Digital Ship’s Connectivity Briefing recently held at the SMM in Hamburg explored the potential of greater data demand in the maritime industry.  The NSR-moderated panel, entitled, “Innovation and Evolution and the Integration of Maritime Applications”, focused on crew and operational applications, and developments in big data and IoT related traffic. Market oversupply of HTS capacity has recently led service providers to push higher data plans, with built-in applications promoted as “the next big thing”. However, as was made clear during the panel, merchant maritime end-users are not interested in more data, but on cutting costs on their service and their operations.

NSR’s Maritime Market Report, 4^th Edition, forecasts that of the $2.7 billion retail revenue potential in the merchant segment by 2025, only 14% will come from HTS service. Narrowband will continue to dominate the market segment, and even cheaper capacity is not favoring a significant shift in VSAT technology adoption.

There is a disparity between the needs of merchant maritime end-users and the increasing supply of capacity and applications available on the market. Service providers looking to corner larger pieces of the pie will need to address the following issues going forward.

HTS vs. FSS

As opposed to many in the satellite industry, maritime players do not seem concerned with the contest between HTS and FSS. Ship owners simply want something that works, period. Where and when they need it, at an affordable price are key drivers and for service providers, they want that process to be as easy as possible to ensure “sticky customers”.

For them, networks are not an “either/or” between FSS and HTS, but rather a combination. In order to reach more customers, and handle the wide range of needs between a merchant ship and a passenger vessel, they have built “capacity ecosystems”, VSAT networks that use both FSS and HTS capacity. In the end, users should not be concerned with the type of capacity, and it is the job of the service provider to seamlessly switch between beams when the ship’s location or needs demand it.

“Smart Data, not Big Data”

Despite announcements for HTS and services, merchant maritime users seem content with the amount of data they currently have access to.

While crew welfare applications are viewed as important for fleet operations, and these applications generally come with a higher data demand, the priority in merchant shipping is not in streaming media, but in calling loved ones. Crew calling, email, VoIP are driving crew data demand, and they do not represent a significantly greater increase in data usage.

Services involving M2M and IoT are viewed skeptically. Applications of this type have existed for some time, and unless the application can be easily proven to save the fleet owner money, there is little incentive to adopt it. Before end-users outfit their ships with more sensors and applications to analyze and predict problems onboard, end-users demand focus in making it easier for fleet managers to work with many ships who have different sensors, different types of data, and different network capacity.

Who Manages the Applications?

Service providers have begun moving down the value chain, offering unique value-added services in an attempt to increase revenues and differentiate themselves in the market. Applications for network configuration, telemedicine and e-Learning are just some of the revenue and capacity opportunities service providers are using to “monetize the bytes”.

However, there is a growing divide between some end-users and service providers. Many fleet operators would rather a third party, more in tune with maritime needs and concerns, create and manage the applications, while service providers feel best-suited to manage applications on their network.

Issues such as cyber-security, legal concerns, proprietary knowledge and specific fleet operation all must be understood and handled appropriately, and there is strong reluctance from the end-user to accept that service providers can manage their applications accordingly.

The Bottom Line

An analysis of merchant vessels reveals data demand and satcom spending are among the lowest in maritime, a trend which is expected to continue unless service providers can find ways to close the gap by offering more value and incentives for adopting broadband services.

Merchant maritime fleets tend not to change unless regulation or finances demand it. While cheaper capacity has spurred some VSAT adoption, shipping fleets seem content to keep things as they are. The fleet manager’s primary need when choosing a satcom service is to cut costs, through paying less for the service, improving the operational efficiency of their fleet, or preferably a combination of the two. Since cutting costs is so important to fleet operators, the only way to make merchant spending go up is not by adding data, but by adding value.

In a sector that has seen huge losses, valuable applications such as container tracking, reefer management, and fuel optimization may be the way forward both for service providers and fleet owners. These applications have to be easy to adopt, comply with all the necessary regulations, be compatible with current ship operations, and demonstrate clear cost savings.

The Connectivity Briefing was a valuable experience, offering refreshing perspectives of the maritime satcom value chain from some of the key players involved. The concerns expressed by merchant end-users are not new, but this panel provided an opportunity to bring them into the spotlight and help drive the conversation, and service offerings, going forward. There is still work to be done on the “integration” of merchant maritime applications, namely that service providers need to focus on applications which improve fleet efficiency, and turn operational savings into spending on satcom. Whether these applications should be managed by service providers, end-users, or third parties is still up for debate, but the conversation should continue in order for merchant fleets and service providers to get the most out of maritime satcom services.