As we find the calendar entering the final quarter of 2023, it is the perfect moment to provide some insights and reflections on this past year, as well as discuss what will likely take place in the coming period.
Valour Consultancy has noted a definite slowdown in the number of publicly announced GEO VSAT installations over the last 12 months. Only Satcom Global and NSSLGlobal announced new GEO VSAT installations, not including LEO services.
- In July 2023, Satcom Global reported that it had installed AuraNow VSAT on board an accommodation vessel of Mermaid Maritime. The vessel, The Resiliant, is a 102-metre-long pipe lay and accommodation work barge which houses 250 crew. The service will allow unlimited bandwidth changes, and Mermaid Maritime will only need to pay for the connectivity required in 24-hour increments. This opens the door for the company saving on costs for longer redundancy periods.
- In the same month, NSSLGlobal won a 36-month contract with Dutch-owned Vertom Bereederungs. The contract covers 28 vessels, 13 diesel-electric propelled vessels. In addition, NSSLGlobal provides a complete onboard IT equipment package, which includes a managed Windows Enterprise Server operating user authentication, security updates as well as a print and file server.
With the slowdown in the GEO VSAT installation business, at least those publicly announced, . Tthere has definitely been an uptick in announcements of LEO services, particularly Starlink Maritime. To augment this further, SpaceX has continued to recruit more resellers. In this case, Pivotel and E3 Systems in May 2023 and 3 months later, KVH joineds the party too.
Some of the most interesting LEO installations included:
- In May 2023, Danaos Shipping announced using Starlink connectivity service, via Navarino.
- In the same month, Marlink installed the LEO service onto the vessels of Athens-based ship manager, Polembros Shipping. The company has been partnered with Marlink for many years and has expanded its hybrid network to include Starlink. Furthermore, Marlink installed Starlink onto the vessels of ship manager, Thenamaris.
- The Greek ship manager, Blue Planet, operates a fleet of dry bulk carriers and started rolling out Starlink deployments on its vessels, via Navarino. The installation began with two vessels, which will eventually extend to the entire fleet.
- Japanese-based Mitsui O.S.K lines decided to trail Starlink, in May 2023, provided by Navarino in cooperation with JSAT Mobile (Sky Perfect), which integrated the connectivity service into MOL vessels networks. In addition, during June 2023, MOL also assessed Starlink via Marlink.
- In June 2023, Sun Enterprises, a Marlink customer, extended its hybrid connectivity options to include Starlink’s LEO service. The Piraeus-based tanker and bulk carrier operator uses Marlink’s Sealink NextGen service. This service combines GEO VSAT and MSS with LEO or MEO connectivity, 5G, and digital solutions all managed on its XChange platform.
- Also in June 2023, Tototheo Maritime provided Starlink to the fleet of Intership Navigation. Initially, the Cyprus based company will test the service on three of its vessels before implementing it fleet-wide.
- In August 2023, Norstar Ship Management (NSM) announced the installation of Starlink’s LEO service on one of its managed vessels, the Golden Curl. The installation took place on the 12th May 2023, in Singapore.
- Furthermore, as of August 2023, the Athens-based Grace Management company is undergoing the process of rolling out the LEO service via Navarino. Starlink will be installed on five of its modern tankers.
- More recently, in late September 2023, Anglo-Eastern announced hitting its 100th installation of Starlink within its managed fleet.
What Does This Mean?
From a simplistic perspective, it means Starlink Maritime service’s popularity continues to grow. As discussed in our 2023 Starlink Maritime report, the firm is serving thousands of maritime vessels, indirectly via its resellers or directly now.
Additionally, it highlights that shipping companies do have the funds to pay for these services, despite their standard service fees for VSAT, MSS and where reachable, cellular services.
Many in the industry previously stated this would be a “one or the other” competition between LEO and GEO services. However, it is clear the mindset of shipping end users is presently a hybrid approach. As an example, LEO is perfect for, say, crew usage, GEO for ship operations, and MSS for safety purposes. How this will continue or change in the coming years will be fascinating to witness.
Another point to consider is the recent acquisition completion of OneWeb by Eutelsat in late September. Combining LEO and GEO services under one roof, this is a perfect example of a horizontal integration with the satellite ecosystem. Also, some maritime service providers will be looking to work with this new combination and hoping it will offer a counterbalance, as well as unique selling points compared to SpaceX’s Starlink service.
Speaking about financials, after the global pandemic of 2020, Valour Consultancy foresaw a bumper year in service airtime revenues in 2021. This was due to the variety of reasons; applications like cruise and offshore energy coming back to life. But also deferred payments from shipping companies holding off from early 2020.
Many people will have opinions on whether hybrid connectivity models are commercially better or worse for vendors, specifically service providers. Lower profit margins on LEO services, and in some cases, no profit margins will potentially push companies from the black to the red.
However, one point cannot be denied, we will likely see a major increase in overall revenues for overall global VSAT airtime by the end of 2023. By how much is yet to be confirmed. Our next edition of the Future of Maritime Connectivity – 2023 Edition, will hopefully shed some light on this boost in revenues. For more information, click here.
Consequences and Exceptions
Remember, nothing is all rosy. Speaking to some service providers catering to the leisure market in Europe, they have noted that GEO VSAT revenues/installations and cellular airtime revenues have been somewhat down in 2023. With high demand for Starlink’s Maritime service, this has masked the predicament of the leisure service providers. Readers should note, in our latest report on the maritime cellular market, we record cellular airtime revenues approximately decreased 10-20% in 2023 from 2022.
It should also be highlighted that some of the bigger service providers have spoken about an increase in their GEO VSAT usage, and consequently generated higher revenues during 2023, whilst also selling extra Starlink’s data package deals. This section highlights the mantra “there is no one-size fits all ”, or more literally, one trend.
Conversely, you could also argue due to the short-term seasonal nature of the leisure market, customers can alter usage much more quickly to cater to demand or different supply to meet their data demand. In merchant or offshore energy, customers are typically on much longer-term fixed contracts. However, the latter point is changing quickly as some merchant customers are now being given much more freedom in their usage volumes and frequencies, as mentioned by the earlier Satcom Global contract.
Finally, a major piece of recent news was the announced passenger service by SES’s MEO constellation and Starlink. This has been in the works for some time.
SES and SpaceX announced a plan to work together to offer a new ocean cruise-specific application, SES Cruise mPOWERED + Starlink. The solutions are available in two tiers; Premium (3Gbps/ship), or Pro (1.5Gbps/ship). The cost of solutions is undisclosed. However, if Valour were to provide a guess on the services, a large cruise vessel (>5,000 passengers) spends around $80,000 a month (excluding hardware/integration/value-added services) on VSAT services for around 600 Mbps connection. The Pro tier is likely to be around $200,000 – 250,000 per month and the Premium will probably be near the half a million-dollar monthly milestone. Some very lucrative business for serving a single vessel, albeit a very large one.
Finally, a little bit of rumour is that SES will be closing down its Skala reseller platform. This is likely to affect more than 2,000 merchant vessels and companies like Satcom Global and Telenor Maritime. With significant revenues, and one would assume profitability, being generated from its direct cruise business (O3b) and also some of the bigger merchant accounts (Maersk), the question will have arisen internally “Is it worth the effort of serving smaller vessels (merchant) by its service provider resellers, with much less monthly ARPU ($1,500-2,500) with resellers also taking their cut?”
We think if the rumour is true, we know the answer to that question.
“2,500 vessels multiple by monthly ARPU ($2,000 minus $400 (reseller cut), $4 million monthly. Eight big cruise vessels on Premium Tier.”