Flexibility: A New Paradigm in Maritime Satcom

Growth in onboard applications has added another layer of complexity to the maritime market, keeping maritime fleet IT departments busier than ever.  To make their life easier, the satellite industry has integrated flexibility in network services and operations, but is it enough to answer the growth in bandwidth demand?

Within the satcom industry, service providers, satellite operators, and hardware manufacturers are all undergoing a shift in how satellite communications networks are designed, and deployed.  At the forefront of that change, and most visible to end-users, is not only the migration from MSS to VSAT, but the introduction of HTS services. 

According to NSR’s Maritime Satcom Markets, 3^rd Edition over the next five years, over 4,000 HTS terminals will enter the market, generating almost $450 million in VSAT retail revenues for service providers.  Compared against FSS markets, in 2019 HTS will account for 15% of VSAT In-service Units, and 26% of VSAT retail revenues. 

That difference between In-service units and retail revenues in the VSAT market is not because ‘new technology is more expensive’, but that in the first five years, there will be higher-end customers migrating towards HTS offerings and consuming larger amounts of bandwidth, such as Royal Caribbean and O3b.  However, with new capacity coming online over the next five years and new technologies changing the hardware landscape, the following five years are poised for heavy growth in HTS-based offerings, but with a closer balance between HTS In-service Unit market share and HTS Retail Revenues.

As end-users focus more on deriving value from the applications and the ‘connected ship’, everything is on the table. From route optimization in merchant shipping to improving seismic data handling in the offshore sector to connecting the next wave of social media apps in the cruise industry, the focus has turned towards the applications.  It will be these applications and services that help push FSS (and HTS by association) into new markets and vessel profiles. 

Yet, the promise of HTS and the ‘connected ship’ has brought challenges into the Maritime VSAT markets.  Service providers need capacity where their customers are, which becomes an extremely complex equation with spot-beam-based HTS capacity.  The answer traditionally has been a closer relationship of the satellite operator into the day-to-day management of end-user bandwidth.  We have already seen those ecosystems develop in the consumer-broadband markets with ViaSat, Eutelsat, Hughes, etc.  Inmarsat with GX is another example for the mobility markets.  And, maybe even Intelsat is moving towards that model in their own way with the recent announcement of their IntelsatOne Flex service.

Although still remaining an offering for service providers to avoid some of the negative cost economics on their end (fewer hub equipment required, etc.), one has to ask the question: What if multiple high-end vessels are under the same spot-beam, but served by different service providers?  How much traditional FSS wide beam capacity will need to be dedicated by Intelsat to allow service providers to meet their SLAs with their customers (and who needs to own it)?  And, whose responsibility will it be to ensure any transition happens seamlessly to the end-user? In other words, is Intelsat’s new offering the closest approximation to a scalable ‘infrastructure-as-a-service’ that service providers can expect in the mobility space?  With the elasticity coming from FSS capacity, can we expect other satellite operators with hybrid FSS and HTS satellites to follow?

Are other satellite operators likely to announce similar services for mobility markets?  The answer leans heavily towards “yes”.  However, that also does not mean the ‘traditional role’ of service providers will be extinct.  There are myriad possibilities of how to operate in a hybrid environment, where just as we’ve seen in traditional ‘cloud environments’, the right mix is a little of owned infrastructure in high density areas, and access to flexibility to buffer demand/supply.  The real question is if Intelsat has created a de-facto ‘closed ecosystem’ within its fleet, or if service providers and ‘Flex-enabled vessels’ will still have a choice of satellite operator using the same equipment.

Bottom Line

Intelsat’s recent announcement of their “Flex” service reminds us of one thing – innovation behind the scenes is just as important as innovations the customer can see and feel.  These days, maritime end-users do not need/want to be bothered with the nuts-and-bolts of satellite communications – with the onslaught of onboard sensors, remote monitoring, crew welfare concerns, and health/safety regulations - the applications themselves are occupying the time of end-user’s IT departments. 

But, the jury might be out as to if this and the other likely hybrid-infrastructure models have solved more questions than answers.  If nothing else it has helped simplify the conversation between service providers and end-users which is the ultimate goal, right?