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Insight.... The Times, They Are A Changin'... FAST!

by Claude Rousseau
Senior Analyst
NSR (Northern Sky Research)

When Bob Dylan sang the lyrics that comprise this article’s title back in 1964, he prophesized a future where “the slow one now, will later be fast”, a maxim in a different context today that could apply to the MSS industry. There are plans by almost all MSS operators to go faster and have more content delivered over their satellites at broadband speeds.

Inmarsat, the elder of MSS operators, last year launched their maritime Fleet and aeronautical Swift Broadband solutions, following quickly on the heels of a successful land-mobile BGAN release a year earlier. Inmarsat had, up to then, captured a sizeable market share with narrowband products using slower data speeds and was hoping to gain on its new product and turn its customers on to broadband.

At the end of 2007, BGAN counted for almost 20 percent of Inmarsat’s land-mobile broadband in-service units and a stunning 30 percent of revenues in the same category, after a slow and somewhat careful start from a cautious customer base. Traditional Inmarsat users seem to have adopted BGAN, and Inmarsat is adding approximately 800 new BGAN users every month, thus making BGAN the showcase for the company and giving added confidence that satellite broadband demand is here to stay.

Crossing the hundreds of Kbps barrier in download speeds has proven a smart move for Inmarsat, and many competitors are following suit. Thuraya had the most direct competition to Inmarsat already when BGAN was launched, with its notebook-size DSL unit capable of transmission speeds of up to 144 Kbps early in 2005; however, Thuraya’s offering met with less stellar results than BGAN due to its more restricted market coverage, a factor that will change this year as it now covers a good portion of Asia.

Like many products built for mobility and using satellite as the primary link, the variety of the end-user population is increasing, too, with certain markets more likely to take-up products at higher bandwidth speeds. Among the core target markets are homeland security, humanitarian aid and first responders, government agencies, the military, satellite news gathering (SNG), oil and gas exploration, forestry and utility companies, many of which are targets of ‘other’ competitors, namely the fixed satellite services operators.

These competitors operate C- and Ku-band transponders on GEO satellites and play a more prominent role in land-mobile, air, and ocean-going platforms than before. With increasing revenues from managed services and transponder leases, they offer a seamless service at much higher download speeds than L-band can enable. The price model (fixed monthly fee) and their ‘natural’ broadband capabilities have helped them pick up steam and step on the traditional MSS operators’ turf.

For all players, the overarching vision to increase numbers of units deployed is to provide users with a global mobile network, where one can roam from its base to any point on the planet, while moving. But the main difficulty with mobile satellite services for a traditional broadcast fixed satellite business is… mobility. Contrary to fixed users, the MSS market is more oriented for, and pushed by, on-demand services due to earlier capacity constraints and pay-per-use models. Why, then, pay for something you do not use constantly?

The FSS players know well that higher speeds are required for large data file transfers, video, and Internet browsing and such is the way to go in mobile markets. They have entered the fray with a business model based on a monthly fee for ‘all the data you can eat’, at a set download speed, as opposed to a per-minute pricing structure. The FSS-based mobile services also offer lower airtime prices to offset much larger equipment price (compared to L-band systems), which can be three to four times more in the maritime sector.

Last year saw FSS operator SES Global announce a maritime service targeted at cruise ships and merchant marine vessels, which has been the heart of Inmarsat’s revenue base in the sea-going vessel segment for years. And with more cruise ship owners wanting to broaden onboard communications services with GSM coverage and Internet cafés for passengers,

Intelsat Ltd. announced in June 2007 a C-band Network Broadband Global Maritime service that offers an integrated Automatic Beam Switching capability and a monitoring system product such that ships can manage remote sites from a single monitoring location.

Then, this year, Intelsat received a contract from Panasonic to dedicate transponders for the aeronautical market to add Internet connectivity and other high bandwidth communications applications to in-flight entertainment aircraft systems.

The same dynamic occurred in the land-mobile segment where SES and Intelsat were both called up by Ku-band phased-array antenna maker RaySat Antenna Systems. The manufacturer obtained the go-ahead from the FCC to deploy up to 400 commercial-grade communications-on-the-move systems with speeds up to 14 Mbps after it landed a contract with Fox News to cover the start of the U.S. Presidential election with live mobile news reporting. There too, this deal makes headway for FSS operators into Inmarsat’s SNG customer base, which had trumpeted BGAN’s award for its use by CNN.

It is not just a question of speed but also cost of the service in the end that is one of the main differentiators. Since the pressure is on to lower airtime (even for BGAN less than two years after its launch), Inmarsat is not remaining idle and waiting for more customers to lower prices. One of the main BGAN distributors (Vizada) announced that it was doing just that and reduced prices in Latin America in late May 2008.

Time is also of the essence and, for many users, hurrying up to a location in 24 hours, getting past customs quickly, and setting up a communications link at more than 128 Kbps with one unit in the following minutes after arrival is critical. And there, the edge goes to smaller, lower power and weight units in L-band.

The future of the MSS market holds the promise of a dynamic environment which will see more products compete to provide users a full mobility experience, enhanced from the usual voice and data services. Already in preparation with Internet and video to the handheld, the plans of operators for the next ten years are taking stock of the various thrusts in media, data, voice and video convergence.

Some astounding jumps could take place in the coming years when narrowband operators literally skyrocket to broadband, with perhaps the most impressive one being Iridium, which is currently offering 2.4 Kbps data but plans to enable speeds on its NEXT constellation of up to 2 Mbps.

Either for business purposes in land-based solutions, or for entertainment on passengers aircraft, or crews in merchant marine ships, the times for broadband satellite solutions are ‘a changin’ faster than before.

About the Author
Mr. Rousseau has more than 15 years of experience in the space sector in various roles, including business and program management, consulting, research, administration and communications. Mr. Rousseau started his career in Ottawa, Canada as Special Assistant for space and science in the Office of the Minister of Industry, Science and Technology of Canada. He then joined the Canadian Space Agency in 1992 in Montreal, Canada where he was Assistant to the President, then successively Analyst for Industrial and Regional Development, Administrator for the RADARSAT program and Manager for Strategic Planning in the Long Term Space Plan Task Force.