Steve Collar CEO, O3b Networks
O3b Networks is ramping up activity ahead of the launch of its first satellites next year. The company announced the launch of its new O3b Maritime service and is likely to announce a new oil and gas service, among others, in the next few months. With the launch of its first set of satellites now less than a year away, the company is increasing its activities as it looks to sell its services and solutions to different industry verticals. O3b Networks CEO, Steve Collar, talks about the challenges ahead.
VIA SATELLITE: What is the significance of the launch of O3b Maritime?
Collar: O3b Maritime is an important product for us and it comes on the back of the launch of O3b Trunk and O3bCell. Our four key verticals are trunking, cellular backhaul, enterprise (maritime and energy) and government. O3b Maritime is targeting the premium maritime markets of cruise operators and private super yachts as opposed to commercial shipping, or small vessels. There are a number of customers demanding bandwidth that they are not able to get today, and probably not able to get from any other maritime solution in the future. We are able to deliver up to 500 Mbps to an individual vessel — a unique proposition in the market that is best evidenced in our recently announced deal with Royal Caribbean.
VIA SATELLITE: Is maritime a small play for O3b?
Collar: The core business for O3b will remain a combination of trunking and mobile backhaul but we think we can successfully capture a reasonably significant share of this market. There is nobody else out there who can do what we can do. For customers that are looking to differentiate themselves and offer a high-end experience, we become the best solution. If you take the cruise industry, huge investment is made to provide guests the very best cruise experience possible — from food to excursions and from cabins to facilities and services — but until now it has not extended to include connectivity. This can turn a positive cruise experience into a negative one as, increasingly, we all expect to be connected everywhere as if we are at home or in the office.
VIA SATELLITE: As O3b approached its service launch date, how close is the company to signing some key commercial contracts?
Collar: We launched our O3bCell product recently, which highlights some core aspects of value that we can bring to mobile operators. For example, there is almost no data deployed over satellite today so the satellite backhaul that exists is carrying almost exclusively voice. The primary reason is that it is not affordable to deploy 3G or 4G data services over traditional geostationary satellites. O3b allows mobile operators to deploy voice and data affordably over satellite for the first time and at the same time provides meaningful performance benefits. Low latency is a key differentiator, which audibly improves voice quality and avoids the TCP slow start effect that limits the data rates achievable over existing satellite solutions to a few hundred kilobits per second. O3bCell offers the best performance at the best price.
VIA SATELLITE: What is a realistic timeframe to sign these deals for O3bCell?
Collar: We are engaged with a number of the mobile operators but these are customers with long engagement cycles. Any network architecture for mobile operators is going to take a little bit of time. I am optimistic that we will sign a couple of major telcos, in addition to our existing frame agreement with Etisalat, before launch. By way of example, here in Asia we have just announced a deal with Amrtur from Brunei, which has a strategic partnership with Datastrean Technology (DST), the leading telco in Brunei. We are seeing real resonance of O3bCell value proposition with a number of operators across Asia and Latin America.
VIA SATELLITE: In context of other markets such as Latin America and Africa, how would you rate the Asia opportunity for O3b?
Collar: The opportunity for us in Asia is significant. We see huge demand in countries such as Indonesia, which is a great target market for us given that a significant amount of traffic is carried over satellite today. The fundamentals are strong; you have some pretty tough geography, a very volcanic region, which means laying fiber on the seabed is challenging, coupled with huge growth in demand with the economy developing strongly. We are also looking at places like Vietnam, Cambodia, Laos and Myanmar as they begin to open up. There is a lot of activity in Asia and we expect it to be a significant region for us.
As a global operator, we see the various regions in the world developing at a different pace. If you look at O3bCell, I would say that the primary focus for now is Latin America and Asia where 3G rollout is accelerating, and less so in Africa. Trunk is different and we have seen the Amazon region, Colombia and parts of Africa continue to demand services. Parts of Africa are still in fiber shock but we see that starting to change.
VIA SATELLITE: Are you planning to introduce additional services before launch?
Collar: We will launch a dedicated product for the oil and gas market, which we are working on at the moment. We think we have a strong value proposition for this market. A good example is in the area of seismic exploration, leveraging our maritime developments but in the energy sector. It is about getting huge amounts of data from the exploration vessels and back to headquarters for processing. Today, it is completed using a range of methods including ferrying tapes on helicopters. O3b can offer a better solution. Another focus is government solutions where our combination of high throughput, low latency and the flexible pointing and maneuverability of our beams provides a pretty interesting combination.
VIA SATELLITE: Will you launch any by IBC?
Collar: Yes, I expect us to have all of our products launched by September.
VIA SATELLITE: Do you have any further capital expenditure plans before launch?
Collar: The infrastructure investments are pretty much in place. Our satellites are most of the way through construction and the teleport network is being rolled out. The focus now is very much on customers.
VIA SATELLITE: Where would you like to have O3b positioned when the first satellites are launched?
Collar: Today, we have somewhere between a third and half of our capacity already committed. We have a backlog of between $500 million and $600 million. I think by the time we launch we will have a backlog of more than $1 billion, and somewhere between half and two thirds of our capacity committed. We will be building the momentum between now and the launch date. We have some good irons in the fire in terms of customer engagements and a system that is unique. O3b offers performance that no one else can match. We deliver fiber quality bandwidth over satellite and we are making sure that we are providing those services to customers who value these benefits.
VIA SATELLITE: Has the landscape changed for O3b in the sense there are more companies competing in your space?
Collar: We have not seen that changed meaningfully. It is true that a number of satellite operators are targeting some of those same verticals, but with different solutions. We feel that the unique elements of our architecture allow us to offer a great option to our customers.
VIA SATELLITE: What are your views on “all electric” satellites and the impact this could have on the satellite industry?
Collar: I think it is a really innovative approach in an industry that struggles to innovate. In space, customers are looking for reliability and this encourages the use of the same components that have always been used, somewhat putting a dampener on innovation. All electric satellites put together the same basic building blocks in an intelligent way much like we are doing at O3b. Satellite operators have been successively squeezed during the last five to 10 years and there is a need to drive down the cost of services delivered to customers, while the cost of satellite launch vehicles has been going up. Anything that redresses the balance is welcome.