Starlink have been making a splash in the world of maritime and the industry has observed with keen interest the growth and deployment of the LEO service.
What Does Starlink Mean for the Maritime Industry?
Connectivity is becoming more crucial and digitalisation tools have become almost standard protocol. With IT management interactions in real-time, LEO services such as Starlink Maritime are becoming highly desirable to users. The system has freedom from weather-related issues, high speeds, and higher latency when compared to existing GEO VSAT.
However, the emerging player is not without its issues, to really understand the impact of Starlink maritime, we must travel through the looking glass.
The Usual Suspects…Resellers
Starlink seemed to change its strategy from a direct service, to the use of resellers in September 2022. However, it is more likely that the LEO service provider has acknowledged the benefits of reseller agreements combined with a direct-to-market approach.
While their previous system was effective for consumer markets, such as its RV land-based services; Starlink recognised that commercial and industrial users are not going to install satellite communications themselves.
Additionally, the LEO service provider also quickly saw that weaning the industry of its existing suppliers would be exceedingly difficult, therefore, the use of resellers has allowed it to “seed the market” quickly.
Marlink and Speedcast were followed by Castor Marine, IEC Telecom, Anuvu, Navarino, Tototheo Maritime, Tampnet, FMC GlobalSat, EnerAtar, KDDI, Elcome International, Clarus Networks, Venn Telecom, and NSSSLGlobal. This is list is growing quickly, and we are likely to see some new names and others drop out.
There are numerous financial benefits for resellers, who can sell Starlink at their chosen premiums, marking up the service to an extent that suits their needs.
Another major benefit of being a Starlink Maritime reseller is the capacity to cross-sell other service, hardware and/or value-added services. If you buy Starlink Maritime, an L-band backup such as Iridium Certus would make sense as an add-on. A new exchange box, as well as other services such as cybersecurity, and IT management suite may also be required
Furthermore, Starlink resellers, such as Castor Marine, Marlink, NSSLGlobal, Speedcast or even Tampnet, are already known for their hybrid connectivity solution expertise. The benefits of Starlink are attractive to the industry but can be sold alongside other connectivity solutions within hybrid networks, which is beneficial for connectivity priorities.
But Why Do Customers Use Service Providers?
One major motivation is that it is simply much easier to access Starlink through service providers.
We understand that Starlink’s direct customers (who purchase via its website) are only able to buy three systems through a single credit card. While this does work for some, particularly those in the fishing and leisure, this can be unmanageable for the rest of the maritime industry. Through a service provider, a customer can be billed to a single credit card which is particularly useful for larger fleets.
Starlink also offers limited technical support while resellers can offer more tailored support at every stage of the process. This ranges from the delivery of readily available hardware and the arrangements for installation to the inclusion of value-added services such as cybersecurity and IT management.
In addition, while Starlink only allows transactions in US dollars, service providers can bill in different currencies such as Japanese Yen or even the Euro, which is an added benefit to customers.
A Closer Look
Compared to typical VSAT service level agreement deals, when customers purchase from either Starlink on from its resellers they are purchasing data capacity as opposed to speed of connectivity (Committed Information Rates).
Maritime users can choose between two hardware solutions, a single flat – antenna or a dual flat high-performance antenna, with airtime plans of either 1TB or 5TB. Bonding the solutions, however, can open a range of choices when a user buys two single antennas.
With regards to the 5TB data plan a maximum speed of approximately 350 Mbps is priced at $5,000 per month with a cost of $10,000 for the initial hardware (antenna, router, power supply, cabling, as well as other accessories).
Once users reach their data cap, their service is throttled at 1/1 Mbps. However, users can opt back for a priority data service again, returning to 350/40Mbps (best effort) in 1GB increments.
It must be noted that all given prices are directly from Starlink for resellers are able to add on their premiums at their discretion, or what the customer is willing to pay.
In addition, Starlink is believed to have almost global coverage with a few notable restrictions in countries such as Russia, China, Taiwan.
The Drawbacks of the LEO Service
While overall the feedback from Starlink installations have been positive, there are some drawbacks to the system.
Contracts with Starlink are renewed monthly, a contract type that is a rarity in the industry except for those used by KVH’s AgilePlans. Monthly contracts create the issue of price instability over prolonged periods, price increases could be a result of hikes by Starlink or the resellers themselves.
However, monthly contracts are well suited to some markets, such as leisure vessels. Such boats could be used in the summer or autumn months but are inactive for the rest of the year.
In addition, the overage system could be proven difficult for some users. As previously mentioned, when a user reaches their data cap the system throttles to 1/1 Mbps. Customers must ‘opt in’ to increase their data allowance, once done so they must opt-out to stop the price increase rolling over to the following months. This may prove difficult for some users, having to continually increase and decrease data plans depending on monthly usage. Also, will this throttle service continue to be the case, say in 3 months’ time?
Starlink also does not offer a CIR (Committed Information Rate) and unlike VSAT services is not required to offer a minimum speed. While Starlink currently offers a high-speed service, the lack of CIR means there is little security provided to customers in the case of a speed decrease.
It will therefore be interesting to see whether Starlink addresses these drawbacks of whether the list will grow as the service increases its presence in the industry.
What Does the Future Hold?
The response to Starlink Maritime has been highly positive. Recently we have seen ship management company Anglo-Eastern confirm their first formal installation of Starlink. It is expected that at least 200 vessels will be installed with Starlink by the end of 2023, if the full trial results are successful.
Other companies installing the LEO service include Carnival Group, Solstad Utilities, Eastern Pacific Shipping, and Acta Marine. As the months pass, Starlink is gaining ground across the maritime industry.
But will hardware shortages affect the rollout of the service? The worldwide shortage of microchips does affect both the user terminal and dish production. There have also been reports of issues in the supply chain for larger rocket engines that will be necessary for satellite launches. However, Starlink does have fewer issues than its competitors, its vast number of orders makes the LEO operator a priority for supplies.
Some industry peers state due to its coverage and capacity issues, Starlink is unlikely to see any significant profits over the next five years. The LEO provider is also struggling with signal blockages of other systems, interference with detailed ground-based astronomical observations, space debris, environmental effects, and radio/electromagnetic interference.
However, with SpaceX covering the shortfall, Starlink has both the time and the backing to continue over this hurdle.
Starlink has yet to hit critical mass in the maritime market and is a work in progress. It will be interesting to see how it adjusts to the launch of competing LEO services, such as OneWeb and Amazon’s Project Kuiper, only then will we see its full potential.
Source: ValourConsultancy
