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Putting the Customer Last – Inmarsat Raises FB Prices Again – Warning: Next Act: Global Xpress

If you think Xpress Link is a bargain at an initial $3,000 per/month with free antennas and equipment, think again. Massive, double-digit price increases are possible once your initial contract has expired.

In typical Frank Coles style, Inmarsat now forces its low-end Fleet Broadband customers to pay more for more capacity, more than they may need or want. Inmarsat’s new pricing effective January 1, 2015 and affecting an estimated 15,000 or more vessels hikes the prices a whopping 20% + on the entry-level Fleet Broadband package, from $840 to $1050, a rise that comes on top of a 60% + series of price increase for the same service imposed during the last two years. Of note is the fact that the increase steps outside the previously claimed Inmarsat justification for raising prices on Legacy Services, the need to migrate customers to the new platforms.

This pricing move, while expected to boost revenues and earnings in the short term and possibly generate bonuses for management, jeopardizes the company and its shareholders in the longer term. Thanks to Inmarsat management’s demonstrated propensity to heap double-digit price increase on top of double-digit prices increases, the company has now positioned itself as putting earnings first and the welfare of its customers last.

Only the naïve would not expect the same kind of price escalation with Global Xpress. Consider that the cost of the Xpress Link/GX “free” equipment is in the range of $50,000 USD. At a $3,000 per/month fee, Inmarsat won’t break even on the equipment cost alone until late in the second year, and that does not even include depreciation on the roughly $1.8 Billion cost of the GX network and infrastructure (including the recently contracted 4th i5). So, if you think Xpress Link with the “free” upgrade to GX is an attractive offering now, wait until the end of your initial contract. Then, prices could skyrocket.

By the end of your contract, Inmarsat’s service will be an integral part of a ship’s IT network, especially with iFusion or the once touted SEP or more aptly, the MEP (Monopoly Enablement Platform), installed. If the expected price increases do occur as expected, given the time and cost associated with removal of the Inmarsat hardware, you will either have to bear whatever price increase Inmarsat chooses to impose or endure the inconvenience and cost associated with removing and replacing GX on your vessels.

Consider the Alternative – Ku-Spot Beam Technology:

Since GX was announced, one by one, we have seen Inmarsat’s over-hyped performance claims debunked or “restated.” For example, we now know that the overly hyped 50 Mbps performance claim applies to an entire Spot Beam not what individual users will receive. In reality, ships are offered only 256 Kbps guaranteed CIR with burst to 1 Mbps, not 50 Mbps. The real truth is that using a comparable Ku Spot Beam infrastructure, Intelsat, SES, Telesat and Eutelsat and their integrators will be able to deliver four to five times the capacity more than Global Xpress to a 1.0 Meter antenna – all with far less Rain Fade sensitivity and without upgrading equipment. In addition, with Ku-Band, unlike Ka-Band GX, there are numerous competitive providers. If you are not satisfied, you can choose another provider when your contract expires. Thankfully, as an alternative to Global Xpress, nearly every major VSAT integrator will offer the customer this superior, monopoly-busting, Ku-Band, Spot Beam service.

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