Consumer, Maritime VSAT Sales Surge as Corporate Terminal Sales Slump

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LONDON — The number of satellite terminals ordered for corporate applications dropped by 7 percent in 2009 in what may signal a leveling off of demand even as the market for consumer and maritime terminals is booming, according to the latest annual survey conducted by Comsys.

The fall in orders, to 327,000 units, occurred at a time when the enterprise market for very small aperture terminals, or VSATs, appears to be separating into very large orders and relatively small ones as the mid-range corporate market shows signs of saturating, Comsys Senior Consultant Simon Bull said here Sept. 15 during Comsys’ VSAT 2010 conference. “We’ve had some extremely poor performance in certain regions,” he said.

Bull said the industry has seen similar dips in orders in the past 20 years and has always returned to growth as a new market or technology breakthrough spurs demand. Whether that will happen this time, he said, remains to be seen.

But if corporate networks are no longer a source of growth, the consumer broadband market, which first took off in the United States and Canada, shows few signs of slowing down. The same is true of the maritime sector, which in recent years has expanded from voice and short-message applications to broadband.

Traditional Ku-band satellite fleet operators are now making a special effort to attract the maritime market for mobile broadband applications for the merchant ship, energy production and leisure vessel markets.

A proliferation of Ka-band satellite projects under way promises to lower bandwidth costs and increase speed for consumer and maritime customers, with most of them using multiple spot beams.

“Will the spots become a rash?” Bull asked, suggesting that even more projects are under way. “A Ka-band land grab is under way as Ku- and C-band are tough places to get frequency assignments and orbital slots. The same will be true of Ka-band.”

Besides the established U.S. consumer broadband providers Hughes and ViaSat/WildBlue, Europe’s Hylas project from Avanti Communications of London, and Paris-based Eutelsat’s Tooway are both planning Ka-band satellite launches before the end of this year.

In the Middle East, Yahsat of the United Arab Emirates has a Ka-band spacecraft under construction, and both Arabsat and Nilesat have expressed interest in Ka-band. Thai satellite operator Thaicom continues to grow its Ipstar Ku-band service in Asia, while the Australian government is sponsoring a vast broadband deployment program that may include at least one Ka-band satellite.

Most of these operators have at least some coverage in the oceans and some — including ViaSat, Hughes, Eutelsat and, in Ku-band, Intelsat and SES — are developing strategies tailored to maritime markets.

Comsys found nearly 9,000 vessels today are equipped with VSAT systems in addition to their narrowband L-band satellite links. The maritime VSAT market grew by 17 percent, on average, between 2007 and 2009, according to Comsys.

In a market study released Sept. 2, Euroconsult of Paris reached similar conclusions, saying wholesale revenue from selling satellite capacity for maritime applications grew 15 percent over 2008, to $1.3 billion.

“Real-time monitoring, remote diagnostics, maintenance, route planning and electronic port declaration are just a few of the applications generating huge capacity demand at sea,” Euroconsult Chief Executive Pacome Revillon said in announcing the report’s findings.

The growth in demand for Internet connectivity by passengers and crews occurred despite the overall dip in global maritime activity as a result of the economic downturn that affected much of the world.

Euroconsult concluded that VSAT links will overtake L-band and other traditional maritime satellite communications in terms of revenue by 2020. Comsys forecasts 14 percent annual growth in VSAT installations in the next five years, reaching 18,500 vessels by 2014.

Several companies presenting their businesses here at VSAT 2010 described what they called an apparently insatiable demand for connectivity by ship crews and passengers who no longer tolerate a lack of Internet connectivity.

“Some of the biggest customers can drive $50,000 to $100,000 per month from a vessel or oil rig,” Bull said of the revenue potential for satellite bandwidth. “A middle range would be more like $3,000 to $5,000 per month.”

Bull said the limiting factor in the near-term growth rate was getting these maritime platforms into dry dock to make the antenna installations. “It takes a long time to roll out an installation program on 50 to 100 vessels,” Bull said. “Some of them are only in dry dock once every year or two or three.”