Inmarsat Banks on Ship Equip Deal To Boost Customer Base

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PARIS — Mobile satellite services operator Inmarsat on April 28 said it has completed the purchase of Ship Equip International, a $159.5 million acquisition that the London-based operator views as a way of preparing for its next-generation, Ka-band Global Xpress satellite system.

Norway-based Ship Equip, which reported revenue of about 312 million Norwegian kroner ($56 million) in 2010, provides communications services to about 850 maritime vessels. Inmarsat estimates that this customer base represents about 10 percent of the global maritime fleet currently using Ku-band satellite links with VSAT, or very small aperture terminal, onboard antennas.

Inmarsat officials believe they will be able to persuade Ship Equip customers and others in search of higher bandwidth to migrate to the Global Xpress service, which is scheduled to debut in 2013. Inmarsat has ordered three large all-Ka-band satellites from Boeing Space and Intelligence Systems as the centerpiece of the $1.2 billion investment in Global Xpress.

VSAT operators, with the help of satellite fleet owners including Intelsat of Luxembourg and Washington, have entered what used to be a maritime communications market that Inmarsat had just about all to itself by offering lower-cost, higher-speed bandwidth from existing Ku-band satellites. Intelsat is adjusting beams on several of its satellites to cover the ocean areas around the world in Ku-band.

The advantage of Ka-band is its abundance. Whereas the Ku-band frequency is crowded in many regions of the world — Ku-band is used for television as well as data links — Ka-band remains largely untapped. “Ka-band has twice the bandwidth available compared to Ku-band,” said Leo Mondale, who heads the Global Xpress program at Inmarsat.

A debate continues within the industry about how well Ka-band will respond in stressed environments, such as during rain and dust storms, and through clouds.

Astrium Services of Europe, which provides satellite communications links, especially in X-band, to defense forces in Britain and to the NATO alliance, has been conducting tests in Britain designed to simulate an unmanned aerial vehicle sending video streams in Ka-band. The company has reported that early results indicate it may be challenging for commanders to adjust to sudden drops in bandwidth following cloud- or dust-caused interference with the Ka-band signal.

During an April 13 briefing at the National Space Symposium in Colorado Springs, Colo., Mondale and other Inmarsat officials said they accounted for Ka-band’s well-known rain-fade issues before moving forward with Global Xpress.

The same concerns about signal attenuation were expressed before satellite consumer broadband was widely adopted in the United States, Mondale said. Today the two consumer broadband satellite service providers, Hughes and WildBlue, together have about 1 million subscribers and Hughes is moving its customers away from Ku-band to Ka-band.

“The customers include people in Georgia and South Florida — places where rain is a factor,” Mondale said. “Ku-band had the same issues when it was introduced. The fact is that by adjusting power levels [on the satellite beam] and by using adaptive coding modulation, adjusting the speed of coding, you will slow down the signal reception but you will not drop it. It will not go away.”

Mondale said Inmarsat has not yet settled on where the three Global Xpress satellites will be stationed in orbit, in part because many Ka-band systems that show no signs of being built have nonetheless made reservations for slots with international frequency regulators. The choice of orbital positions for Global Xpress will widen in the next two years as these reservations expire, he said.

Inmarsat’s pitch to prospective Global Xpress customers is that they retain their existing L-band satellite hardware — most maritime fleets are already customers of Inmarsat’s existing fleet of L-band satellites — and add Global Xpress gear. The slower L-band system could be reserved for when conditions are less than optimal for Ka-band transmissions.

Inmarsat Chief Executive Andrew Sukawaty said during the National Space Symposium briefing that the company’s belief in Ka-band for high-bandwidth applications does not imply that Inmarsat is leaving L-band. A fourth Inmarsat-4 satellite, which has been partly financed by the 18-nation European Space Agency, is scheduled for launch in 2013. He said the company intends to replace the Inmarsat-4 fleet with L-band satellites when the time comes to retire the existing spacecraft.

Just weeks before concluding the Inmarsat deal, Ship Equip signed a five-year contract with Telenor Satellite Broadcasting of Norway for Ku-band VSAT services using Telenor spacecraft located at 1 degree west. The contract is for Ship Equip communications in the North, Norwegian and Baltic seas, with NewWave Broadband of Britain responsible for providing the services to Ship Equip customers.

Telenor is building its own mixed Ku- and Ka-band satellite, called Thor 7, for launch in 2014 and expects to use its Ka-band capacity to compete directly with Global Xpress in Telenor’s home Nordic region. Judging from the bandwidth speeds and equipment size Telenor is advertising for its future Ka-band customers, the Norwegian operator shares Inmarsat’s assessment of what Ka-band can do even in harsh maritime environments.

Sukawaty said Inmarsat was aware of Ship Equip’s impending contract with Telenor before committing to the acquisition. “Typically these contracts have a three-year firm element and then two years of options,” Sukawaty said. “We were definitely not upset about it.”

 

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