Maritime provider KVH sees 'major impact' from OneWeb constellation
January 12, 2017
PARIS — Maritime satellite broadband hardware and service provider KVH Industries is developing an antenna for use with the OneWeb constellation of low-orbiting satellites to provide a complementary service to its coming capacity from high-throughput satellites in geostationary orbit.
KVH’s current network uses 19 C- and Ku-band wide-beam satellites linked to 12 teleports worldwide. As of 2016, KVH said its antennas and the related maritime broadband service offering was on board more ships than the next two maritime VSAT providers combined.
The company reported that as of October 2016 it had delivered more than 7,000 maritime VSAT systems.
25,000 VSAT-equipped ships and a 225,000-ship addressable market
Looking at the same hockey stick-shaped forecasts from NSR and Euroconsult, KVH sees a market of 250,000 vessels of which only 10 percent are currently fitted with VSAT systems. Among those awaiting a broadband solution are some 40,000 ships using London-based Inmarsat’s L-band solution.
Inmarsat is offering its own VSAT service to customers that agree to transition to Inmarsat’s Global Xpress Ka-band satellite service, which uses three satellites in geostationary orbit. With its investment in Ku-band VSAT HTS, KVH is a direct Inmarsat competitor even as it generates revenue from Inmarsat’s heritage L-band service on KVH customer fleets.
Addressing a Jan. 11 investor conference organized by investment bank Needham & Co., KVH Chief Executive Martin Kits van Heyningen said the maritime sector, despite the recent stagnation of the oil and gas sector, is poised for a major move to broadband.
“We’re at the beginning of a major upgrade with this market,” Kits van Heyningen said. “The [mainly Inmarsat L-band] technology that has been used is over 10 years old now. It’s really no longer adequate for modern operations.”
KVH has positioned itself as a one-stop shop for maritime fleets, providing hardware, connectivity and content and providing hundreds of terabytes of data annually to customers.
The company’s IP-MobileCast alone delivers 500 gigabytes per month to customers and after what appeared to be a tepid response from the market is now finding traction. One of its attributes is filling unused seconds of satellite capacity used for communications to deliver slices of video content that then are assembled on board.
A Ku-band HTS antenna this year, and then a OneWeb opportunity
KVH has leased capacity on several Ku-band high-throughput satellites and expects to be entering production of HTS-compatible antennas by March, Kits van Heyningen said. Existing hardware will continue to function but only those customers upgrading to the new antennas will get the substantial throughput boost from the new spacecraft, for about the same per-megabyte price they are paying today.
KVH sees the low latency of the OneWeb network as a complement to the geostationary HTS capacity. OneWeb is scheduled to begin launching its constellation of 700-plus satellites in early 2018.
KVH’s new chief financial officer, Donald Reilly, said OneWeb ultimately would have a “significant impact” on the company’s business in both maritime broadband hardware sales and services, and in the cellular backhaul market.
For the nine months ending Sept. 30, KVH’s service revenue was down 4.8 percent with a slump in engineering services. Its airtime service revenue was down as well.
Reilly said KVH’s own VSAT business airtime revenue increased slightly during the period but was dragged down by a 20 percent drop in revenue from L-band services provided by Inmarsat.
“Inmarsat is a diminishing revenue source for us,” Reilly said.
Kits van Heyningen said the company in 2017 would focus on selling service packages that include the antenna hardware and the airtime and content bundled into the same monthly bill.
While eliminating the immediate revenue impact of equipment sales, the bundled package should yield higher revenue and profit within 12-18 months, he said. For maritime fleet owners, the all-service contract eliminates the problem of “a stranded investment” in an antenna in the event the ship is sold.
Peter B. de Selding