Revenues among mobile satellite services (MSS) manufacturers will increase by slightly more than 50 percent by 2012, analyst Tim Farrar forecast in a report released July 9.
 
Revenues will grow from $493 million in 2006 to a projected $740 million in 2012, according to “MSS Industry Perspectives,” a 43-page research report from Menlo Park, Calif.-based consulting and research firm Telecom, Media and Finance Associates Inc. (TMF).
 
Farrar, also president of the Mobile Satellite Users’ Association, described the MSS equipment market as “healthy,” and suggests that most of its growth will derive from handheld equipment, where terrestrial cell phone manufacturers are likely to compete for new orders. “As a result, traditional MSS equipment vendors such as Thrane & Thrane will need to exploit other niches in order to grow their revenues in the future,” the report said.

Those numbers contrast somewhat with those recently released by NSR, which estimated that the global MSS market would grow from 1.8 million in-service units in 2005 to more than 6.7 million units by the end of 2012, closer to a threefold increase.

Citing company policy, NSR declined to comment on other analyst reports.

The TMF report also assesses the future market opportunity for Stratos Global Corp. and quantifies the impact of new, lower-margin Inmarsat services. In March, CIP Canada Investment Inc. announced it would acquire Stratos, the largest distributor of Inmarsat services, in a deal funded in part by Inmarsat.

"MSS distributors also face pressures in the medium term, as their margins on Inmarsat services decline and new distribution channels are opened up,” the report said. “Unless they can realize significant growth in other areas, distributors such as Stratos may be faced with the prospect of revenue declines beyond 2010, as Inmarsat customers migrate to new, lower-margin services.”

Farrar believes MSS will continue to grow in the maritime market and also expand into other segments that previously have been considered cost-prohibitive for MSS players, but “the most important market will be North America,” amid players like Terrestar and ICO, he said.

"The question will be whether the growth is enough to justify a couple of billion dollars’ investment by the time you’re done,” Farrar said. “I think it’s hard to see the growth justifying that level of investment. Whether you include [ancillary terrestrial services] or the mobile video that ICO is trying — whatever it is, you’ll need to see more growth, and the new technology will stimulate that. The question simply is by how much.”