food supply, provide a home away from home for crew and passengers, and ensure safe passage for millions.



PRESENTED BY

DESIGN, LAYOUT AND INTERACTIVE:
THE DIGITAL DEVELOPMENT TEAM @ AI

Copyright © 2015. Access Intelligence, LLC.