At SATELLITE 2019, Via Satellite announced its first winner for the new Satellite Technology of the Year (STOTY) Award, which recognizes superb technology achievements. This is a team/company award, rather than an individual award. The first winners of this award were Intellian Technologies, a relatively new company that has shaken up the market with a number of innovative products and technology. Its v240MT Tri-Band antenna system is the kind of flexible product/technology that satellite operators/end users crave. Intellian took the honors and is the first high profile winner of our STOTY award. We talk to Intellian Technologies CEO Eric Sung about winning the Award and what it means to this engaging tech company.
Sung: First of all, I would like to thank the Via Satellite team for selecting us for this Award. It is absolutely a great honor. As a company that was founded in 2004 as a small start-up in satellite communications, this recognition is the most precious thing to our company and our team, because this is recognition for technical leadership. Everyone from Intellian was moved by the fact this was the inaugural Award. We take this Award as encouragement to thrive toward even bigger innovations. I would like to express my utmost gratitude to Carnival Cruises, and their team for the trust and support they have given us for selecting the v240MT solution.
Sung: Carnival Cruises has been our customer since 2015. They have installed the v240M, which was the world’s first 2.4-meter C- and Ku- band dual band auto-switching antenna system. We probably deployed 50 to 60 of them to multiple brands under Carnival Cruises. Why are we working closely with Carnival, they were keen for us to develop new antenna systems that could deliver a different level of throughput to their passengers and their service providers, and a system that can work with any satellite operators and integrators. We partnered with SES/O3b to develop this 2.4-meter Tri-Band and Geostationary Orbit (GEO)/Medium Earth Orbit (MEO) antenna system. And finally, we succeeded in delivering this Tri-Band and multi-orbit antenna system to the market with Carnival. The need for cruise line operators is quite obvious. To deliver a high-throughput experience to their passengers just like they have at home, was not something that could be done with a dual-band C-/Ku-band system. Before with the v240M, less than 400 Mbps was the maximum limitation in terms of throughput to a single vessel. Now, on a single cruise vessel with multiple v240MT systems deployed, we can deliver 3 Gbps throughput, which is 10 or even 20 times faster throughput than before. This is transformational when looking at the guest experience on cruises, but also in sectors like oil and gas for drilling ships, etc. This level of throughput is absolutely critical.
Sung: Firstly, I am proud that it is a frequency agnostic system. The v240MT has enabled three different frequency bands in one single antenna system. A customer can choose any of these bands via a mediation system, depending on beam availability and network design. The antenna system can automatically switch to the frequency band selected by the software Application Programing Interface (API). Having a Ka-band frequency capability is very important these days. Secondly, it is an orbit-agnostic system. The system is able to support GEO/MEO/Low Earth Orbit (LEO) constellations. Previously, there were GEO-only antennas or MEO-only antennas. The v240MT can support multiple frequency bands and it operates perfectly with SES/O3b services for example. This is perfect for military/cruise and energy customers. By implementing GEO/MEO/LEO into one antenna system, it can operate with any satellite service in the world right now. It also supports LEO, which also makes it future proof.
Lastly, I would like to highlight the antenna mediation platform. In order to provide GEO/MEO multi-service operation, it is critical to manage multiple antenna systems with one single mediation box and software platform to support various use cases and complex antenna switching scenarios, Intellian developed and manufactured an Intelligent Mediator platform. For example, if three v240MT antennas are deployed on a single vessel, two can be deployed in a MEO mode, and one can be using GEO. In case the vessel moves to an area that only has C-band satellite beams in the region, it can automatically switch to a C-band service and this switching can be managed remotely or on the vessel in a few seconds. This is an absolute critical innovation to help service providers create a fully managed service for the end user.
Sung: Already, around 100 v240MT units have been delivered and deployed within Carnival and other customers. Carnival is going to continue to deploy these v240MTs as their standard antenna system for most of their fleet over the next couple of years. Meanwhile, the v240MT system is a perfect fit for cruise, oil and gas, as well as government vessels. These days, a lot of energy customers have started a positive cycle, and they have started to deploy this antenna system, and some have shown a lot of interest to replace all of their antenna systems with the v240MT. Demand is increasing dramatically these days. For example, if you look at the cruise and ferry sector, delivering high throughput connectivity services at affordable prices is becoming the key to elevating guest experiences. Based on this enhanced data pipe over satellite, cruise operators are able to provide a differentiated service, and guest experiences such as Netflix to each cabin.
In the case of the energy sector, high throughput is also very important because offshore vessels need to transmit huge amounts of data to shore, such as surveillance video streaming, safety and regulatory data, business applications, etc. These are the key areas where we see the need for this type of antenna system, and Intellian is working with a lot of potential customers right now.
Sung: We are putting more and more effort in R&D to develop this system. I have been in the industry for just over 15 years, and the next few years, as we all see, will be one of the most exciting times in the industry. Capacity is going to dramatically increase and many new LEO services will come into play. You have the likes of Telesat, OneWeb, Amazon, and SpaceX looking to launch new systems. SES is also going to launch a series of new satellites for mPOWER. Traditional players such as Inmarsat are going to invest more in new satellites. With this, Intellian has been investing the past several years in the development of NX series antenna systems that can support multi-band, multi-orbit satellite environments, and we are about to launch a series of new products and technologies based on this. Going back to the v240MT, we see the demand from the customers for an antenna system based on a single antenna mediation platform. We are investing heavily to improve our antenna mediation platform, and we will also embed Internet Protocol (IP) capability into the antenna systems so you can manage them more intelligently.
Sung: It is true that price pressure for antenna companies and terminal manufacturers will continue. But, price pressure — from my point of view — will not just be placed on antenna system manufacturers, but also on the entire industry participants such as satellite operators, ground segment players, as well as service providers. Antenna systems and satellite terminals from my point of view have been quite expensive due to the limited volume, and lack of innovation. We have been complacent to work in closed eco-systems. This has been part of the nature of the industry. However, in order to bring satellite services into the mainstream and wider markets such as rural communication, enterprise, cellular backhaul, and 5G, the price of the antenna and terminal should be based on technology innovation, and not just margin erosion. High-end antenna systems and solutions such as the v240MT can deliver performance to high-end users, and we believe it will remain as a high-end product and service. It needs a lot of investment in R D and a lot of effort to commercialize it, and we have to interact with the customers to continue to maintain this high-performance product.
Sung: We have been very successful to grow beyond maritime into land mobile, military, and government markets. Around 10 to 20 percent of total revenue comes from government business and around 80 percent comes from commercial. We expect more growth in the military and government market as we develop new products and services. Recently, we have completed the development, and started to deliver a specially designed maritime antenna system for the U.S. Navy Space and Naval Warfare Systems Command (SPAWAR) and we received a large contract award from the Korean Army late last year for the 1-meter Ku-/K-a LP100 auto-acquire man-portable fly-away terminals. We have also the GX100PM, which is a military grade, Inmarsat terminal and this product is gaining a lot of orders and traction from Europe, Australia, and the US. So, as we grow, the ratio between government and commercial will be similar, as we expect revenues to grow for both.
Sung: Yes, as we all know, new satellite services are coming, whether from new players or from incumbents investing in new satellites. The need to develop antenna systems and user terminals from the perspective of enabling these services and the market will be huge. We are developing a lot of new antennas and terminals for Inmarsat, SES, and Marlink, and a couple of other new satellite operators. Our recently announced partnership with OneWeb is for Intellian to develop cellular backhaul user terminals and remote enterprise terminals for their new LEO constellation, and we were able to showcase this new technology at SATELLITE 2019.
Sung: Yes, Intellian is profitable. We are a publicly listed company in South Korea since October 2016. We were established in February 2004. Since 2005, we have been profitable. We have a compounded growth rate of over 30 percent over the last five years and in 2018, we achieved about $100 million in revenues with 10 percent EBIT. In 2019, we expect at least 30 percent growth in revenues, and at least 60 percent growth in EBIT.
Sung: I believe we are living in the most exciting era for the satellite industry. Over the next five years, there will be transformational changes into our lives and the industry. But, having said that, our focus over the next 12 months will be further investment in R&D and engineering to prepare for increasing growth over the next five years. Our strategic direction is very clear. It will be led by technology and innovation. That is our simple goal. VS