Maritime Becoming Prime Time For Satellite Companies

With demands for bandwidth set to increase, satellite players are vying to supply the crowded maritime sector with more effective communications solutions, as shipping operators look to satellite to boost their performance.

Maritime is one of the most exciting sectors for satellite companies, as shipping companies look to beef up their communications and entertainment capabilities. Improved connectivity is becoming a vital tool for improving overall efficiency and reducing costs as well as retaining an experienced crew, important considerations for shipping operators during tough economic times.

It is clear the operators want more bandwidth, says Christian Bergan, director, verticals marketing — maritime, for iDirect. “From a trending perspective, we see owners deploying new applications, and bandwidth consumption is sharply on the rise. In fact, several of the operators are reporting bandwidth consumption of more than 40 Gb per month. That is quite significant compared to what it was a few years ago, when it was only 10 to 20 Gb per month, so there have been major changes in bandwidth consumption. When we look at the maritime market three to four years ago, VSAT played a major role in specific segments such as cruise line or the oil and gas tanker market. There was a lot of early interest from these segments because they had the bandwidth requirements necessary for broadband connectivity. In recent years we have seen VSAT services gaining popularity in areas like the shipping industry, because the increase in applications being used on board has increased their requirements and they can’t cost-effectively meet those needs through traditional satellite services. There is a lot of new interest from areas where VSAT has not been traditionally installed, and we expect that trend to continue in the short- to mid-term.”

James Collett, director of maritime services at Inmarsat says his company is seeing an increasing demand for greater data volumes, which calls for more bandwidth and higher throughput to and from ships. “The desire to have a ship as a node on the network of a shipping company is absolutely key. This demand for more data applications will lead to more growth. What is clear is that many of these shipping companies have strong business cases which center around spending more on communications and connectivity in order to bring a return in other areas. For example, fuel efficiency, routing and general ship operations are all areas where users can bring improvements to their bottom line through increase use of satcoms, so everyone in the data market will want to participate fully in that growth.”

In terms of some of the technology trends, Chris Baugh, CEO of NSR, says, “Smaller dishes with higher throughput (is one trend). The ‘hot dish’ now appears to be 30 centimeters, half of last year’s ‘hot dish’ of 60 centimeters. In the maritime market in general, everything is going IP… engine monitoring, internal navigation systems etc. On-board computer networks are expanding to include Wi-Fi access points for personal laptops on some of the higher-end customers. Smaller dishes, fixed prices and regulatory changes mean smaller vessel operators now are looking for satellite services,” he says.

 

New Applications

As more bandwidth becomes available, the more shipping companies can be creative in how they use this bandwidth. “What you have seen over the last couple of years, particularly with the financial crisis, is that there is a much higher interest from ship owners in services that help them improve their operational costs,” says Tore Morten Olsen, CEO of Marlink. “That is things like remote diagnostics on engines, administrative voice applications, etc. There are several applications both developed and under development which can help them drive the operational costs down.”

As well as providing better services for crew, this new bandwidth can bring about other changes. Erik Ceuppens, CEO, Vizada EMEA & Asia, says the move towards IP services is a major trend among shipping operators. “You are seeing this trend towards converging maritime broadband, but certainly, if not more important than broadband, is this trend towards always-on IP services. It is this always-on functionality that will drive IP services and applications. If you look at the levels of the IP sophistication onboard vessels, it is still pretty low today. The connectivity services have not been there, so the move towards always-on IP service will encourage more advanced applications on board vessels. Broadband usage is still relatively low today in the maritime industry. Clearly, there is much potential here for broadband, which will be adopted further thanks to lower equipment prices and low airtime costs,” he says.

Julian Crudge, head of datacomms at Telenor Satellite Broadcasting (TSB), says that with the existing restrictions of capacity, there is pent-up demand for more connectivity. “When we do get more capacity, such as Ka-band, this will be taken up. Services have been changing from old SCPC services over to shared access platforms, which gives slightly more competitive pricing to ship owners,” he says.

Nick Dukakis, vice president of maritime and offshore, SpeedCast, says the oil and gas sector also remains a strong market for VSATs. “We have seen strong growth across all maritime segments, particularly ones related to offshore oil and gas. Offshore support vessels; floating production, storage and offloading vessels; platforms and rigs are all strong users of VSAT. In addition oil, chemical and [liquefied natural gas] tankers are also a strong segment. We see the trend of very strong growth for VSAT over the next five years across all verticals, including commercial shipping and using a combination of technologies based on Ku-, C- and L-bands. There will be more bandwidth hungry applications being used on-board and more integration between vessels and land-based offices. In addition to crew welfare, we see additional drivers in the market such as administrative, operational and regulatory ones pushing the need for more bandwidth and real-time fixed fee operations,” he says.

 

Crew Welfare

Crew welfare has become a huge issue for shipping operators, as crew members continue to demand the same level of communications they have access to on land. Crews are also getting younger and more IT and broadband hungry. “As the global economy improves and competition intensifies, crew recruitment and retention are becoming more critical to companies’ operations and profits,” Dukakis says.

Iridium has seen some interesting trends in terms of consumer behavior, says Dan Mercer, general manager and vice president for Europe, Middle East, Africa and Russia for Iridium. “We did an experiment with a very large, well-known fleet to see if there was a better way in providing the service to the crew. It is about crew retention as well as the welfare of the crew on board. What we have found is that people don’t jump on the Internet and look at 25 different websites. Typically, they are only looking at three or four websites — Facebook, e-banking, sports or a news page. That was quite a trend that allowed us to help focus our partners on optimizing the user experience over 128 Kbps or 64 Kbps at a fair price. That is the type of service we are seeing being rolled out,” he says. “We are see great demand for crew e-mail, crew Internet and instant messaging. Then it is a question of how you deliver the services. The shipping companies want to retain these guys, but they don’t won’t the administrative overhead to find out who has paid for what.”

 

Ka-Band and Other Next-Generation Platforms

The development of Ka-band services is generating excitement throughout the sector. “There is an increasing proportion of the market which is looking for a genuine broadband experience,” Collett says. “We have seen that through the momentum that maritime VSAT services have gained. We are very keen to be part of that growth. We see a significant number of our current customers who, by the time we bring Global Xpress to market, will be very attracted to the maritime broadband offerings that we will then have in the market. We also see opportunities with customers that have been using maritime VSATs now being open to us.”

“With Ka-band coming, this may improve the value proposition to ship owners,” Olsen says. “They can have smaller antennas on board. It potentially provides higher data throughput opportunities which could then be utilized for services such as VoD and other higher bandwidth consuming applications which are not present or economically feasible in the market today.”

Jan Hetland, director, datacomms systems, TSB, says, “I think the next paradigm shift, will be when large amounts of Ka-band become available. I think Ka-band will bring some shifts in the maritime VSAT industry. When you transition to Ka-band, you won’t have the situation you have in the Ku-band market today where just anyone can put together a hub, as long as you have the room or the permit to transmit from a 2.4-meter or slightly larger antenna. In the future, given the nature of Ka-band satellites, there will be a smaller number of teleports per satellite, as all the traffic needs to come down a tier one gateway. That means the satellite owner and operator will take a larger part of the value chain than they do today, where the FSS operators are just selling wholesale capacity to their customers.”

Ceuppens says there will be a great flexibility in the market as well, with other technologies helping to expand service offerings in the maritime market. “Technologies such as Ku-band will continue to progress. Over the next few years, we will see different broadband technologies competing in the market, which will bring equipment and airtime prices further down,” he says.

Iridium’s Next constellation is scheduled to operational by 2017, and will allow the operator to expand its maritime offerings, Mercer says. “Our new service on Iridium Next on L-band will be up to 1.5 Mbps. When you compare that to today, that is the top end of the VSAT services and some of the Ka-band services that are being talked about. For us, that encompasses a huge amount of the requirements of the maritime sector. Our customer base does not want to necessarily replace equipment. What you are going to see from our perspective is a migration of new customers who want high-speed data services as well as all the existing customers who want to stay as they are,” he says.

Dukakis believes the market will see a space for different solutions working in different bandwidth. “I think solutions on Ka-, Ku-, C- and L-band will co-exist. Ka-band is obviously the next big question mark. How will it be priced commercially, for which subsegments will it be interesting to, and how will it perform technically? These are all important questions for the industry and ones we would also like to have answers to.”

 

Shipping Operator Perspective

Maersk Line, one of the leading shipping companies around the globe, has an initiative, Project Gangway, that involves the deployment of Inmarsat’s FleetBroadband service to 220 container vessels. “Project Gangway is part of our division’s business strategy and a clever way of investing to gain cost and business advantages, for example, in fuel consumption,” says Soren Andersen, head of vessel management, A.P. Moller-Maersk, container division. “One of the objectives behind putting into place many of the recommendations of the company’s seafarers was to improve communication which would, in turn, result in more efficient fuel and energy consumption and, therefore, tangible business efficiencies. Quicker communication to the captain to adjust and reduce speed when coming into a specific port because the berth is not ready will naturally provide fuel savings. Equally, if we need to improve delivery times, we can communicate the need to increase speed.”

The company should be able to realize significant costs savings as a result. “The cost effective and reliable communications provided by Marlink, Vizada and Inmarsat will enable Maersk Line to deliver significant operational efficiencies, resulting in fuel savings and emission reductions that will help Maersk Line reach our ambitious environmental targets. Further, it has been of utmost importance to Maersk Line that the solution has focus on crew welfare by offering facilities for our crews to stay in touch with family and friends 24/7,” says Niels Bruus, director, energy efficiency, Maersk Line.

 

Impact of Economic Slowdown

While most acknowledge the recession slowed down the pace of expected growth in the maritime market, it seems business is moving forward. “The market is picking up again now. I think the downturn has passed. I think we are seeing new demand from new ships and new shipping lines as well as increased connectivity. Even though there has been a slower market over the last couple of years, it has still been growing year on year,” says Crudge.

Dukakis says only some sectors of the market really suffered due to the economy. “I think for some segments, such as commercial shipping, container vessels and bulkers, there were delays in making decisions for VSAT. This is not surprising during the economic downturn, when many of these vessels were laid up. The positive news is that the container vessel sector is coming back, and they are beginning to put VSATs on board and do various trials. We have a number of very large container companies that are doing VSAT trials,” he says. “I think over the last three years certain verticals, such as the oil and gas and the tanker side, are going full steam ahead on the VSAT side. On the commercial side, we are seeing more operators put VSATs on board. I think it has been a gradual education and awareness.”

Ceuppens says, “I don’t think the economic crisis has fundamentally changed the usage of maritime broadband, but it has probably slowed them down in two aspects. Firstly, it has delayed a bit the uptake of more expensive capital intensive systems. At the same time, we have nevertheless seen a dramatic uptake of broadband. Ship owners and administrators have clearly adopted broadband technology. Some of these companies have chosen it to reduce costs, but they have not yet really fully adapted or changed their usage patterns. This means they are not taking full advantage of service levels available with broadband technology. There has been a slower take-up of the more expensive systems because of the climate, and probably the crisis has slowed down the usage patterns of customers.”

Baugh says shipping companies reassessed their communications needs due to the recession. “I think the downturn has forced the maritime sector to re-analyze all of their cost-benefit analyses. The big guys have expanded their deployments because they realize the value proposition of integrating satellite services into their day-to-day operations. They also streamlined regulatory filings, reduced in-port maintenance times, lower crew churn, etc. For the smaller operators, already marginally profitable, most have frozen their acquisitions, but 2011 looks to have some buying activity resume as economic conditions improve. Changes in regulation will also mean that some fleets will need to purchase satellite-based offerings simply to continue operating… History shows that they will likely expanded their satellite usage down the road,” he says.

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