A Chance of HTS Satellites Influence Maritime Telecommunications Business

The maritime SATCOM market has seen tremendous changes over these years, especially with the introduction and growth of maritime VSAT services in C-band and Ku-band that allowed for higher throughput and therefore a range of new IT applications services at sea.

In 2013, reported that the global maritime satellite communications market comprised around 350,000 active SATCOM terminal, of which the vast majority, more than 95 percent, were still legally narrowband L-band terminals using Inmarsat and Iridium systems for voice communications, safety, and regulatory compliance. In recent years, growth in the sector has however mainly been driven by broadband applications and increasing data usage, with strong growth in maritime VSAT and MSS  (Mobile Satellite System) broadband systems.

While the overall maritime SATCOM market grew at approximately 4.5 percent in 2013 in term of active terminal and approximately 10 percent in wholesale revenues, active VSAT terminals increased at a CAGR (Compound Annual Growth Rate) of over 13 percent in the last three years, nearly doubling since 2005 to more that 11,000 terminals in 2013. Growth of maritime broadband systems was observed across all major maritime verticals such as merchant shipping, passenger vessels, fishing, oil and gas, and leisure. It was driven by increasing throughput requirements per vessel, a range of new, bandwidth intense applications for ship operations and crew, and a relative price and performance advantage compared to the legacy narrowband L-band solutions, for which Inmarsat has raised prices.

In particular, the increasing crew communications on board merchant ships and the increasing demand for passenger communications needs on cruise ships and superyachts have generated huge capacity and throughput requirements in recent years, which cannot met by MSS sevices at affordable cost. For operational communications, new applications such as real-time monitoring, remote engine diagnostics, maintenance, route planning, and electronic port declaration are being adopted by an increasing number of vessels; all of these applications drive growth of on-board bandwidth requirement.

Consequently, the installation of broadband VSAT systems has become inevitable, especially for high-end vessels such as cruise ships, superyatchs offshore rigs, tanker, oil and gas survey vesssels, and an increasing number of merchants ships.

However, with the ongoing growing need for data and throughput, traditional C-band and Ku-band VSAT systems may as well soon reach the limit of what they can provide to the maritime sector in a cost efficient and affordable way for certain market tiers. Therefore, a number of operators have started to invest in HTS multispot-beam systems in Ku-band as well as Ka-band, which allow them to offer higher data rates, better efficiency, more affordable bandwidth, and smaller equipment to the maritime sector. 

Inmarsat, one of leading MSS operator, announced its new generation spacecraft of Global Xpress with Ka-band VSAT service that will offer downlink speeds up to 50 Mbps and uplink up to 5 Mbps from their user terminals (http://www.networkinv.com/technology/vsat/inmarsat-global-xpress/). This service use three satellites (Inmarsat-5 / I-5), each providing 89 fixed spot-beams Ka-band and will operate in geosynchronous orbit with flexible global coverage. One of the I-5 entered commercial service on July 1st 2014 (http://www.inmarsat.com/about-us/our-satellites/global-xpress/).

According to Inmarsat, Global Xpress will however still provide about double the capacity of current maritime VSAT offerings for the same or slightly lower monthly fees.While ramping up its installed base of new Ka-band terminals will be an issue in the early years, Inmarsat intend to leverage heavily on its leading position in the sector, its active L-band and Ku-band VSAT subcriber base, as well as its global distribution network.

Another major supplies of maritime C-band and Ku-band capacity today, Intelsat, plan on launching HTS (High Throughput Satellite) capacity for the maritime market in C-band, Ku-band, and Ka-band (http://www.intelsatgeneral.com/infrastructure/intelsat-epic-ng). Intelsat announced its next generation HTS satellite series, called Epic,on which first of two satellites (Intelsat 29e and Intelsat 33e) will be on service around 2015 and 2016.  

These are two examples from a number of HTS systems that will be launched over the coming years, with a number of them providing ocean coverage, including ViaSat-2, Telenor's THOR 7, O3b, and several others. HTS systems will also be more efficient in terms of Mbps provider per MHz.

However, one has to be careful when looking at the increase in capacity supply through HTS systems, differentiating the total amount of capacity over regions (aggregate) and the amount of capacity available to a single ship at any given point in the ocean. Given the multspot-beam architecture of HTS systems, the two measures will be substantially different and the available capacity per ship, although growing significantly, may not rise to the level that some report might suggest.

The impact of the significaant increase in capacity over the oceans has to be reviewed in detail, but it is quite certain that new HTS systems will change the way satellite communications are used at sea over the coming years. In early years, SATCOM was mainly used for basic voice and low-data applications for safety applications. With the arrival of broadband services, such as Inmarsat, Iridium, or other VSAT services, the market started to use more bandwidth-consuming applications.

As of today, maritime satellite communications moved to fully-integrated IP applications providing internet access, audio and video streaming, and integration of the ship into corporate network. HTS system are expected to significantly increase data traffic and the available bandwidth per vessel, consequently enabling a range of new applications for end user over the coming years.

The addition of content and cloud applications into the service portfolio could be a differentiating factor for satellite operators and service providers and possibly a smart way to generate additional revenues, and drive more usage of connectivity. Content such as movies, news, and sporting events broadcasting are increasingly demanded by crew members and ship passengers. The acceptance of such content over satellite mainly depends on the pricing strategy and content quality. The acceptance of applications seems more challenging since it will take time to discover the crews and passenger specific needs, and tho educate ship owners, crews, and passengers on these new tools. Professional applications will require shipping companies to adopt applications and integrate them into existing operations. However, in the case where such applications could become mandatory, there will be a huge potential addressable market, enabling by HTS systems.

In addition to the vast new range of applications that HTS systems should enable, other impacts of these systems will most likely include a decreasing price per Mbps, a decrease in hardware prices, and ultimately new maritime VSAT markets that would have historically not been addressable for satellite providers.

The upcoming launch of HTS systems and services over the next years is expected to drive the maritime VSAT market, however it will also lead to a number of changes, both on supply and on the demand side. On the satellite operator and service provider side, expected that the market to become more competitive, with lower capacity prices and an increasing focus on value added services. For the end users, the market will likely provide better services with more affordable choices and range of new and exciting applications that were once unimaginable.