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O3b Expects Oil and Gas Market Success Before Launch

By | October 15, 2012

      [Satellite News 10-15012] O3b Networks is set to unveil its new O3bEnergy solution at Oilcomm this year. The company will see its first satellites launched next year and is now working full steam ahead to get customers and it could have a strong dealflow in the run-up to launch.

         O3b CCO John Finney said his company is targeting the likes of BP with O3bEnergy. “We will launch our product for the oil and gas sector at OilComm in November and expect to sign an O3b Energy customer before the launch of our first satellites,” Finney told Satellite News. “We are targeting 100 deep-water rigs worldwide in approximately 10 offshore locations. For an oil company like BP, we think we have a compelling offer which combines high throughput together with low latency supporting off-shore applications that will drive efficiency and save the operator money.”
         At an analysts’ day at Rome last week, the company spelled out its plans for the future and how it hopes to win business going forward. Greg Wyler, the founder of O3b, admitted initially the plans were not for the company to be present in such markets such as the cruise ship market and even the oil and gas market, but deals here will help the company in terms of its main vision ‘the other three billion people connected’, which is the very mantra of O3b.
         With the satellite manufacturing side of the business on track, the question now is persuading customers in the maritime, oil and gas, telco and government sectors to take capacity on these new satellites. O3b CEO Steve Collar told analysts that O3b would be able to offer more attractive prices to customers as it is able to sell more capacity on the system.
         “We have a uniquely scalable system. If you launch a geostationary satellite you are investing in a fixed asset at a fixed cost base for 15 years. When we launch additional satellites into the O3b fleet we bring down the effective cost per Mbps across the entire system. The four new satellites ordered last year would increase our capacity by 80 percent but only increase our cost by about 25 percent. Our customers will benefit because we will pass on savings to them in the form of lower and lower prices as we launch more satellites. It is a virtuous circle. Customers in the terrestrial world have come to expect better pricing over time but it is something that satellites have struggled to do. We will change that.”
      Collar also admitted that the company was still investing in ground infrastructure. “We will have built eight teleports by the time of service launch with another two in the following six months.”
         One of the big issues facing O3b has been the cost of the terminals. Collar explained that O3b Cell terminals are about $40K a piece including the antennas, BUCs and the modem. “An equivalent geostationary cost is around $30K but for a less capable system,” he said. “We are a third more expensive but with significant throughput and cost per Mbps advantage.”
      While the company is targeting more business in the oil and gas sector and looking to target companies such as BP, Shell and Petrobras for its services, the core business will remain selling to telcos. It hopes to gain more customers like Telecom Cook Islands, which is now embracing satellite as a way to provide connectivity to the 15,000 or so residents that live on the Cook Islands over 2.2 million square kilometers. The Cook Islands came up with a sustainable development plan between the years of 2011 and 2015.
         Telecom Cook Islands CEO Jules Maher admitted that connectivity has become important across the board. With tourism a main economic driver, as well as looking to improve education and health services, the telco realised it needed to improve current speeds of 256 Kbps to 3 Mbps. Jules Maher, CEO, Telecom Cook Islands said the operator investigated the possibility of fiber in 2010, but has since come around to the efficiencies of satellite, and has gone all in with O3b.

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