By Jason Bates
VSAT systems have established themselves as a technology ideally suited to corporate networking, enabling a new tier of users to take advantage of the enhanced flexibility the platforms offer. But the industry has had to respond to a growing competitive threat from terrestrial services, which are expanding their offerings and geographic reach. VSAT operators that best respond to the changing marketplace will be able to not only survive but also prosper by taking advantage of new opportunities that will develop in this market.
VSATs numbers have been growing steadily, according to a February report from Frost & Sullivan. The industry is benefiting from traditional applications, such as corporate networks, point-of-sale and Internet access as well as from new applications and new target markets such as rural telephony, telemedicine and disaster recovery networks, according to "World VSAT Markets." But this growth appears to be limited according to industry executives, and the future for many traditional VSAT companies most likely lies with embracing terrestrial providers and forming hybrid network offerings, says Max Engel, satellite analyst with Frost & Sullivan. "It used to be that satellite was special, and the industry still has occasional problems in regard to thinking it is special and different and unique and alone in its ability to provide broad area networks," Engel says. "It's not special anymore. It has a certain set of very useful characteristics, and those characteristics make it a powerful tool where appropriate, but if you look at the old VSAT model, say what Hughes did five years ago, it was very much a matter of 'we will take care of everything'. You have VSATs, so you won't need to touch a terrestrial network. That's not really a good way to do things anymore. Terrestrial generally has more capacity and is cheaper in many applications. So why spend more to do what you can do cheaply and easily on the ground? There is a lot more of that on the ground than there used to be."
Many VSAT providers already have realized this reality and embrace it, says Jorge Vespoli, vice president of global sales and marketing for San Diego-based ViaSat Inc. "Why would you call [hybrid networks] the future? It's been happening for a while, especially in North America," he says. "We've been doing it on an ad-hoc basis. We don't like to brag about terrestrial solutions, because it goes against our philosophy, but we embrace it when it makes sense. In the market sectors that we focus on, we provide managed [virtual private networks] that use satellite as the core technology. Sometimes we use DSL or others terrestrial technology because there is no satellite or no direct view to a satellite, and we want to offer a fully integrated solution. If satellite is only 1 percent of the system and terrestrial is 99 percent, that's bad, but if it's the other way around, that's good. In our efforts, terrestrial is generally the exception, not the rule."
Embracing hybrid networks does not mean the end of VSATs, Engel says. It simply means that operators will have to adjust their expectations about their amount of involvement in the private networks. "Hybrid networks are incredibly powerful, because they let all the players work to their strong suit. Hybrid does not mean satellite loses. It means satellite occupies smaller niches in a broader firmament. It's not at all clear that this means less dollars. It might mean more dollars and more satellites, but we are moving toward a satellite role being more broadly spread and less a complete solution."