Terminal Distributor Sees Promise in BGAN Market

by












  Space News Business

Terminal Distributor Sees Promise in BGAN Market

By MISSY FREDERICK
Space News Staff Writer
posted: 10 October 2005
01:56 pm ET


As Inmarsat prepares to launch its Broadband Global Area Network (BGAN) in 2006, its various equipment distributors are anticipating a change in the market for the ground equipment needed to use the new satellite-based mobile communications service.

While existing Inmarsat terminals mainly are being used by governments and large-scale companies such as high-profile news organizations, the faster, smaller and cheaper BGAN terminals may appeal to a broader customer base, industry members say.

Thrane & Thrane, an Inmarsat terminal manufacturer based in Copenhagen, Denmark, has been changing its business strategy to adapt to the new technology.

In 2004, Thrane & Thrane purchased its largest distributor, Land Sea Systems of Virginia Beach, Va., in an effort to become more of an end-to-end solutions provider. In other words, Thrane & Thrane will not just relinquish control of its terminals after sale – in some cases, it will distribute that terminal to its customer and provide technical assistance and supervision of its use.

George Spohn, the company’s v ice president for s ales and m arketing, has been approaching new customers in several new markets that he thinks will be attracted to the more advanced BGAN technology. Spohn said he expects BGAN to become much more widely accepted than existing equipment that is bought primarily by government customers, because it provides data more quickly for a significantly cheaper price than existing terminals.

Inmarsat will launch BGAN after its three new Inmarsat 4 satellites are operational. The first was launched in March. The broadband service will use smaller ground terminals to distribute up to 492 kilobits of data per second; Inmarsat’s traditional terminals are capable of speeds up to 144 kilobits per second.

Thrane & Thrane is banking on the increase in speed to help it make inroads into new markets, said Henrik Norrelykke, the company’s president. The faster speed and cheaper price are expected to draw an entirely new customer base, Spohn said. The new terminals are expected to range in cost from $1,500 to $3,500, less than half the cost of existing Inmarsat terminals.

“When you start looking at IP (Internet Protocol)-based satellite modems, all of a sudden you start looking at expanding beyond the traditional uses of Inmarsat, whether it be military, humanitarian or high-level media and television,” said Spohn.

BGAN conceivably could be used by the insurance industry, construction industry, or particularly state and local governments, Spohn said. The telecommunications issues which plagued Louisiana and Mississippi during Hurricane Katrina should draw attention to the need for an IP-based communications system for first responders, Sphon said.

“The state and local government heretofore have not gotten much into the Inmarsat game, because equipment and air time are expensive,” Spohn said. “But the big thing we’re talking about with Sept. 11 and Katrina is interoperability, and putting everything on an IP-based responder . And now the price is becoming attractive to state and local governments.”

Insurance providers doing assessments of Katrina-related damage could benefit from using the BGAN terminals in the field to communicate when inspectors are evaluating damage for claims, Spohn also proposed.

The company also has struck up agreements with all the companies providing satellite air time, so that if a company purchases a BGAN terminal, it is no t limited by what service provider it chooses, Spohn said. “None of the other manufacturers are doing this,” Spohn said. “We’re in the position of trying to provide end-to-end solutions.”

It will take time to determine whether the potential clients will respond to the technology. Spohn said he has seen a “groundswell of interest” among the many communities the company is targeting, but that many do no t know the technology is out there and could conceivably be affordable.

“Our job is really to be evangelists of the new technology,” Spohn said. “It would be really easy just to go and sell the new stuff to all the people who buy the old stuff. But we need to get the word out that the BGAN terminals are really nothing more expensive than your standard laptop PC, and to use them is no more expensive than doing an international phone call.”

In the meantime, the company has used other strategies besides reaching out to new customers to expand its business. Thrane & Thrane purchased Land Sea Systems last year, its largest distributor, and opened an office in Shanghai, China, in July. This gives it a more global distribution presence and an opportunity for further growth even when the Inmarsat market seemed more constrained, Norrelykke said.

“Financially, it has worked out very well,” Norrelykke said, citing double-digit growth for business in North America.

During its first quarter of the fiscal year ending July 31, Thrane & Thrane overall showed a fall in revenue of 84 million Danish Krone ($13.4 million) from the same quarter in 2004. The decline in revenue was attributed to losses in the maritime and land mobile markets, according to the company’s financial report.

The company also has been growing physically, going from 17 to 27 employees stationed in Virginia Beach this year.

“We are quite unique; we’re the only ones present in the U.S. where instead of pulling back on distribution, we’ve been investing in it,” Norrelykke said.

The Shanghai office opened in July, and six sales representatives are stationed there right now, Norrelykke said. Its philosophy now is to work as a business with regional centers rather than operating as a manufacturer in Copenhagen with no further connection to its customers.

“You can’t see the world from Copenhagen, even with really strong binoculars,” joked Norrelykke.

Comments: mfrederick@space.com