[Satellite News 04-07-09] Inmarsat’s acquisition of a 19 percent stake in SkyWave Mobile Communications was a “small investment” for the company in its efforts to expand Inmarsat’s presence in the Satellite Low Data Rate (SLDR) market, Inmarsat COO Perry Melton told Satellite News.
    “In terms of the LDR market, and the applicability of satellite, we are keen to promote an increased take-up and wider market penetration of these capabilities. This minority investment in SkyWave is about fuelling some consolidation and driving the development of Inmarsat’s services to a next generation capability,” said Melton.
    Inmarsat, realizing that the SLDR services sector is unfamiliar territory for the mobile satellite services provider, is preparing for a change of pace, according to Melton. “This strengthens our position in providing more capable services, not only now but in the future. This is a key point. We have just finished repositioning our Inmarsat-4 satellites, which will provide services past 2023. We see a long-term view from companies that are investing in SLDR or other services. They want a network that will be around for a long time,” he said.
    According to the terms of the investment, SkyWave will acquire assets relating to the GlobalWave SLDR products and services business from TransCore and will enter into a sales distribution relationship with TransCore focusing on the North American trucking and rail segments market, designed to leverage TransCore’s presence in those segments. “This is a consolidation of two relatively large players within the SLDR market. It provides a platform to take an existing customer base and invest in next generation capabilities. It also delivers the economies of scale — smaller, cheaper hardware — that allows them to grow the marketplace,” said Melton.
    While Inmarsat’s initial stake in SkyWave is 19 percent, Melton said Inmarsat’s intent is to accelerate development within the SLDR market. “We don’t necessarily need to have total control. Our desire is to facilitate or enable the next step change in the market, which their acquisition of the GlobalWave assets will provide. This provides scale,” he said.
    Improving the service provision aspect in the SLDR market, which has been fragmented for several years, is another critical driver. “What customers need is some consolidation at the service provision level, where you can get the end-to-end solution delivered in a more efficient way and get access to a wider customer base. This investment will facilitate that consolidation. We are backing an organization that can champion those capabilities and drive this next generation of growth,” said Melton. 
    Despite the economic downturn, Inmarsat believes the SLDR market will be quite resilient due to its diverse market of security, government, trucking and other commercial customers. “There may be certain market segments that are weaker, but there are others that are quite strong. If you look at the increased interest in security and tracking, whether it is containers crossing the oceans or by land across the United States, certain requirements are increasing. We are seeing growth. Even Iridium is reporting growth. Their SLDR market is showing growth even though it may not be a high revenue market for them. There are some market segments that are quite resilient because there are certain drivers,” said Melton.
    Iridium also is trying to monetize the SLDR market. In reacting to the deal with SkyWave, Iridium CEO Matt Desch told Satellite News that he has more confidence in his company’s value proposition to the machine-to-machine (M2M) market. “We don’t view the Inmarsat/SkyWave deal as a game-changer for the M2M industry,” said Desch.             “Where Iridium was able to immediately change the game when it entered the M2M market six years ago, this is another example of an Inmarsat partner integration that will take time. Iridium anticipates that M2M will continue to be our highest growth market in the years to come as it has been for quite some time.”