End Users Talk Satellite Aspirations

Carnival Cruises, Tullow Oil and Al Jazeera are key customers for satellite capacity. With many High Throughput Satellites (HTS) coming online, are satellite operators beginning to really meet the needs of some of their main customer targets?

Carnival Corp. recently appointed Reza Rasoulian, as its vice president of global connectivity and shipbound technology operations. Rasoulian, who comes from the satellite industry, is in a great position to drive change through his new position at one of the world’s biggest cruise companies.

However, while he knows what the satellite industry is capable of, that will not stop him from being critical if the industry does not adapt to the needs of companies like Carnival. “At VSAT Global last year, there were several presentations made by the big satellite operators that the satellite designs of yesteryear are long gone. The message was that the floodgates have opened. I think change is coming, but from a customers’ viewpoint, it is probably not fast enough. Why is it not fast enough? I think everyone is still looking at getting the big picture. I think we need to look at it more surgically. So, how do we provide the best experience to the end user? While we are an enterprise customer, we have thousands of consumers on our ships. They are hungry for bandwidth,” he says.

Carnival Corp., which has a number of other cruise ship brands, is a major acquirer of satellite capacity. To give you an example of the scale, Some of Carnival’s biggest cruise ships will have 5,000 people (3,500 guests and 1,500 crew) on board. These are miniature cities. The company has a fleet of more than 100 ships so you can imagine just how much bandwidth Carnival might need to serve crew and passengers alike. Some of the newer ships contemplated for the next several years will have much higher guest and crew capacities.

Interestingly, in recent times, a tipping point has been reached in terms of the type of capacity that Carnival uses. About two years ago, the company was mainly using C-band capacity. But, in recent times it has been migrating more and more to Ku-band, while still using a lot of C-band capacity. Rasoulian says an inflection point was reached around six months ago where it went to around 60 percent Ku-band/40 percent C-band. In some ports, Carnival has to turn C-band off, to make sure it is not interfering. In other ports, there is C-band interference from shore-side microwave links and so forth.

Carnival has now deployed the WiFi@Sea experience to 30 out of 100 ships. It announced the launch of the service earlier this year and plans to be up to about 40 ships by the end of 2015.

The company wants to see more innovation from the satellite industry as it looks to meet an ever-escalating demand for bandwidth. “I would like to see [innovation] in areas such as antenna technology. There have been a number of announcements regarding multi-band antenna technology. These are very important to us. We are happy with large antennas, but the frequency agility and the band agnoscity is important,” Rasoulian says. “On the ground side, we want higher throughputs, higher return channels. There is a lot of physics we face, but we ask the industry to push the limits to the extent possible to drive efficiency in spectrum use. We do have the needs for a lot of capacity. We want more flexibility.”

Carnival is not the only high profile cruise ship company to really boost its on-board bandwidth in recent years. However, it has taken a very different approach to Royal Caribbean, which has looked to equip fewer ships, but with more bandwidth. Interestingly, Royal Caribbean has decided to work with O3b Networks, which is something we may have expected Carnival to do. Rasoulian suggests a “possibility” of working with O3b.

“O3b is interesting. We have some smart people working at Carnival; we always evaluate all options,” he says. “We are still looking at O3b. We are very excited about the LEO constellations that have been contemplated. We believe we can do the same with GEO capacity. If there was a compelling business case for O3b, we would do it. Would we work with O3b in the future? Maybe!”

Rasoulian admits Carnival will be using HTS going forward. It is currently under contract with a provider to leverage some of the launches that are planned. With HTS, Carnival is hoping to leverage better economics. “We would love to have a ‘follow-the-ship’ model but that might not always be possible. We have record fill rates on our ships. We want to continue that. Connectivity is such an important element, if we don’t serve the bits, we will have a lot of explaining to do,” Rasoulian adds.

The company is moving away from the managed service model, so is taking more responsibility for managing the bandwidth itself. “One of the key learnings, is that it is not just about bandwidth, it is about how you serve the bandwidth, and how you deliver the bandwidth,” says Rasoulian. “To deliver a bit to a user device or subscriber terminal is pretty complicated. There are so many different service layers. These are several hundreds of thousand tons of steel. It is a pretty complex environment. One of the focuses of our organization is really looking at the end-to-end solution to maintain the customer experience.”

Thanks to its recent WiFi@Sea service, Carnival is seeing up to a 50 percent lift in customer satisfaction. The company’s goal is to entice people who have never cruised. Connectivity is seen as an important element to add value and Carnival has been looking at different packages to try and entice users. For example, it has the “Social Media Package,” which costs $5 a day for unlimited access to platforms such as Snapchat, Facebook, Twitter and a few others, so you can share your experiences while you are traveling. If you want that same plan for the voyage, it is $29. Carnival then has value and a premium packages and more access to popular sites. While being coy about the actual take-up of services, Rasoulian says the cruise ship company is encouraged by what it is seeing. “We have doubled our take rates from the time we have started these programs just under a year ago. Not only have we doubled our take rate, [but also] customer satisfaction has gone through the roof. Guests are happy they are not constrained by time,” he says.

Al Jazeera is one of the world’s biggest news broadcasters, which has gone from being Middle-East centric to one of the biggest globally in the news arena. Ibrahim Nassar, manager of the teleport department of the global technology services directorate at Al Jazeera, says the company is pleased with how the satellite industry is adapting to changing needs of broadcasters like Al Jazeera. He says, in the past, Al Jazeera saw satellite operators as just selling capacity, but now, with the game plan being changed in how media content is delivered, satellite operators are getting more involved in selling the solution, and not just the capacity. “They now provide us with ground services, as well as the technology to migrate from the old era of contributing/distributing over satellite to the new era. So, I think they are more engaged in the broadcast business than just selling capacity,” he says.

Al Jazeera is a global media network; it has channels based in the Middle East and North Africa (MENA) regions, as well as hubs in London, Washington, D.C., and New York City. It also now has Al Jazeera America and Al Jazeera Balkan. The broadcaster is trying to establish agreements for global newsgathering where it can use global satellites with a network of fiber, which allows it to send its content back to Qatar for post-production and then to be distributed back. “We have huge platforms and operations. We are trying to establish a solution where we can provide connectivity to journalists in all remote sites and offices, especially in front line areas in MENA and others. They need to have applications such as Internet and VoIP and then they can contribute linear feeds quickly and efficiently to headquarters,” says Nassar. “So, the aim is to retain our famous exclusivity and content to our end users. There is a roadmap for this to be implemented. Right now, we are running proof of concepts, and soon we will be connecting buzzers together to establish the solution.”

Satellite remains central to the news broadcaster’s plans. Nassar admits satellite still has a “significant” role in Al Jazeera’s business, and that the satellite era is far from finished for the company. “We have made huge operating expenditure investments in satellite and backhauling to places like North America/South America, Asia etc. So, we can cover a huge area with just one satellite. We use fiber to contribute the huge throughputs from our hubs and offices. We use satellite to reach our audiences and cable operators worldwide. We use more than 1 Gbps of satellite and 3 Gbps of fiber capacity,” he comments.

Over the next 12 months, Al Jazeera will be trying to make its operations more cost-effective from a contribution point of view by establishing a VSAT and network for its offices in MENA and central Asia. Nassar says this will be a big challenge to achieve. “We also want to make our distribution more efficient by looking for alternatives. We don’t want to switch from satellite, but we just want more efficiency,” he adds.

HTS are also making a difference to the broadcaster. “These satellites bring a very nice solution to us,” says Nassar. “We have huge amounts of content, so we need these satellites. Being like a spot beam technology, they are very secure, and they provide a fiber-in-the-sky like technology. This is provided by Es’hailSat, which is a strategic partner of ours. This is really securing our strategic content to Europe.”

Interestingly, while HTS are welcomed, Nassar still believes that satellite operators can do more in terms of bring the price of capacity down. He says while satellite operators are trying to lower costs, he thinks customers require further savings, especially on some orbital positions. “I don’t want to name some areas, but they are really expensive. But, with new operators like Es’hailSat in the market, we expect prices to come down. We hope they will revisit some of the prices. We won’t only use satellite,” he says.

Tullow Oil, a major acquirer of satellite capacity in Africa, admits its demand for satellite capacity is in decline right now. Richard Mikisa, a network engineer at Tullow Oil told Via Satellite that, because of the current state of the market, the company is being very careful with its investments in the region. Despite the slowdown, Mikisa says there is a lot of demand for satellite capacity in Ghana right now, where there is a lot of oil exploration going on. He also says there are a few other contracts in Kenya, but outside of these two countries, there is not much happening.

“The demand will increase if the oil prices start to go up again, but on the other side, we are getting more links going into what used to be considered remote places. Even in places like Kenya and Uganda, where there were lots of VSATs, even if we were to ramp up to full exploration and production, we would still need less VSAT, because telcos have been getting more terrestrial links into these places,” he adds.

The company has a strong presence in Africa. When asked what the “hot” country markets were in Africa, Mikisa says, “Tullow Oil is really looking at Ghana and East Africa. We have a few things in West Africa such as Gabon. But, Ghana, Kenya, and Uganda are the main territories. We have a few other prospects, but they are still in the pipeline, such as Mauritania. Ghana is where we produce a lot of oil. In East Africa, we are doing exploration as well as doing an appraisal of the opportunities. They are the two main regions.”

The oil and gas market has been going through a turbulent phase, and this is clearly impacting Tullow Oil’s investments. “If you are looking to invest and sign new VSAT contracts or pay for bigger pipes for bigger links into these places, then if you aren’t drilling as much then you cut down. Most of the communications budgets are impacted by the exploration budgets,” says Mikisa. “So, if you are not exploring as much, that directly impacts the IT budget. So, we are affected by market turbulence.”

The oil and gas market remains a fertile one for satellite players, however. The need for satellite communications isn’t going away. One of the interesting trends in this market is what impact non-GEO operators can have in this space. Mikisa admits that new MEO systems could be interesting for the market.

“I think the uptake [of MEO systems] in the oil and gas industry will be faster than in other industries because of the amount of capacity involved. But, they are still extremely expensive. So, where they looked like really viable options this time last year, they are not looking as good in the current environment. But, ultimately, I do see them being game changers. Now that the technology is becoming proven, they will definitely change things. I think most of the onshore places we operate now, we can get terrestrial links in. So, the MEOs won’t make a big difference there. But, they will make a difference in the offshore market where we play. The only way to get communications there is VSAT,” Mikisa says.

With oil and gas exploration still being conducted in many remote areas in Africa, the need for satellite is not going anyway. However, there has still been a frustration on the cost of bandwidth as well as the flexibility of contracts. Andrew Marks, the ex-CIO of Tullow Oil, commented a few years ago “Satellite is king for now, but you have to ask, is the long-term satellite VSAT deal at risk?” So, did the satellite industry listen to Marks’ observations? Mikisa says around four or five years ago, oil companies used to be locked in to some pretty inflexible watertight contracts and they were pretty rigid. He says that the satellite industry has had to reinvent itself to make it more attractive to oil and gas customers such as Tullow Oil.

“They are giving people dynamic pools, and the contracts can be short-term. If you need a change, the lead times are getting shorter. The satellite industry has had to change with the times, and the types of deals available now are very different. You are no longer locked into rigid, five-year, static contracts. Now, you can get contracts for six months and the bandwidth can be dynamically allocated. The technology has caught up with the times. To remain relevant, they had to change the way the technology works and how it is contracted,” Mikisa adds.

However, while the satellite industry has raised its game, and new HTS promise further advances, price is still the main issue facing companies like Tullow. “The price for satellite is still pretty high. If you are going to go for a MEO option, you need to buy big amounts of bandwidth. The price is still a bit steep. Satellite’s reliability is better, but the pricing is still the major issue,” says Mikisa. VS

_{Mark Holmes is the editorial director of Via Satellite and Avionics magazines.}