Maritime Broadband Offers Leave Fleet Owners in Unfamiliar Waters

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PARIS — Commercial satellite operators may be falling over themselves trying to appeal to the maritime market but maritime customers and satellite bandwidth providers still know too little about how the other operates, according to an official with the shipping industry’s trade organization.

George Hoyt, vice president of Cyprus-based InterManager, said ship owners are looking for a return on their investment that is not always clear with satellite broadband, especially now that the labor shortage in many parts of the maritime industry has eased, making it easier to attract and retain crews without offering amenities like Wi-Fi.

“Now there is not a real strong shortage of seafarers,” Hoyt said March 12 at the Satellite 2012 conference in Washington, organized by Access Intelligence LLC. “Ship managers don’t have a budget” to purchase satellite broadband terminals and to pay the usage rates.

The exception, he said, is the oil-tanker business, where regulations on seafarer experience mean ship owners need to provide the Internet and other communications links demanded by the crew.

Some of the world’s biggest satellite operators are positioning themselves to compete with London-based Inmarsat, and with McLean, Va.-based Iridium Communications, to provide communications links to the maritime industry.

These satellite operators will point Ku-band beams on their future satellites to extend their coverage beyond the shoreline. Some, including Telenor Satellite Broadcasting of Norway, are moving into Ka-band, as is Inmarsat with its next-generation Global Xpress satellites, to enter service in 2014 or 2015.

Luxembourg- and Washington-based Intelsat has added dedicated beams on seven satellites to ring the globe — minus the polar regions — with coverage for maritime and aeronautical customers.

Three of those seven satellites have been launched. When the seven are in service, Intelsat will be able to offer uninterrupted coverage “allowing always-on broadband for ships and planes traversing the world’s busiest transport routes,” Intelsat Chief Executive David McGlade said in a statement following the March 25 launch of the company’s IS-22 satellite, which is one of the seven Intelsat satellites with global mobility beams.

The Ku-band satellite operators are offering the same broadband connections they provide to very small aperture terminal, or VSAT, networks on land that link corporate headquarters with branch offices.

Paris-based Euroconsult, a satellite industry consultancy, in March published a study concluding that since 2008, satellite bandwidth revenue generated from maritime customers has grown by 9 percent per year on average.

At the end of 2011, Euroconsult found, some 317,000 ships were equipped with satellite communications gear, with service revenue totaling more than $1.4 billion that year.

Within a decade, the study concluded, “the VSAT market will account for the majority of satellite-based maritime communications revenues.”

This is a core market for Inmarsat and the company is spending $1.2 billion on its Global Xpress system to head off the market encroachment by VSAT networks. It is also trying to lock in current VSAT users with contracts that switch over to Global Xpress when that Ka-band system is available, even though Inmarsat does not have its own Ku-band capacity.

Hoyt said the problem for satellite operators is that the maritime industry is made up of some 10,000 companies, most of which have fewer than 10 ships. InterManager represents 89 member companies that together own 4,370 ships and employ some 250,000 seafarers.

For many of these companies, Hoyt said, the debate may be between providing a broadband link and providing health care for the crew. Several in the audience listening to Hoyt during the Satellite 2012 conference were incredulous.

“You can call it the Stone Age,” Hoyt responded, adding that a second problem is the maritime sector’s traditional reluctance to embrace new technology. “If I use the word conservative,’” he said, “take that as an understatement.”

Hoyt said one place to begin would be for satellite service providers to clearly spell out what they mean by broadband and what it will cost per month. In addition, he said, VSAT providers would need to address the issue of the Global Maritime Distress Safety System (GMDSS), a series of protocols and equipment type approvals that VSAT operators do not yet include in their sales pitches.

“If VSAT operators were to venture into this territory they would immediately become a serious competitor,” Hoyt said. “But it would mean meeting serious standards and not just providing woolly definitions. Otherwise Inmarsat is the only one with GMDSS.”

For the moment, he said, many ship owners are sitting on the sidelines, refusing to sign long-term leases in an environment in which satellite bandwidth costs may be going down.