A gathering of the main players in the mobile satellite services (MSS) market featured more realism than the same event a year ago, but the switch from the unbridled optimism of the previous year actually was a refreshing change.
The Mobile Satellite Users Association conference returned to Baltimore in 2007 with some executives fully confident that the new breed of MSS companies would thrive with plans for a new generation of businesses using hybrid satellite-terrestrial networks.
But at the 2008 gathering of those same companies, many executives looked to have added a dash of caution to their optimistic outlooks, no doubt influenced by some of the events that took place since the previous meeting. Terrestar in April lost its CEO and laid off half its workforce. In January, Mobile Satellite Ventures announced plans to extend support for its current communications through 2011 (and then in June extended that deadline through 2012).
The older, more established companies — Inmarsat, Iridium, Globalstar — continue to warn the newer entrants that the MSS market remains a tough business, even with demand for communications on the go increasing rapidly around the globe and customers demanding not just voice but data and other services from their providers.
“The definition of mobility has changed,” says Leo Mondale, vice president, business development and strategy, Inmarsat. “Oil rigs used to be considered mobile. Now the individual is the mobile unit. That has a lot of interesting opportunities. The definition of mobility retreating down to smaller units.”
Evolving to meet the needs of customers will be key to survival, but it is too soon to begin projecting massive revenue streams from these promising but still unproven markets? “The big question is will passenger (consumer) demand drive a lot of investment on that proposition. This is unproven,” says Mondale. “It’s a great conversation topic — the use of Blackberrys and phones on airlines — but it remains to be seen. … There will be a lot of competition, but it’s hard to imagine mobile satellite demand driving all of that infrastructure.”
So even with this burgeoning demand, not every MSS player may be back for the meeting in 2009 or beyond. “There are going to be a lot of systems and competitors to go head-to-head in the market as the third, fourth, fifth or sixth competitor, and that is not the smartest thing to do,” says Tim Bryan, CEO of ICO Global Communications. “I think larger groups of people want functionality but not full time,” and that occasional demand will not be enough to keep all the potential competitors going.
But a reduction in the number of MSS players is not necessarily a bad thing. A smaller, strong group of MSS players serving a growing and diverse client base would be a win-win for everyone, and it also will fun to see how the market reaches this point.