iDirect Maritime podcast #1. VSAT: Present and FutureBy james tweed • Mar 27th, 2012 • Category: iDirect
For many years the development of communications at sea has focussed on one thing: the safety of ships and their crews. The necessary investments in major satellite infrastructure and the complex nature of the technology had translated into costly terminals and airtime for ship owners and operators.
Until recently, communication services using L‐band satellites dominated and there was little choice when it came to the type of communications system fitted on a vessel. Then the use of VSAT technology based on Time Division Multiple Access or TDMA ushered in a whole new era of opportunity for communication at sea.
Offering flat‐rate, always‐on IP connectivity these TDMA VSAT networks have increased from less than 20% to more than 50% of the maritime VSAT market in the past five years making VSAT connectivity one of the hottest topics in maritime communications.
With them comes the opportunity for ships to become highly functional remote offices, integrated with corporate network and other applications including those to improve vessel management, extending the communications infrastructure to personnel on board, and allowing crews to train and remain in contact with home.
But for a technology with the potential to transform the way shipping companies operate there has been a surprising lack of real data about how ship operators are actually using and benefitting from their VSAT systems, what applications are making a difference and what the real costs and savings are likely to be.
With a flood of new entrants into the maritime VSAT service provider market, keen to take advantage of the projected increase in VSAT fittings, ship operators are now faced with a range of competing requirements and suppliers and little hard data to help them evaluate whether VSAT could be the right choice for them.
iDirect occupies a unique position in the VSAT market. The US based company’s Intelligent Platform is the core technology enabling solutions from twelve of the top fifteen maritime communications providers and iDirect’s satellite routers are currently carried aboard 47% of all VSAT enabled vessels. They are at the forefront of the new VSAT era and recognise the maritime industry’s need for information and education on
To provide this information iDirect turned to specialist marketing consultancy Stark Moore Macmillan. Commissioned to undertake the first comprehensive independent survey of maritime VSAT, during 2010 Stark Moore Macmillan questioned both existing VSAT users and potential VSAT users, conducting in‐depth telephone interviews with Chief Information Officers, Chief Technical Officers, Fleet and Technical Managers and IT Managers. Interviewing 60 shipowner/operator companies with 10 or more vessels the sample represented 5,500 vessels or 13% of the world’s commercial trading fleet of 1000GT or over.
According to the findings the adoption of VSAT technology shows no sign of slowing with nearly 30% of the market considering or ready to implement VSAT within 24 months. With only 7% of respondents indicating that complexity was a reason not to fit it appears the value proposition of VSAT technology is being understood by the maritime market.
When it came to the cost of VSAT systems versus L‐band, the survey produced what could be considered conflicting results. With the average monthly VSAT spend at US $3,500 per month it is considerably higher than the average L‐band solution. However, when asked whether the VSAT system had saved money 20% of respondents claimed they had saved money, whilst 60% claimed they had seen their costs double. This result from the survey exposes a fundamental weakness in the ability of maritime businesses to quantify the value and cross‐business benefits of VSAT.
It is this finding which Stark Moore Macmillan believes goes to the heart of the VSAT issue, namely that those ship operators who have attempted to quantify the costs of VSAT have only compared the basic cost of fitting and running a VSAT system as opposed to their L‐band system. No vessel operator had included the cost savings realised elsewhere in the business resulting from the introduction of VSAT and the applications they now had access to. The result is that even those who believed they had made
savings had no way to demonstrate them.
For the 30% of ship operators considering fitting VSAT in the next 24 months, and beyond, this has major implications. On the one hand they need to migrate communications away from the operational IT remit and towards its new position as a core strategic cross‐business function, driven at senior management level. But they currently lack the necessary methodology to calculate the value VSAT can offer to all areas of the business.
The survey confirms that in the vast majority of cases senior management are not involved in VSAT purchase until the final purchase decision is being made. Senior management are taking decisions to implement applications like Enterprise Resource Planning (ERP), Weather Routing, Video Conferencing, ECDIS updates and Regulatory Data in response to challenges including environmental compliance, bunkers, safety and competitiveness. But when it comes to the communications backbone necessary to successfully deploy these applications across the fleet, namely the always‐on, flat rate IP broadband provided by VSAT, evaluation is predominantly still an IT remit.
So while senior management are preparing to spend large sums on ERP solutions to drive efficiencies in their business, they are in danger of jeopardising these efficiencies by not having an adequate communications infrastructure in place.
Another interesting finding of the research is that the primary driver for adopting VSAT is now increasing operational efficiency on‐board. This is a change as the primary driver a few years ago was improving crew welfare.
While still an important benefit Stark Moore MacMillan now points to the fact that supply and demand are now broadly in balance in the seafarer market as an explanation for this change in emphasis. Despite the challenges that maritime companies may have quantifying the total cost of ownership and benefits for a VSAT solution the overall picture confirms the widespread belief that VSAT is set to increase its penetration
of the maritime market.
In response to this iDirect concluded that sharing the findings of the research would be of benefit to the maritime community: encouraging it ‐ and particularly its senior management ‐ to focus on how they quantify the real value of VSAT and its potential to improve maritime businesses.
To help them further iDirect is creating a series of VSAT Executive Briefing Podcasts of which this is the first. Developed specifically for ship operator senior management these short podcasts will provide the case studies and strategic insight required to set realistic expectations about VSAT, and guide them towards methodologies which enable the holistic benefits of a VSAT investment to be properly quantified.
You can download your free copy of the ‘VSAT: Present and Future’ Whitepaper containing the full survey results from the iDirect website at www.iDirect.net/maritime where a transcript of this podcast is also available.
And please join us for the next in the iDirect VSAT Executive Briefing Podcast series in April.
Thank you for listening.