PARIS — Satellite maritime hardware and services provider KVH, which is already going toe-to-toe with Inmarsat in winning new broadband subscribers, on March 5 said 2014 is likely to be a breakout year for the entire maritime-broadband sector as new safety and crew-welfare regulations, plus new products entering the market, stimulate demand.
Through acquisitions, KVH has assembled a bouquet of assets to provide satellite bandwidth, shipboard hardware, voice and data air time and video programming in a single package.
The company said that in 2013 it was market leader in the sale of VSAT, or very small aperture terminal, broadband satellite terminals to maritime customers. Competitor Inmarsat of London says that it is securing 50 percent or more of the new business.
Regardless of which company properly lays claim to the leading position, all agree that the maritime sector is taking off as Maritime Labor Convention laws and regulations mandating digital charts nudge ship owners toward broadband connections.
Market analysts NSR and Euroconsult both point to multiyear growth in the market in the coming decade, and the advent of high-throughput satellites with beams over major maritime routes will accelerate the trend with the promise of higher bandwidths at lower per-megabit prices.
Euroconsult estimates that in 2013, the installed base of 348,000 satellite maritime terminals generated some $760 million in revenue for satellite fleet operators.
In a presentation to investors March 5 at a conference organized by investment adviser Raymond James, KVH Chief Executive Martin Kits van Heyningen said the current addressable market is 250,000 vessels — cargo, merchant, fishing, energy production and cruise services combined — with 1.4 million employees.
Kits van Heyningen cited conclusions by NSR that the market will double in size to $2.3 billion by 2020. This figure includes the entire value chain, not just the revenue generated by satellite operators, and includes narrowband offers from satellite constellation owners Iridium, Thuraya and Globalstar in addition to Inmarsat and the broadband suppliers.
KVH has leased some 23 transponders of C- and Ku-band capacity on 15 satellites.
That makes KVH a likely customer for Intelsat’s future Epic high-throughput satellites, which use Ku-band and are compatible with today’s VSAT equipment. But Kits van Heyningen said Middletown, R.I.-based KVH is anticipating the arrival of multiple high-throughput systems using Ka-band as well.
Offering customers up to four megabits per second of downlink, with the promise that subscribers purchasing cinema and other video entertainment will pay only for the programming rights and not for the air time, KVH has made inroads against Inmarsat’s slower-speed L-band service.
That advantage is likely to diminish as Inmarsat’s Global Xpress Ka-band broadband satellites are fielded. The full three-satellite constellation is scheduled to be in service by early 2015. The first, launched in December, will enter service in July over the Indian Ocean.
KVH’s video programming through its new KVH Media division, formerly Headland Media, is testing an IP-MobileCast service that uses the regular downtime of satellite connections to send, to multiple ships at once, licensed film and other video offers. The film is then cached on board. The full IP-MobileCast product is scheduled for commercial release by midyear.
KVH reported revenue of about $50 million in 2013 for its maritime VSAT service. Total company revenue was $162.3 million, with about half of it coming from the maritime VSAT business, whose hardware and service revenue was up 22 percent over 2012, KVH said.
More than half the company’s VSAT business in 2013 was from services, with the rest hardware sales, a trend KVH expects will continue as it generates higher monthly subscriber revenue — now ranging from $600 to $2,900 per month, depending on the VSAT product used — from the new bundling of services.
Follow Peter on Twitter: @pbdes