Given the amount of effort going into the marketing of Inmarsat‘s forthcoming Broadband Global Area Network (BGAN) service, the high-speed data access service should be a significant component of the Mobile Satellite Services (MSS) market going forward and has some potential to alter the MSS landscape.

Leading Inmarsat resellers Xantic and Telenor Satellite Services have spent a significant amount of time in recent months preparing their sales forces to sell BGAN, and early feedback suggests that the service, which also integrates a voice component, will have a successful service launch for Inmarsat.

“What we have been experiencing over the past year is that there is quite a great demand already for BGAN,” Ernst Peter Hovinga, director of sales at Xantic, told Satellite News. “I would say that 80 percent of the conversations that the sales managers that work for me have had with [our distribution] partners have been about BGAN. Right now, a lot of partners are willing to invest in new programs, especially in areas [of the globe] that have been devastated, like Pakistan, Iraq and Afghanistan.”

With that much interest, Xantic believes a successful rollout of BGAN will depend making things easy for the service providers, and ultimately end users, to begin using the service, and Xantic has focused the training of its sales force to make the launch as smooth as possible.

“Everything we could have done already without actually having the real terminals, we have done,” Astrid van de Ven, Xantic’s BGAN product manager told Satellite News.

Likewise, Telenor is completing similar training of its sales staff on the features of the service, as well as completing its own testing.

“We have completed all of the internal testing and training,” Anders Kallerud, vice president of Telenor Satellite Services, told Satellite News. “We have been ready for the last couple of weeks. We are in the beta test phase of the services today. The test traffic is running very successfully.”

How Big Is The Market?

While having a prepared sales force will help get BGAN off the ground, the potential size of this market remains an unanswered question.

Hovinga noted that Inmarsat is targeting the activation of 30,000 terminals in 2006 but offered no specifics about how that number is expected to grow. Likewise, Kallerud declined to offer specific growth details from Telenor’s point of view, particularly because the service will be offered as part of a suite of IP-based communications services that Telenor offers.

Stratos Global Corp. noted in a Nov. 7 press release that it already has received orders from distribution partners for than 7,500 BGAN subscriber identity module cards that will be packaged with BGAN terminals and sold to customers once services are launched. Stratos officials were unavailable for comment as this issue was going to press.

Industry observers have not released specific growth projections for the service but are suggesting there will be limitations in the early years because BGAN primarily will be a niche application. “BGAN operates at a satisfactory data rate for industrial [niches such as] oil, gas and mineral exploration as well as for commercial airplanes or military forces,” Benoit Denis, satellite industry analyst for Frost & Sullivan said. “The terminal’s ease of use and design make the service attractive as an operation’s support equipment for users with little knowledge of satellite services.”

Uptake of BGAN services will be driven largely by government and military customers, including relief agencies, to address needs for warfighting, emergency communications and disaster preparedness, said Jose del Rosario, analyst with Northern Sky Research said. “Inmarsat’s revenues are 40 percent government/military and BGAN will likely be deployed first by this customer base that has high mobile communications requirements at relatively high service costs.”

Enterprise use of the service will follow after BGAN “has established a reliable track record on military customers,” del Rosario said.

Other Affected Markets

One area that BGAN could have an impact on is the current market for MSS voice services, such as those provided by Iridium and Thuraya. Because BGAN has a voice component, van de Ven is expecting that over the long term Xantic will be able to take market share away from Thuraya and Iridium Satellite LLC because end users will be able to use a single terminal to meet their remote voice and data needs.

Iridium is not concerned that it will lose market share to BGAN. “The profile of our target customer is not affected by the BGAN service,” said Greg Ewert, executive vice president of Iridium. “It comes down to portability versus mobility. Their unit is still a portable unit, which means it has to be set up and shut down. Even though it can do voice with an IP interconnect, which is a neat feature, it still is a stationary device that will have to be set someplace. The customer base that we have, the majority of them, are truly mobile. That can be from a military solider to a utility worker that one minute he is in his vehicle and the next minute he is up a power line hundreds of feet in the air. He needs that small mobile device that we bring to the table.”

Ewert sees the introduction of BGAN as a future business opportunity for Iridium. “You have to take a page out of what Thuraya has done in their core territory of the Middle East and Africa, where we have seen them be very successful in bundling their regional BGAN service with their handsets so they offer their customers the best of both worlds,” Ewert said. “I also am encouraged by seeing us being able to sell [BGAN] alongside, or in conjunction with, our service. I have seen some of our service providers already planning on bundling our unit with a BGAN unit, which would be smart.”

–Gregory Twachtman

(Benoit Denis, Frost & Sullivan, +33 1 42 81 28 02; Liz DeCastro, Iridium, 301/571-6257; Jose del Rosario, Northern Sky Research, jdelrosario@northernskyresearch.com; Tom Surface, Telenor, 301/838-7805; Vera Swan, Xantic, +31 70 343 26 42)