Broadband Maritime Stirs Spirited Discussion

by Elisabeth Tweedie

London, July 13, 2012--The maritime market for satellite services is one of the fastest growing segments of the industry.  Euroconsult has forecasted that the number of satellite communications terminals in the global maritime market will nearly double over the next de-cade, with a compounded annual growth rate (CAGR) of seven percent over the 10-year period.

In what was often a spirited and at times even cantankerous debate, the key topic that emerged from the GVF Conference on Broadband Maritime held last month in London was not the market size nor the relative merits of the different technologies although these were covered; rather it was the importance of the human element.  This meant crew welfare but also very clearly the need for better communication and understanding between the system vendors and the users.

Presentations from both Demetris Makaritis, Fleet Manager, Navigator Gas and Kaushik Roy, DPA and Company Security Officer MOL LNG and the accompanying comments from the floor demonstrated this lack of communication very clearly.  Demetris saying very unambiguously that he would happily pay more for bandwidth as long as the service is available and working.  His experience to date has been that VSAT is neither, with one vessel reporting 60% down time in March and April.  Kaushik said that the VSAT service was unreliable but that he had kept Fleet Broadband as a backup.  However he complained that he couldn’t get through to the ship if the crew were using all the capacity for downloading books or movies. Obviously no one had explained traffic prioritization to MOL LNG and there was no one on the staff with that knowledge.

There are approximately 9,000 commercial ship owners (excluding fisheries and leisure) of these 4,500 own only one ship.  But Navigator Gas and MOL LNG are not small one man band operators, Navigator Gas owns and operates a current fleet of 12 modern 20,500-22,000 cubic meter semi-refrigerated gas carriers and MOL LNG is part of Mitsui OSK Lines which operate 910 vessels.  MOL LNG itself is involved in 25% of the world’s Liquid Natural Gas (LNG) transportation.

Questions from the floor indicated that in Navigator Gas’ case the particular antenna being used was probably inadequate for the required service.  If that kind of miscommunication can arise between major operators and the service providers imagine how bad the situation could get with a small operator who would be even less likely to have the resources to devote to understanding Satcoms.

Tellingly one participant asked why the radio officer who would presumably have a greater understanding of the technical requirements was not involved in the buying process.  Kuba Szymanski of Intermanager pointed out that the post of Radio Officer had ceased to exist many years ago as computers replaced wireless on board ship.

So we have Satcoms providers who in many – but not all – cases don’t know enough about the market they are selling into and buyers with little or no knowledge of telecommunications who therefore

don’t know the right questions to ask to get the service they need.  Hardly a recipe to successfully grow a market!  The buyers need education which is not currently being provided by the Maritime Academies.  Warsash Maritime Academy for example spends 6-12 months training students how to use a sextant – an instrument developed for navigation 4,000 years ago and still regulation on board equipment but only used in extremis, but no time at all on VSAT operation. 

Richard Roithner of Euroconsult pointed out that on average telecoms represented less than 1% of the operating expenses of a ship so it’s not likely to be an area that will command much of the training budget.  Given that situation the vendors have two choices: wait, and continue to get bad publicity from customers who have been sold systems that don’t meet their needs, or provide that education. Equally the vendors need to understand more about the market they are trying to grow – maybe they should seek out and recruit some of those retired Radio Officers!

Unsurprisingly the maritime industry like the most of the rest of the world has been impacted by the economic crises and across the board cost cutting is taking place although not so much in telecoms according to Roithner.  Roger Adamson of Stark Moore Macmillan a marketing and communications company with a maritime division gave a different perspective when he mentioned that the average monthly spend on VSAT communications is currently US$2.6K compared to US$3.5K a year ago.  Some of this can be accounted for by VSATs being installed on smaller vessels, but it’s unlikely that this will account for the entire decrease.  He stated that ship owners are in crisis mode and their focus is not on satcoms “unless it is clearly seen to provide savings and efficiency gains (crewing, ops, IT and commercial)”.   A point that was repeated by several other presenters. 

Ship owners and managers need to be able to see the tangible quantifiable benefits of broadband communication. 

Crew welfare was a recurring theme.  All agreed that it was an important area but one that is difficult to quantify except in terms of the extra bandwidth it consumes.  According to data from Roger ships using L-Band on average use 70MB a month compared to ships with VSATs who on average consume 20GB.  However the average monthly spend on L-Band communications is US$1,051, so clearly VSAT offers value for money if the extra bandwidth used can be cost justified.

Mark Woodhead Managing Director of Headland Media a company that provides daily newspapers, entertainment, training and email software to Merchant Shipping, Cruise Ships Mega-Yachts and oil rigs stated that mariners would prefer to sign a nine month contract on a ship that provides broadband internet to a six month one on a ship without that facility.  Following the ITF Seafarers Trust Survey conducted in 2010 which showed that 80% of mariners had no access to the Web and only 20% of mariners had access to private email with a further ~15% having access to email but without private access, Mark had recently conducted a survey with Mariners to find out what they wanted in terms of communication.  By far the highest demand was for Skype to stay in touch with family and friends, followed by private email with attachments and Facebook and videos.  After that professional development becomes important: chart updates, regulations, research etc. 

Kuba wrapped up the conference with a very feisty presentation, hurling questions about the shipping industry to participants to demonstrate that the service providers didn’t know enough about the market they were selling into and complaining that VSATs had been sold on the basis of being as reliable as L-Band, but without providing any Service Level Agreements (SLAs) to support this.  Orange Business Services is one company that has already responded to this complaint and is offering a 99.95% end-to-end SLA for its system to the maritime industry.  However as would be expected this is a high end solution and is likely to be out of range of many of the ship operators.

Kuba asked for the Service Providers to provide a Return on Investment (RoI) for VSATs as this was needed to justify the investment, particularly in crew welfare, and Ship Managers just don’t have that information. 

Very few people in this day and age would deny the importance of giving mariners access to the web to keep in touch with family and friends and enjoy the same access to entertainment, news and information that most of the developed world takes for granted.  However for a ship operator working in crisis mode, as long as crew are still available providing this service is not going to be a priority unless, as Kuba asked, quantifiable benefits can be shown.   For that to happen much greater communication and cooperation would need to take place between the two parties than is apparently happening at present.

----------------------------------

Eliisabeth Tweedie has over 20 years experience at the cutting edge of new communication and entertainment technologies.  She is the founder and President of Definitive Direction (www.definitivedirection.com) a consultancy that focuses on researching and evaluating the long term potential for new ventures, initiating their development and identifying and developing appropriate alliances.  During her 10 years at Hughes Electronics she worked on every acquisition and new business that the company considered during her time there.  www.definitivedirection.comShe can be reached at: etweedie@definitivedirection.com