It has been a more than 100 years since Guglielmo Marconi developed a wireless device that allowed ship-to-ship and ship-to-shore communications. Since, Marconi’s development, advancements in maritime communications inched along until commercial satellite services became available with the creation of Inmarsat, and satellite providers continue to push the technology as market demand grows.

The way business is conducted has changed significantly since the advent of Inmarsat, with an emphasis on speed, just-in-time delivery and always-on communications. Satellite communications is one of the underpinnings of the commercial shipping industry, allowing the word "global" to become a meaningful adjective to the word "economy".

What exactly is the maritime market for satellite services and how big is it? What types of satellite services are available? What applications are fueling demand for bandwidth? And what does the future hold for maritime satcoms?

Satcoms on the High Seas

The maritime market for satellite services includes a number of distinct segments, including: commercial shipping, cruise lines, energy, fishing, yachts and military, each with a distinct set of needs, and according to the "The Comsys Maritime VSAT Report," released in May, the market generated $400 million in revenues in 2007. Commercial shipping, cruise lines and energy market segments are the three largest market segments by revenue and by bandwidth consumed, and each has shown significant growth throughout the last five years. The uptake of satellite services in the fishing industry is growing but bandwidth demands are not nearly as large, while the global yachting market has shown a steady appetite for satellite services even when the soft U.S. market is factored in.

Inmarsat was formed in 1979 to provide commercial satellite services to the maritime industry. The organization was consortium of 80-plus seafaring nations and operated a constellation of satellites which blanketed the Atlantic, Pacific and Indian Oceans with L-band coverage. Originally, Inmarsat’s core services were circuit switched voice and Telex, but as application connectivity grew, the organization introduced new services providing higher data throughputs. Inmarsat was privatized in 1999, and the new Inmarsat has rolled out services to meet customer demand but the company faces intense competition in the maritime market it once dominated.

Traditionally, the industry has been slow to adopt new technologies, however new business dynamics are forcing the entire market to adjust. L-band service providers Iridium, Thuraya, and Globalstar have launched services aimed at maritime users and have begun to eat into Inmarsat’s market share. The development of stabilized platforms, which allow VSAT antennas to remain locked on a satellite even though the ships they are attached to are rolling or pitching from side to side, allowed even more competition, and now Inmarsat is facing a new generation of competitors that are providing C- and Ku-band VSAT offerings.

One of the largest hurdles the maritime industry faces is hiring and retaining qualified crews. Going to sea has always had a romantic connotation, but Generation X is not as eager to live on a ship for weeks at a time without any contact with the outside world. Neither are passengers on cruise ships. No longer are they happy to get away from it all, as vacationers want to surf the Web and make cell phone calls between ports of call. "One of the underlying drivers in our market is the need to retain trained crews," says Michiel Meijer, maritime marketing manager, Stratos. "There is a shortage of trained crews and shipping companies have realized that morale and entertainment is very important to employee retention. Seamen want the ability to call home and talk with loved ones and send and receive e-mails. This is driving usage and demand is still growing."

"Crew retention and moral has become a huge issue for shipping companies," says Carl Novello, senior technical manager at CapRock. "One popular trend is the deployment of picocells on ships. The picocells connect to broadband VSATs, and the cell phone traffic is backhauled back to shore via satellite. The picocells allow crew members to use their existing cell phones to call home. In the future, we may be able to use the picocells to gather data remotely for [supervisory control and data acquisition] and asset monitoring applications."

Another driving factor is automation. Remote monitoring systems for navigation and engines allow shipping companies to keep track of a ship’s health remotely. Two decades ago a commercial shipping vessel would go to sea with a crew of 40. Today the number is half of that. The Maersk Emma, one of the shipping company’s newest container transport vessels capable of hauling 30,000 containers, only requires a crew of 15," says Meijer. "The second major driver is remote management. Shipping firms must find ways to do more with fewer people. Navigation systems and engine monitoring systems allow expert systems on shore to support the crew. But these systems require at least 64K of bandwidth and IP always-on connectivity," he says.

The increasing use of automation makes a ship’s information technology infrastructure and network connectivity extremely important. Advanced out-of-band network management systems such as the Envoy system made by Uplogix allow a shipping line to manage a ship’s entire infrastructure while it is at sea, even if the main VSAT link is down. The ability to monitor satellite modems, stabilized antennas, routers, switches, servers and PBXs for anomalies, upgrade operating systems, and reboot equipment automatically improves network uptime and minimizes the amount of information technology training for crews. "Shipping companies are rolling out [enterprise resource planning] applications, which require constant connectivity," says Novello. "In essence, they require an office at sea. These applications allow for administration duties and purchasing to be done while the ship is at sea."

Shipping companies are not the only fleet managers faced with employee retention and moral. Navies around the world face the same issue. Cell phone and Internet connectivity, as well as marine TVRO systems, are being deployed to improve the quality of life for sailors.

Stabilized VSAT Antennas

Stabilized antenna systems are a critical component to most maritime satellite services. Although there are different designs, antennas generally are gimbaled so they can twist and turn in multiple directions at once. Using inputs from a gyroscope or GPS compass to give it perspective, a stabilized platform makes constant adjustments to keep the antenna pointed at the satellite. Saltwater and electronic components are not a match made in heaven, so a radome is employed to keep waves, spray and mist off the antenna system.

"Shipping companies are rolling out [enterprise resource planning] applications, which require constant connectivity. In essence, they require an office at sea." — Novello, CapRock

Sea Tel is the established market leader in stabilized VSAT platforms, according to Comsys, with nearly 72 percent market share. Orbit Marine of Israel is the second largest supplier of stabilized VSAT antennas with more than 17 percent of the market. The remaining 11 percent of the market is made up of a number of companies, including Schlumberger, the global oil field service firm that manufactures stabilized antennas for its own use. Comsys noted that shipping companies demand service centers in ports worldwide, creating a significant barrier to entry for competitors. With the possible exception of Schlumberger which does not generally market its antennas outside the company, look for Sea Tel and Orbit to continue to dominate the market for stabilized antennas.

Finding room on a ship, barge, ferry or drilling rig to securely mount a stabilized VSAT antenna system, which might be as much as 12 feet in diameter depending on its frequency and antenna size, always is a challenge. One intriguing new competitor to arrive on the scene is KVH, which produces the TracPhone V7, which uses a 60-centimeter stabilized antenna. The antenna uses spread spectrum technology and KVH has partnered with ViaSat and SES Americom to deliver a turnkey service known as mini-VSAT Broadband Service. The service covers coastal regions and will be expanded in the near future to cover important shipping lanes. KVH’s antenna requires just two men to lift, while competitors systems require a crane to lift hardware in place, thereby mandating that VSAT systems only be installed while a ship is in port for an extended period.

Service Providers

As the market for maritime satellite services has expanded the number of service providers has risen as well. Comsys estimates that 20 percent of nearly 150,000 vessels identified are untapped potential customers for VSAT services, and the number of VSAT operators who now target the maritime market has grown from around 10 a few years ago to more 90 today.

In 2007, Inmarsat launched its Broadband Global Area Network (BGAN) services, and in a move that surprised some, chose to target the land market first rather than the maritime market. "With Inmarsat increasingly aware of the competition it was facing from VSAT services, it was therefore a big surprise to us that, when making the decision on its fourth-generation satellite system, the organization decided to concentrate its service and development on land-based services," says Simon Bull, senior analyst at U.K.-based Comsys and author of "The Comsys Maritime VSAT Report." "With approximately 60 percent of its revenues derived from maritime and one of its great differentiators being its global service it almost beggars belief that the company decided not to provide a maritime version of BGAN nor a global service, preferring to concentrate on the land masses. The magnitude of this mistake has only just begun to be corrected." Leveraging its new constellation of I-4 satellites, Inmarsat introduced FleetBroadband in 2008. Two different types of terminals are available; one supports IP connectivity up to 284 kilobits per second (kbps) while the second supports speeds up to 432 kbps.

In October, Iridium introduced a competitive service called OpenPort and touts the service’s global coverage, including north and south poles. OpenPort’s shipboard equipment uses an omnidirectional antenna, which eliminates the need for an expensive stabilized antenna. The service can deliver IP connections between 9.6 kbps to 128 kbps. Thuraya provides maritime services on a regional basis including the Red Sea, the Mediterranean Sea, the Arabian Gulf, the Arabian Sea, the North Sea, the Baltic Sea, the Caspian Sea, the Black Sea and parts of the Indian Ocean and the Atlantic Ocean.

During the early 1980s, Inmarsat was the sovereign of the seas, charging $10 per minute for voice and telex connectivity. The energy industry consumed large amounts of Inmarsat services and monthly bills exceeding $30,000 per drilling rig were common. Energy companies were quick to adopt VSAT services using stabilized antennas. Over the last 20 years, companies such as CapRock, Schlumberger, Stratos and Broadpoint have expanded beyond the Gulf of Mexico to provide communication services. With a global reach, these companies expanded into commercial shipping and other maritime markets. Conversely, Ship Equip, Vizada (formerly Telenor) and MTN began offering broadband VSAT services to commercial shipping and cruise lines. As these companies grew, they expanded into other areas such as fishing and energy.

The impact of broadband VSAT services on Inmarsat and the maritime industry has been profound, says Bull. "While the penetration into Inmarsat’s market by VSAT operators was and remains small in terms of absolute numbers, VSAT has effectively cream-skimmed the customer base, taking the largest and most valuable users and dominating each of the segments it addresses," he says. "Inmarsat is still used in the oil and gas rig and supply ship, cruise and ferry markets, but the vast majority of the traffic flows over stabilized C- and Ku-band VSAT systems.

"Inmarsat’s major advantages in the maritime market include its coverage, spectrum, [Global Maritime Distress Safety System] role, distribution and service networks, range of products, price of user equipment and, not least, the company’s established brand and name," says Bull. "On the downside, the company is limited in terms of the amount of spectrum L-band affords it and this, in turn, means that bandwidth is relatively expensive when compared to [fixed satellite services] capacity. Consequently, Inmarsat’s services are mostly charged by volume — whether this is in minutes or megabits per second — and heavy volume users can face very large monthly bills as a result. Prior to the current liberalized broadband world, this was a limitation, but not a critical one as users the world over viewed communications as an expensive resource which should be used with discretion and control. However, the environment today is very different with high levels of connectivity and low prices available to the majority of the world’s population."

Claude Rousseau, an analyst with NSR, agrees that Inmarsat faces some challenges. "There are some tough times ahead as they face increased competition from both L-band and VSAT services providers," he says. "But Inmarsat has provided excellent service over the years and their customers are very loyal to their brand. In the maritime market, your customers tend to stay with you, and you shouldn’t discount the need for narrowband communications in the future, which is where Inmarsat excels. There are large number of vessels that only need limited voice, fax, and e-mail — traditional narrowband applications. Fishing vessels are good example. They don’t have deck space for a stabilized VSAT and their communication needs don’t justify the expense."

There also is the possibility that Inmarsat may offer VSAT services in the future. In 2004, Inmarsat put forth a commercial framework agreement that all if its distribution partners signed. Earlier this year, Inmarsat signed an option to buy Stratos, one of its distribution partners, when the agreement expires in April. Stratos offers wideband VSAT services to the maritime industry and an acquisition may allow Inmarsat to expand beyond L-band services. There is speculation that Inmarsat could simply be rolling up their distribution partners to eliminate multiple levels of markup on its services and could sell off the broadband division. Add to the mix a potentially hostile takeover attempt on Inmarsat by Harbinger Capital Holdings and the company’s future becomes very interesting.

Future Trends

The maritime industry’s appetite for satellite bandwidth will continue to grow in the future. Orbit, Furuno, Eutelsat and Speedcast jointly have announced the successful sea trial of a new global Ku-band VSAT service. During the trial, a cargo ship sailed from the Atlantic, to the Mediterranean Sea, through the Suez Canal, into the Red Sea and across the Indian Ocean, finally stopping at a port off the Sea of Japan. Throughout its journey, the ship has communications supplied by ubiquitous Ku-band coverage. Marketing plans for the service are expected to be announced soon.

Another trend is larger bandwidths at the high end of the market. Sea Tel currently supports 120-watt solid state power amplifiers but has multiple requests from clients to support antennas which will support 250-watt amplifiers. This anecdotal evidence, combined with land-based bandwidth consumption trends, suggests demand for larger chunks of bandwidth.

In addition to organic growth, there are new maritime regulations coming which will increase demand. The International Maritime Organization (IMO), which operates under the United Nations Charter, has mandated that by 2012 all seagoing vessels be required to have an electronic charting display information system to replace the paper charts used for navigation today. The charts indicate the location of buoys and the depth of the sea floor, but oceans are dynamic and by the time paper charts arrive on a ship, they often are six week out of date. The electronic charting systems use satellite services to download up-to-date charts.

The demand for satellite services in the maritime industry is growing at a double-digit rate and demand is expected to continue in this range for the next several years. There are now a significant number of service providers with annual revenues between $200 million and $600 million. Which company will hit the billion dollar milestone first?