Predictions and trends in maritime VSAT – 2015


Following the recent publication of the 4th edition of the Comsys Maritime VSAT Report, Digital Ship spoke to the authors about some of the satcom trends revealed, and why the market has grown in the last decadeTelecommunications consultancy Comsys has been researching the maritime VSAT market since its nascent days around a decade ago. The 4th edition of its Maritime VSAT Report has recently been published, offering an insight into current trends in the market, as well as predictions for the future. Digital Ship spoke to Susan Bull, senior consultant at Comsys and one of the architects of the report, about the challenges and opportunities in the maritime market, advances in satellite and antenna technology, crew welfare, and how maritime VSAT actually grew during one of the worst financial crises in history. “It was definitely a hard time in the market,” says Ms Bull, in reference to the period of late 2008 through 2009, when financial markets were on the verge of collapse. “In fact, the market during those times, the commercial side didn’t actually grow that much. We did see some growth in some of the subsections – oil tankers, gas tankers, chemical tankers – those type of things. They grew ok, but when you started looking out into the wider freight market, they just weren’t buying for a lot of that period. It was mainly tankers on the commercial side.” “What drove it more than anything else was the offshore service vessel (OSV) market. The yachting market also started to pick up around that time. The smaller yachts were having a tough time of it, but the mega rich are still mega rich.” Early adoption by the yachting and offshore markets helped VSAT enjoy modest growth in the early days of the recession, despite the global economic downturn. Most offshore platforms already had a decent level of broadband connectivity, but Ms Bull says it was the growth in demand from OSVs that was the key driver, as the requirements of offshore operation demanded higher data speeds. “On the oil and gas side, rigs have always been saturated” she says. “Every rig has at least one, and probably several, VSATs on it. But the service vessels, increasingly they needed to be connected. That sector of the business has continued to demand broadband, and L-band just couldn’t satisfy that high a demand.” “So what we saw was, initially, the really big OSVs start taking off, the Bourbons and these type of guys. Then over time it was the smaller OSVs that started picking up, and particularly out of the Gulf of Mexico. We were seeing a lot of the smaller providers out there, they’ve been joined by quite a few others.” DTS (Data Technology Solutions) is one example Ms Bull points to as a smaller provider that found a niche in the market by providing OSVs with expensive VSAT equipment in a cost-effective way for brief periods of operation. “They recognised that a lot of these OSVs needed to have a VSAT when they went out to do a job, but only for a short period of time. So they designed a really effective and well running skid, so the OSV would just park up beside them, and they’d load the skid on with the VSAT and everything else they needed and off they’d go,” she says. “They’d only be out five days in two weeks, and they’d come back and drop it off. And so there was a lot more of that kind of stuff happening, and over time the smaller OSVs have just picked it up. Now along with DTS you’ve got BlueTide, Elite, Datacom, GDS (Global Data Systems), there’s a lot of those little companies ploughing around and they’ve got a fair few OSVs between them.” “And they’ve been dragged out to other regions and other parts of the world. So that period of time, really the growth was not coming from the wider commercial market, which was really feeling the effects of the downturn.”

Market growth

 

Despite that downturn, in the intervening years, right up to the present day, the maritime
VSAT market has gone from strength to strength.
The Comsys Report states that the current number of commercial vessels with
VSAT is close to 10,000, and the market as a whole has surpassed 20,000 stabilised
sites in service. It sees this number as a tipping point for the industry, and that 50,000
units is achievable over the next few years, driven by improved services and cheaper
equipment.
“In our optimistic forecast, which has actually been more accurate over the years,
we think it could get to 54 or 55,000 by 2018,” continues Ms Bull. “If you look at it
going back, we had 7,000 in 2008, to more than 20,000 at the end of 2014, so things
have moved on quite quickly.”
“In the old days, you didn’t really have much in the way of choice in terms of your
antenna. If you were going to put a stabilised antenna on a boat, your choice was
pretty much Sea Tel or Sea Tel.”
“There were some people who used Orbit, but Orbit had issues a lot of the time.
They came out with some innovative stuff, but a lot of customers found the antennas
difficult to work with. They were better at C-band than they were at Ku.”
The dominance of Sea Tel in the market meant that prices remained high, as the
provider struggled to keep pace with the demand for its systems. New players
coming to the table changed that landscape, with Intellian in particular causing
disruption in the market, according to Ms Bull.

“Ultimately what it came down to was, ‘hey, we’ve got to equip this vessel, we
need a Sea Tel’,” she says. “And Sea Tel didn’t have the capacity at the time, or it
got to that point.”
“And I guess it was about 2008, and there had been some other companies coming
in, like KNS and others, and then Intellian popped up, and they really did
have a major effect on the market.”
“One moment you’re looking at between $40,000-$60,000 for a Ku-band
VSAT antenna, then within a couple of years you had a choice of four or five, and
prices really came down significantly. So today if you’re committing to a large
quantity of antennas – say 200 a year – you’d be down to around $20,000. It’s a
significant change. Along with that has come greater levels of reliability, easier
to install, all those types of things. So all of that has really helped push the market
along.”
As VSAT has become more pervasive, it has become increasingly relied upon at
sea. Alongside operational uses such as weather and chart updates, voyage planning,
and efficiency monitoring, crews have also benefited hugely from the
ability to access services like Skype, Facebook and other social media. We
asked Ms Bull how important crew welfare was in VSAT’s development and
its continued growth.
“Extremely important,” she says. “There have been various studies by various
organisations over the years. We quote extensively from a study where they interviewed
500-odd crew members about what was important for them, and internet connectivity
has come up time and time again as being absolutely vital. These people get
on a boat and they could be out there for months, and if there’s no connection to
friends, family, children, it’s extremely hard for them.”
“An example I heard was one of the Chinese shipping lines. Around the time of
our first report, a lot of people were saying that it (VSAT) just wasn’t going to happen
in Asia, that the Asian lines were too cheap and nasty and they didn’t care about the
crew. Apparently this one particular Chinese operator, they were saying ‘we get
a crew, we go on a voyage, we come back, they never come back on the ship, we just
go and recruit a bunch more people to go on the next one’.”
“Turnover was absolutely massive: around 80 or 90 per cent on each voyage.
They were thinking, ‘there’s plenty of cheap labour, why should we worry’.
After a while they suddenly realised that actually recruiting and training those
crew was costing them an awful lot of money, when they could’ve been holding
onto the crew if they’d had broadband connectivity on the ship, which was a big
part of why the crew was just walking away. So they’ve been putting broadband
on vessels since.”
Internet access at sea is an amenity that seafarers have started to get a taste for,
and once that happens it is extremely difficult to then remove that facility. Once
the genie is out of the bottle, and operations and crew enjoy the benefits, it can’t
be put back in.
“I remember way back when, probably around 2003 or 2004, and BP shipping did
a trial on I think three or four tankers, maybe as many as nine,” explains Ms Bull.
“At the time they had about 50 vessels. The next thing they know, every single
member of crew on all the other vessels had applied for a transfer to the vessels
that had VSAT on them. When BP said they were doing an evaluation, they basically
had crew turning around saying ‘well listen, if we’re not going to have it, we’re
just going to go, we’re going to leave.’ And so they made the instant decision to just
put it on all the tankers, and it’s been there ever since.”
Ms Bull says that, around 2009 or 2010, crew welfare began to decrease in importance
as a driver for purchasing VSAT, due to the trouble in the commercial part of
the market.
However, as companies went ahead with purchasing decisions based on operational
efficiencies, the crew still ended up using most of the bandwidth – and it
became apparent that if the crew has internet, then they stay.
“You might not lose crew instantly, but when they get the opportunity to go some

where else for an equivalent package and they get broadband connectivity, well of course they’re
going to choose that,” says Ms Bull.

Tech developments

Despite advances in L-band technology, and the prospect of increased speeds with
Iridium’s NEXT constellation, Ms Bull believes the frequency will become
increasingly marginalised as a broadband option due to a lack of bandwidth.
Its reliability means that it will always have a place in the market,
but on commercial vessels its role will more often than not be as a backup to higher throughput
VSAT systems.
“I think L-band, if it’s used sparingly, can be less costly than VSAT, certainly less
costly to invest in the equipment and install,” says Ms Bull.
“If you’ve got a relatively small boat, like a fishing vessel or a small yacht, then
you’ll go with L-band. But if you’re not in that league, if that’s not where you’re at,
then L-band is ultimately going to be a backup, and it’s going to be marginalised
in that part of the business. “
“That’s not meant to be derogatory in any way to L-band, or the equipment, or
anything like that, it’s just the simple fact that you just don’t have the frequency that
you have in Ku or Ka. It’s only about 10 or 20 Mhz total, for all the world’s L-band. So
what can you do with that? It’s always going to be expensive.”
The development of flat panel antennas is another technology that the Comsys
Report addresses. A number of manufacturers, such as Phasor and Kymeta, have
made big strides with flat antennas in recent years, and Ms Bull says she believes
the technology has the potential to replace traditional stabilised antennas at some
point in the future.
“I think definitely they have the potential for doing that,” she says. “It’s going to
depend on quite a lot of things. Many years ago I was doing some work for Mitsubishi,
and they showed me around their technology museum. In there they had a nice flat
plate antenna – electronic, steerable, all that kind of thing. I said ‘wow, does this
work?’ and they said ‘yeah’. I said ‘what’s it doing in a museum?’ and they said,
‘well, it cost $4m to make’.”
“Now we’re not at that stage. Now if you’re talking about an equivalent 1 or
1.8m antenna, the target price is in the region of below $10,000. On board a ship
it’s going to be slightly different becaus erather than just sitting in a particular place
and just pointing to the occasional satellite here and there, you’ve got a ship moving
all the time. So it means it will have to have multiple panels. Or you’re going to have
to have some type of stabilised system to point it generally in the direction of
the satellite.”
“Is it going to have a major effect on the maritime market over the next five or ten
years? Yes, absolutely. When these pro ductsreally start hitting the streets – and
they will – yes it will have a major effect and it’s going to make life a lot easier. You
don’t need a crane to get it onboard, you can just carry it on. It’s much easier to
install, much easier to sight, all that type of stuff, and it will be lower cost. So they’re
definitely going to play a big role.”
While rapid progress has been seen throughout most parts of the VSAT industry,
the Comsys Report notes that investment in overarching technological platforms
tends to come first, with the infrastructure to accommodate it sometimes
playing catch-up. Nonetheless, developments and innovations are underway that
should bring platform and modem technology in line with the evolution of satellites
and antennas.
“It’s changing,” says Ms Bull. “Typically 10 or 15 years ago, if you started
talking about a link up, it was unusual to get a link much more than 512 Kbps, and
2 Mbps was huge.”
“Now all of a sudden, anywhere between 2 and 10 Mbps is common. What
that’s done is suddenly raise the bar on the need for the modem device to process that
data, to handle the packets.”
“So there’s been a lot of work on that side and all the major manufacturers have
been working on that. We’ve already seen some of them come out. Some need more
development and a little more work, but it’s getting there. I think there’s a bit of
concern about where the whole HTS market is going to play. It’s not an easy market
to get right on the land, let alone at sea. So there are a few question marks hanging
over that. But generally the technology is moving on – antennas, modems, satellites
– all of those things, it’s happening out there.”

Market forces

The current uncertainty in the oil and gas market is also having complex effects on
the maritime VSAT market, Ms Bull says.
On the one hand, the offshore industry is suffering from low oil prices, and platforms
are being decommissioned. On the other hand, lower fuel costs are helping
the freight sector, which potentially frees up funds that can be diverted to VSAT
investment.
Factor in depressed day rates for vessels, as well as the crew welfare argument,
and there are multiple, often conflicting, forces at play. However, the growth in the
market is expected to continue, and the Report states that the outlook for maritime
VSAT is ultimately positive.
“The oil and gas price has always historically done this cycle, gone up and gone
down,” says Ms Bull. “It’s just a fact of life. It will come back. It’s just a question of
when, and then things will pick up again.” “There’s definitely a big slowdown
there in the next year or so. But I’m already hearing that parts of the oil and gas market
look better today.”
“I think a lot of the oil and gas companies are using this time where everything
is not so intense to think about the best way to go forward: the most cost-effective
way to move forward, thinking about changing their provider, or changing
equipment, or whatever it happens to be.
So that’s a positive side of the downturn in the market.”
The picture for freight vessels is perhaps more complex. An abundance of
ships means that the supply of gross tonnage for tankers, carriers and containers is
currently outstripping demand, and the relative slowdown in China’s economy has
not helped.
Lower oil prices have been negated somewhat by stricter MARPOL regulations
governing Emission Control Areas (ECAs), but crew welfare is keeping the
VSAT market moving forward, as well as potential gains from efficiency.
“We know the commercial vessel market has been having a really tough time,”
continues Ms Bull.
“When I’ve spoken to freight companies at the bottom end of the scale in the
commercial market, companies that are struggling with day rates, they still want
VSAT. They really want it, but it’s a question of can they get it, can they afford it.
And some of them are so up against the wall that they just can’t. It’s as simple
as that.”
“Having said that, look at how the commercial market has been penetrated, and
has adopted VSAT, over the last five years or so, during one of the worst recessions in
shipping history. I think going forward, the business will re-orient itself and the
market will continue to grow. That’s just inevitable.”
One of the primary reasons for this belief is just how ingrained VSAT has
become in the day-to-day operation s of life at sea. What was once a luxury is now
becoming closer to the norm, both for crew retention and more fundamental commercial
considerations.
“What we’ve seen over the years in so many other verticals, is once VSAT comes
along and brings a service that they otherwise would not have had, it brings a competitive
advantage,” says Ms Bull. “Then before you know it, if you don’t have it,
you don’t have a business. You have no choice but to do it.”
“Even back in 2008 and 2009 when the downturn happened, particularly in the
yacht/charter business, if you didn’t ha vebroadband on your yacht, you wouldn’t be
able to charter it. No one would charter it.
Why would they?”
“If you want to charter that vessel, you have to put a VSAT on there. End of story.
And that is beginning to happen now in the commercial market. If you don’t have
broadband on your vessel, you are going to suffer.”
For all the talk of crew welfare and its undoubted importance, in the end, operational
capability is likely to be the stronger driver. VSAT is now at a point where it can
greatly enhance the function of a vessel, delivering features at sea unheard of just a
few short years ago.
If a product or service becomes ubiquitous and brings competitive advantage,
those without it get left behind. Ms Bull believes that the maritime VSAT market is
currently at that tipping point.
“For example in the OSV market, the contractors want real-time video,” says
Ms Bull.
“They want to understand what is happening at that particular time. So there has
to be real-time video capability on the OSV. And if they don’t have it, chances
are they’re going to find it very hard to geta contract.”
“So of course they’re going to have to have it. It’s almost like saying ‘this OSV
doesn’t have an engine, it’s much cheaper to row it or sail it.’ Well guess what
guys, you need an engine. And they need broadband.”

Publicado el junio 19, 2015 en Technical y etiquetado en , , , , , . Guarda el enlace permanente. Deja un comentario.

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