Letter | No Regulatory Issues for KVH’s New Service

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Inmarsat Says Maritime Customers Not Jumping Ship Over Rate Hikes” [Aug. 13, page 7] was an excellent article. A few comments to start off a discussion, if I may.

I listened to the Inmarsat quarterly earnings call and read the press release, and found it interesting that company officials credited their maritime revenue growth for 2012 exclusively to increased prices and reduced margins for their channel partners. While customers may not yet be complaining about price increases, the reason certainly is not that they don’t care. Inmarsat’s channel partners certainly are unhappy with its price increases and the strategy to introduce them. Inmarsat indicates in its own press release that its fully owned distribution partner (formerly known as Stratos) has yet to pass price increases on to the end users. We have heard similar reports from other distribution partners, who were caught off guard with midyear increases they had difficulty passing on to their customers.

Inmarsat Chief Executive Rupert Pearce’s speculation about regulatory issues with KVH Industries’ new mini-VSAT Broadband service with global C-band overlay to our Ku-band network is wishful thinking on his part and totally unfounded. The U.S. Federal Communications Commission has just approved our new TracVision V11 dual-mode C/Ku-band 1-meter antenna. The beauty of our network is that we use Ku-band coverage around all major continents to provide service within the limit of 200 nautical miles. The global C-band coverage is accessed outside of areas with Ku-band coverage, or when Ku-band is unavailable due to heavy rain or the link. One antenna integrated with one modem seamlessly switches between C- and Ku-band coverage, providing consistent global geographic coverage matching Inmarsat’s services.

In fairness, Mr. Pearce may not be aware of advanced dual-frequency on-board terminals as Inmarsat’s XpressLink service requires two independent on-board terminals, a Ku-band antenna for VSAT and a FleetBroadband 500 antenna, which is also the configuration for the new Global Xpress solution to alleviate the rain fade concerns of Ka-band service. KVH doesn’t need Inmarsat’s FleetBroadband backup service.

Finally, regarding Mr. Pearce’s comment on the decline of the maritime VSAT market, he must be drawing this conclusion from his company’s lack of sales for its XpressLink and Global Xpress VSAT services. Industry research reports from both Euroconsult and Northern Sky Research don’t conclude that the market is depressed at all — to the contrary! KVH just completed a record quarter for sales of our mini-VSAT Broadband systems, including a major sale to the NYK cruise line. Our competitor Globecomm just won one of the largest orders ever for maritime VSAT services in a major deal with Maersk. Inmarsat’s competitors are doing very well upgrading commercial maritime customers to VSAT services.

 

Jim Dodez

Middletown , R.I.

 

The writer is vice president of marketing and strategic planning for KVH Industries Inc.