Strategic Analysis of Maritime Satellite Communication - Free Essay Example

Sample details Pages: 8 Words: 2447 Downloads: 8 Date added: 2017/06/26 Category Management Essay Type Analytical essay Did you like this example? Strategic Analysis of Maritime Satellite Communication Don’t waste time! Our writers will create an original "Strategic Analysis of Maritime Satellite Communication" essay for you Create order 4. Strategic Analysis and Challenges of Maritime Satellite Communication (MVSAT) 4.1 Commercial Offering for MVSAT Providers With the ever changing of customer needs, changes are needed to provide the type of service offering to suit the customers. In particularly over the past few years, the maritime market has evolved in the form of wider commercial segment by using offering broadband at sea as an essential requirement to recruit and retain high quality crew members. To aid in the offering, Maritime Very Small Aperture Terminal (à ¢Ã¢â€š ¬Ã…“MVSATà ¢Ã¢â€š ¬Ã‚ ) operators have responded by offering unlimited data usage with a fixed monthly charges as well as rolling out lower hardware antenna costs to fund the usage of Ku Band services which allows higher throughput (Transfer Data Rate). 4.2 Deck Space Limitation for Equipment It is a foolish assumption to assume the availability of plenty of deck space on board a vessel to install the antenna just by looking at the vast sheer size of the vessel itself. In actual fact, this is far cry from the truth as deck space is often a premium even if we are considering huge vessels. Typically for a vessel to cruise around globally in a C Band communication system, a 2.4 metre antenna with a protection radome as large as 3.7 metre in diameter on board is required. For regional travel vessels, more vessels owner would prefer to use a Ku Band communication system as the protection radome can be reduced to 1.2 metre from 3.7 metre and using only a 1 metre Ku Band antenna which reduce the cost significantly. 4.3 Cruise Segment Within the maritime industry, there are a few segments that are well targeted and now effectively saturated. Dominant competitors usually targeted those profitable segments and areas that suit their strategy plan to grow their revenue. Incumbents such as Maritime Telecommunications Network (à ¢Ã¢â€š ¬Ã…“MTNà ¢Ã¢â€š ¬Ã‚ ) dominate the cruise lines. Even though the number of vessels in these segments are few in number in the range of one thousand but they are significantly higher in revenue in which each cruise can fetch the company as much as USD50,000 revenue per month. In this segment, vessel owners are particular in having a big antenna house on top the vessel that affected the aesthetic of the million dollar vessel. 4.4 Fishing Vessel Segment Fishing vessels are often smaller by size and often the deck space is very limited with majority of the deck space used up for fishing equipment such as cages, net and rods. The sitting and installation of the antenna is a critical part of all communication system. Unsuitable installation in a short mast might result in snapping during rough sea which results in loss of signal. Installation too close to engine room can cause long term problems and unstable communication signals. 4.5 Military Warship Segment Military warships emit all kinds of noises, smokes and interfering frequencies when they go on the firing which makes installation of traditional tracking antenna a challenge. Navy around the globe considered using a highly specialise steerable flat plate phased array antenna but found the cost of such antenna too costly and need specialise manpower to install. 4.6 Large commercial Vessel Segment For larger commercial vessels like cruise liners whose sheer size of its vessel might prevent line of sight to a satellite. To overcome this challenge, MVSAT provider will install two antennas at both ends of the vessel. While this solution provides redundancy to the communication services in case one antenna is faulty, the main setback will be additional deck space and costs needed to house the other set of expensive equipment. However this is a major consideration even for cruise liner that could generate tens of thousands of dollars of revenue from the data or voice services provided to the passengers. 4.7 Leisure Vessel Segment Leisure vessel are smaller in size than cruise and have far lesser deck space available as well as weight is also a major consideration. In addition, many yacht owners also dislike seeing big and bulky antenna on top of their yacht that will damage the aesthetic. For these reasons, smaller Ku Band antenna size which is less than 1m is proven to be most popular. However, with small vessels and small antenna, the challenge of stabilisation increases as smaller vessel tends to pitch and roll far more quickly and at a larger degree than a larger vessel. In addition, Ku Band signal are more susceptible to noise and rain. 4.8 Total Market Size and Area of Focus Based the maritime market database researched and compiled by commercial research company Comsys, there are approximately 1.1 million of different vessels of all the above types as breakdown in the table shown below. These numbers are expanding aggressively on a daily basis especially due to the risk of maritime warfare or pirates and increase exploration of oil and gas. Table 4à ¢Ã¢â€š ¬Ã¢â‚¬Ëœ1: Gross Addressable Maritime Market for MVSAT system Segment Small Medium Large Very Large High-end Commercial 100 grt 973 250 grt 448 500 grt 2,583 1,000 100,000 grt 1,029 Military/ Government 50 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 100 grt 1,937 250 grt 37 500 grt 3,552 1 10,000 grt 44 Commercial 100 grt 15,902 250 grt 7,393 500 grt 37,486 1,000 grt Fishing 100 grt 27,315 250 grt 6,677 500 grt 2,348 1 10,000 grt 2,383 Leisure Mass Sail 1,016,000 Mid Yachts 17,200 Large Yachts 3,103 Mega Yachts 160 Inland 100 grt 2,556 250 grt 4,674 500 grt 4,414 1 10,000 grt 3,298 Total Vessels 1,064,683 36,429 54,116 6,914 Legend: grt: Gross Registered Tonnes For this database, we will fully analyse the total market size in the particular segments and their sub-segments as shown below: 4.9 High End Commercial (5,033 Vessels) These segments compromise of some of the most profitable and heavily data usage segments from Oil Gas Rigs, Oil Gas Maritime, Cruise and Ferries. These segments have the first to embrace satellite as the main source of communication starting from almost 20 years. Through the forecast, these segment will continue to grow but not at an astonishing pace. 4.10 Mainstream Commercial (60,781 Vessels) Bulk Carriers, General Cargo, Passenger/Cargo and Tankers made up these segments with a sizeable market of approximately 60,000 vessels. Based on the research done by Lloyds Register, there are an estimate needs to provide services to around 10,000 more vessels in the market. 4.11 Fishing (38,723 Vessels) These segments consist of Fish Carriers, Fishery Support, Motherships, Trawlers and Other Fishing Ships. These markets are extremely large but in reality very small penetration or efforts are done to capture a larger market share. The fishing vessels owner are sensitive price and the main usage will be on voice and limited usage on data. And majority of these vessels travel regional instead of tankers that travel globally. These markets are typically captured by competitors such as Inmarsat, Iridium and Thuraya who offers low cost L Band satellite services with low throughput. 4.12 Leisure (Approximately 1.04 million Vessels) These segments draw a lot of interests from the incumbents. These vessels mass sail small yachts, super yachts and mega yachts rarely travel globally. These segments can be sub divided into three different regions (Europe, Middle East and Asia Pacific) and with different propositions. Smaller stabilised Ku Band antennas, high throughput and stable network would likely to be the key to success in these leisure markets. 4.13 Military and Government (5,570 Vessels) These segments consist of Warships, Small Navy, Coast Guard and Government vessels are difficult and sensitive markets to penetrate. These customers will normally opt for local provider which is owned by their own government or closely related to the government for security reason. To penetrate these markets, provider might need to set up infrastructure such as teleport in the customerà ¢Ã¢â€š ¬Ã¢â€ž ¢s country to ensure all traffic in and out of the teleport will be scanned by the government. 4.14 Inland Marine Craft (14,942 Vessels) These segments are pretty much undefined and difficult to quantify as very little information is found. One of segment, river cruises is targeted by smaller providers who the vessels owner are look for low cost solution for communication when cruising near to the shore. 4.15 Summary In reality, certain small niches segments would be contracting, but majority segment of the maritime industry appears to be undergoing a booming stage with more and often larger vessels being built. With the growing trend, SingTel should strategise and target the market with the greatest potential. 4.16 Market Pricing for Maritime communication services Based on the market intelligence gathered by commercial reports, sales managers and reseller agents, the average monthly charges per vessel billed to the end customer of different segments are recorded below: (1) High End CommercialUSD6,100 to USD15,000 (2) Commercial Freight and FishingUSD3,100 to USD6,000 (3) Leisure USD2,000 to USD3,000 These monthly charges include the above and bottom deck equipment such as antenna and modem bundled together as a leasing package which is attractive for customers who do not want to fork out upfront amount ranging from USD50,000 to USD100,000. 4.17 External Environmental Scanning (Macro) à ¢Ã¢â€š ¬Ã¢â‚¬Å" PESTEL Analysis Political Economic With financial economy in certain parts of the world crashes and higher unemployment rates are expected in the near future. Companies with tighter wallet and conservative Chief Finance Officer tend to be more prices sensitive and utterly cautious in their spending in any investment which the management doubt it will bring in additional values or improve productivity to the organisation. Social Through globalisation, more and more sea farers have the chance to own a smart phone or a tablet or both. With the increase in smart device ownership, this creates a social space for people to communication using social apps such as Facebook, Whatsapp and Viber. In This phenomenon trigger the huge demand of voice and data usage and can only be supported via satellite for sea farers working and cruising on board the vessels. Crew Welfare is increasingly important as it enables the ship owner to recruit or retain quality crews. For example, a trial done by British Petroleum Tankers was to install maritime satellite communication in some of its vessels. By all accounts, crews from other vessels requested for transfer to the vessels with communication systems and threatened to quit if not successful. This crisis forced British Petroleum Tankers to make a hasty decision to equip all its fleets with communication systems. The need for stay connected is critical for all of us as we are consistently used to being in contact almost all the time. Even so needed for the crews as they will be isolated in majority of the time in the ocean thus satellite communication system is needed for them to keep in touch with family, friends and the World. Technological For many years, communication at sea is primarily monopolised by incumbent such as Inmarsatà ¢Ã¢â€š ¬Ã¢â€ž ¢s L Band services (1 to 2GHz) which grew significantly since the start of its birth in 1979. According to commercial research company Comsys, Inmarsat had commissioned in more than 128,500 maritime installations (Comsys, 2008). Inmarsatà ¢Ã¢â€š ¬Ã¢â€ž ¢s services poses several advantages when compare to the competitors in the maritime market: Been a Satellite Provider as well, Inmarsat operates 11 geostationary satellite which each one them typically covers one-third of the globe, providing them with a full globe and redundancy coverage. By providing L Band services, this frequency band is less susceptible to atmospheric attenuation such as rain; noise and pollution fade than C Band (4 to 8GHz) or Ku Band (12 to 18GHz) services. However, L Band technology requires larger receiving antenna to be installed on board the vessels where space is always precious and limited. In addition, customers are billed as per satellite bandwidth use, whether this is based on per minute usage for voice services or per Mega-bytes for data services which is expensive for consumers that needs high data usage. By mid 1990s, the sudden surge of needs in Maritime market by oil gas exploration, cruise and ferry vessels causes the immediate requirement to look for alternative solutions that increase the data rates (throughput) at a more affordable rate. In particular, the 2 more profitable markets (oil gas and commercial vessels) have slowly migrated and deployed the use of C Band and Ku Band communication services which provides higher throughput and smaller antenna size. Environmental With the increasing awareness and concerns towards global warming, pollution and energy wastage would be an area which will be targeted by Maritime Port Authority. In 2011, Singaporeà ¢Ã¢â€š ¬Ã¢â€ž ¢s Maritime Port Authority rollout a Green Ship Programme targeted at Singapore-flagged ships. This initiative incentive ship owners who adopt energy efficient ship designs or equipment that reduce fuel consumption and carbon dioxide emissions (Maritime Port Authority of Singapore, 2011). Ship owner can enjoy a 50% reduction on the Initial Registration Fees during the registration of the ship and a 20% rebate on Annual Tonnage Tax payable every year if they adopted the Go Green Technology. By supplying energy efficient communication products certified by the authority and products that monitor the vessel fuel usage and pollution would definitely attract the ship owners to implement such solutions. Legal / Regulation Regulatory issues are an extremely complex and different area of consideration for maritime industry. In theory, C Band stabilised VSATs equipment needs to be shut down with 300km away from the coast. To counter this regulation, some vessels are considering installing both C Band and Ku Band terminals to allow complete coverage whilst trying to comply with this ruling. Some time ago in Europe, some countries implemented new regulations that restrict the operations within national waters which is around 22.2km away from coast. However few vessel owners will take notice and comply of this regulation and it is also tough or impossible to police effectively with the number of vessels overpower any marine guards. In certain countries, the license and frequency clearance can be quite onerous, particularly C Band frequency are also used for microwave links within developed countries would raise some concerns from MVSAT communication. However there is an estimation of around two thousands vessels with C Band equipment on board in the world, some regulators would choose to ignore this issue without the need to spend huge resources and manpower to police it. As the industry grows and with the increasingly use of smaller antennas deployed on the vessels, these situation would be hard to ignore. Table 4à ¢Ã¢â€š ¬Ã¢â‚¬Ëœ2: Internal and External Stakeholders Internal Stakeholders External Stakeholders Demand Side Supply Side Private Public Shareholders (Management e.g. MD, CFO) Creditors Employees Customers Technology suppliers Equipment suppliers Maritime associations and authorities Local communities Environmentalists Conservationists NGOs Competitors Regulatory agencies Local government National government Table 4à ¢Ã¢â€š ¬Ã¢â‚¬Ëœ3: Environmental Trend Matrix Societal Forces Political Economic Social Technology Environment Legal Task Elements P1 E1 S2 T1 V1 L1 P2 E3 S3 T2 V2 E4 Communities V1(O/T) Competitors P2(T) E3(T), E4(T) S3(O) T1(O) L1(T) Creditors Customers E1, E4(O) S2, S3(O) T2(O) V1(O) Employees / Labour unions Governments P1(O) T1(O) V2(T) L1(T) Special-interest groups Shareholders Suppliers E3(T) V2(O/T) Trade association (O) = Opportunities (T) = Threats Page 1