When the Connexion by Boeing service is mentioned, it likely brings up images of airline passengers using the satellite broadband service to surf the Internet during flight. Now Boeing is preparing to bring the service closer to the ground, as the service operator is just months away from expanding into the maritime market.
A maritime offering “has always been a part of Connexion’s plan because we really provide high-speed information services to mobile platforms,” said Sean Schwinn, director of Connexion’s maritime unit.
Connexion’s big splash into the maritime market can be traced back to 2004 when the company announced it was leasing capacity on SES Americom‘s AMC-23 satellite, boosting Connexion coverage over the Pacific Ocean and helping to create a truly global service. Boeing then performed maritime service trials in the northern part of the Atlantic Ocean with Teekay Shipping to validate that the technology could be used in a maritime setting. Teekay also is the first company to announce it will be a Connexion customer once the service goes live.
The Connexion maritime service will use the same satellite capacity used by airline customers, which includes leased capacity on 12 satellites in orbit and on the AMC-23 satellite (the launch of which was recently delayed by International Launch Services do to anomalies with the Proton launch vehicle).
But even with the globally recognized Boeing name attached to it, current competitors in the maritime market are not intimidated by Connexion’s entry.
“Connexion is only one of a number of players that are entering the maritime market,” Lawrence Paul, director of business development at Telenor Satellite Services, told Satellite News. “There have been a number of service providers that have entered in recent years and a number of satellite operators as well are moving into this business. It is going to create more competition in the market, but it also is validation that this a good market to be in, that it is a strong market and growing market as other people are focusing on it as well.”
One reason Paul is not necessarily intimidated by Connexion’s presence is the notion that in order to survive in the maritime market, a company is going to need a diverse set of product offerings. “You really need to have a broad and flexible portfolio of maritime services — L-band Inmarsat, low-end Iridium voice/data services, as well as the higher-end stabilized VSAT services — to be competitive,” he said. “Our portfolio has changed an awful lot in the maritime market in the past year and half-two years, but it is not a result of Boeing being on the scene. It is a result of what our customers are demanding of us.”
Schwinn spoke with Satellite News Editor Gregory Twachtman about how Connexion will fit into the maritime market and Boeing’s expectations for the service.
Satellite News: Why do you believe Connexion will be able to compete effectively in the maritime market?
Schwinn: We provide a level of service in terms of data rate and some unique services that are really unmatched at sea. Data rates to the vessel are up to 5 megabits per second and data rates from the vessel are up to 256 kilobits per second.
We are very affordable. We are offering a package of 2,000 minutes of data and 100 minutes of voice inclusive of TV and equipment for $2,800 per month. Candidly, that is more than what most commercial shipping operators are spending today, but we think its in an appealing zone for the more sophisticated shipping companies out there today and it provides a very large package of service. If you were trying to buy something comparable just in terms of minutes of access, it would cost you up towards $20,000 per month. So we are much more competitive.
Satellite News: What other services differentiates Connexion in the maritime market?
Schwinn: We provide services that are not available today, and we don’t know how anybody can offer them the way we do. For example, we offer television service. We will be picking the same four channels of TV that you can currently watch if you are flying on Singapore Airlines. Some other providers are bringing on some higher data rate services but they haven’t really been priced yet. They haven’t really firmed up their global coverage yet. But even when they do price them and potentially do launch other satellites to provide truly global coverage at higher data rates, I have not heard anybody else talking about providing a media service like our TV service, and that is a nice amenity for crew members onboard a vessel.
If you follow shipping, one of the big issues facing shipping companies is crew retention – attracting crew and retaining crew. So providing an amenity that makes the crew feel more connected and part of the world around them while at sea is, we think, an important differentiator.
Satellite News: What maritime markets will you target initially with Connexion?
Schwinn: The market space we see the earliest opportunity in maritime is the commercial shipping market, the ocean-transiting trade vessels — container ships, oil tankers, bulk cargo containers, car carriers — the kinds of vessels that carry the world’s trade around the world’s oceans.
Satellite News: Is there a play in the cruise line market for Connexion?
Schwinn: The cruise line market has different choices they can make. Cruise ships can easily accommodate a C-band terminal, and there are some pretty outstanding companies that provide quite good satellite communications to cruise ships today leveraging the C-band infrastructure. If you have room for the antenna, you can get cost-effective satellite communications at a pretty high data rate and provide quite a bit of the value proposition Connexion provides in the commercial shipping market. Over time, that is the market I am sure we are going to address, but right now it is not where we see our greatest opportunity initially.
Satellite News: Is there a play for Connexion in the government services market?
Schwinn: We are not planning on a unique government service. But just as we serve government executive fleets today in the aeronautical business, we are very interested in and quite actively pursuing government users of commercial maritime service.
Just recently, there was an industry announcement from the Deepwater team. It is a major rethink of the U.S. Coast Guard‘s infrastructure and the Coast Guard’s desires and intents to get a new satcom system to phase out the Inmarsat’s Sat-Bs and come up with a system that enables far greater data rate communications and global coverage. When we read the announcement we saw ourselves in the mirror, and we going after that pretty heavy as well.
Satellite News: Who do you consider to be the chief competition in the market?
Schwinn: What we are competing with from the Inmarsat side is the Fleet 64 and 128 services. For the reasons noted above, I feel pretty good [competing for] the more data-intensive Inmarsat user, and I think we are in the right part of their space. If you look at the recent financial results, you will see that the part of their business that is growing is maritime data at about 15 percent per anum. Most of that maritime market is seeing increasingly the value of IP-based communications.
We also see Iridium as competition. Iridium is an entirely different service offering. They offer a lower data rate service that is an appealing segment of the market that is able to get by with quite a bit less.
What we are hearing from the market is choice is good. Some customers will have a Connexion system and other services as well, particularly for crew calling. I think the Iridium solution is quite good. So there might be a bit of Iridium and Connexion all on a single vessel providing solutions as appropriate to different parts of the vessels needs.
Satellite News: Have you looked into a strategic partnership with Iridium to offer a voice and data package in a single bundled package?
Schwinn: The direct answer to that question is no. But we are in the process of building our sales channels and those sales channels represent us, they represent Iridium, they may well represent Inmarsat. So the customer is going to have that choice from sales agents in the field that will be able to put those types of solutions together.
Satellite News: How will the introduction of Inmarsat’s Broadband Global Area Network (BGAN) high speed data service affect Connexion?
Schwinn: BGAN is just now launching its transportable land-based services. We will be a year, perhaps two, ahead of a truly global maritime BGAN offering. We will be in service in January around all of the Northern Hemisphere with our service.
Satellite News: What market share are you looking to capture?
Schwinn: We see a market of between 30,000 and 40,000 vessels engaged in this kind of trade and we think we make a pretty compelling solution for a reasonable percentage of that number. We would be happy if we ended up with 10 to 20 percent of that market.
I think though, when you look at it throughout the long term, the user behavior will change. We will pick up some market share, but I believe that market will also grow as choices that provide low cost, highly reliable, high quality of service communications become increasingly available from us and from other providers. I think the market will itself grow in response to the arrival of those choices.
Satellite News: What do see as the significant challenge coming into the market?
Schwinn: Essentially, we need to prove ourselves. That probably is our greatest challenge. The industry relies upon satellite communications. They move 90 percent of the world’s trade. They do it with the tools they have and are quite accustomed to those tools. The burden is on us to prove that we have a highly available, highly reliable and highly supportable global service they can buy easily from providers of services they know and trust.
We have a great plan to put all that in place, but fundamentally the challenge that we face is to prove that it works, to prove that it goes where they want to go and they can get it fixed when they need to get it fixed should it need any attention and they can buy it where they want to buy it.
Satellite News: How important is having the Boeing name attached to your service?
Schwinn: I have asked that question directly to a lot of people around the world and what it says to [potential customers] is that this is a company of global scale with more than adequate technical resources to place on the job and a very competent challenger to the incumbents to provide a global communications service.
(Terrance Scott, Connexion by Boeing, 206/655-9350; Liz DeCastro, Iridium, 301/571-6257; Tom Surface, Telenor, 301/838-7805)
