VSAT : Extraterrestrial Connection

Today technology has evolved with time and it is seeing a period with
continuous change. With better and more effective wireless services, cable would
soon be a passé. Technologies like VoIP and broadband now have better platforms
to transmit. VSAT in broadband is the latest evolution in this regard.

VSAT is being used by SMEs, banking sector, and the securities industry. The
technology is also being used as a means of reducing the digital divide.

A satellite dish is placed at homes or work places to enable high speed
broadband. The biggest advantage of VSAT is the speed and is today considered to
be one of the best technologies. The VSAT industry has been growing at a
constant pace with SMEs contributing a large share to the growth. For Kaushik
Mandal, VP, Tatanet, adapting VSAT would mean cost-effectiveness. “VSAT provides
24×7 connectivity and can be quickly deployed anywhere, and is last mile
independent. Moreover, the improved satellite broadband technology has the
capability to serve the end-customer in a cost-effective manner,” says mandal.

SME Connection
Terrestrial broadband Internet infrastructure is common in the metros, urban
and few semi-urban areas. But availability is scarce in remote and far-flung
areas. A steady broadband infrastructure is absent in rural India and service is
either not available or unreliable, which is a major issue for many SMEs that
have set up businesses here. Today VSAT is a staggering Rs 600 crore industry in
India and can prove to be a reliable alternative to the SMEs.

The major problem for smaller cities is not having good bandwidth and
connectivity; to think of high speed and reliable Internet connectivity is a
distant dream, at least for the SMEs operational in C, D and E class cities. As
satellite broadband is much easier to deploy and install, and is more cost
efficient, it would become easier for the SMBs/SMEs to operate and stay

“Connectivity will be the key in the SMB growth story of India, and hence the
growth of Internet will continue in this segment. At Tatanet, we have identified
this need and are working toward bridging the digital divide by bringing more
and more innovative products and services to meet present and future
requirements of SMBs,” says Mandal. VSAT offers a single vendor for all the
services. This is not only convenient for the smaller businesses that would not
able to pay multiple service providers, but at the same time, for larger
companies as well for the same reason. This makes paying bills, sending emails,
etc, easier.

Major Adopters
The banking sector is also seeing high adoption of VSAT. Connecting ATMs
with branches is where VSAT comes in very handy, especially in branches in the
rural and semi-urban areas where there is little or no connectivity. According
to K Krishna, director, Hughes, “Today the branches in semi-urban and rural
areas want to provide the same facilities that are available in urban areas. So
to keep up with the pace they want better speed and higher uptime of
connectivity, and also want to connect five-to-six banking terminals. As the
banks want better system and network manageability, without going to multiple
telcos, VSAT is the best option.”

Recently, State Bank of India tied up with Hughes to connect its branches and
ATMs in urban, rural and semi-urban areas through VSAT and terrestrial lines.
The network will be capable of providing core banking with more than 99% uptime
at all the branches. If required the network can further be extended to a higher
number of branches and ATMs, hence providing 100% core banking.

As broadband becomes more mobile with VSAT, it gets easier for customers to
deploy it. It also has added benefits like high up-time. But the most important
factor driving VSAT broadband is mobility. It can be set up anywhere, and has
very high scalability.

The SME Outlook
  • SMEs account for more than 50% of IT revenues in India
  • Average growth rate has been more than 30% (considering present
    economic slowdown, we can be a little conservative)
  • 3-5 % of SMEs have a LAN network in their offices and factories
  • 20% have Internet connection
  • 5% have broadband connection
  • 1% have their own websites

According to Rajan Swaroop, executive director, NSBU, Bharti Airtel, the
future of satellite broadband is very bright in the nation, though it is at a
very nascent stage. And with the arrival of newer VSAT technologies the present
market scenario would change for the better. “We expect Ka-band to arrive in
India in 2009. The affordability and dish size are further going to improve.
Broadband VSAT would be bridging the digital divide and shall be a tool for
Internet penetration. With the success of the e-Gram project, VSATs have again
been established as a reliable and affordable medium of broadband connectivity.
The technology was unduly over-shadowed by terrestrial connectivity but the time
has come that VSAT technology be used appropriately and should be appreciated
for its strength,” says Swaroop.

VSAT Challenges
  • Satellite bandwidth availability and cost both pose a challenge to the
    industry, hindering its speedy growth.
  • Bandwidth availability in Ku-band is a major constraint and the
    industry is keenly awaiting the launch of new satellites to bridge the
    demand-supply gap.
  • VSAT industry is currently facing high pressure on margins.
  • Highly complicated and long regulatory requirements have taken away
    considerable business potential from the industry.
  • Dollar price fluctuations will put major pressure on price and
  • Customer expectations with regards to ‘Internet experience’ with other
    technologies vis-à-vis VSAT’s inherent latency is also a barrier.

The e-Gram Network deployed by the Gujarat government is the world’s largest
VSAT network deployed by a single company. It connects more than 13,000 rural
villages with Internet and related applications.

Broadband Goes Rural
Recently, the Government of India for its common service center under the
NeGP, invited tenders from private players for setting up CSCs. A similar step
has been taken by the government to increase telephone penetration in rural
areas for which PCOs were set up. Similarly, for connectivity in villages
through CSCs, VSAT would come to use.

According to Krishna, “We are looking at connecting around 6 lakh villages.
And on an average one village for every six villages will have a center. In this
measure the affordability problem will be taken care. And since it is a
private-public model the government is giving subsidies to the lucrative states
like the north-eastern states and Maharashtra.”

Another project undertaken by Hughes to bridge the rural divide is the e-choupal
project, in collaboration with ITC. E-choupals are information centers networked
across nine states to seamlessly connect farmers with large firms and global
markets. Around 3.5 mn farmers across 36,000 villages will benefit using the
services. These choupals are connected through VSAT and offer real time services
like Internet, commodity prices, education and training, direct marketing
channel for farm produce, weather updates and news.

Technology Talks
Xc-band and Ku-band are the operational band for VSAT. There has been a
never-ending debate on the choice between the two. When applications are
critical the Xc-band is preferred. But economically the Ku-band is a better
choice. The new Ka-band is also being deployed by operators globally, and its
arrival in India is due in 2009. VPN over VSAT has been available for a long
time now over satellite networks, as it delivers tremendous value for secure and
fool proof operations.

In the frequency spectrum, the C-band starts from 5925 MHz to 6725 MHz and
3400 MHz to 4200 MHz, whereas the Ku-band has a frequency level of 13750 MHz to
14450 MHz, 12200 MHz to 12750 MHz, 11450 MHz to 11700 MHz and 10950 MHz to 11200
MHz. This means the Ku-band has added benefits over the C-band. The C-band has
lower frequency, which means low speed. To transmit over a longer distance the
C-band consumes more power and also needs a bigger dish. Higher noise levels and
high bandwidth, along with lesser number of channels are other drawbacks.

Not without Flaws
Like all new technologies VSAT is also facing its own set of challenges. The
biggest problem is the absence of enough air space. But hopefully the problem
would get sorted out once the next satellite is launched.

Railways to Get
Internet Connectivity
Hughes has recently installed satellite
dishes in about hundred trains in Europe and is planning to do so in India
also. Satellite dishes are installed at the front and tail end of the train.
This ensures regular signal and connectivity even when the train enters a
tunnel. The satellite dish on one end of the train would ensure that the
connectivity link is maintained. This would allow the Indian Railways to
offer a host of mission-critical applications like disaster communication
system, accident relief train (ART), unreserved ticketing system (UTS) and
freight operating information system (FOIS) in the remote areas. The Indian
Railways also plans to introduce the use of Internet in running trains. The
entire procedure is under experiment in one of the trains between Mumbai and

Another major factor affecting VSAT adoption is the high price of equipments.
The equipments manufacturers are unable to understand the growth model for
Indian consumers and therefore, are not able to provide low cost hardware. Some
VSAT operators also think that the telecom prices are governed in India by
valuation of companies rather than operational efficiencies. This is a very
difficult situation wherein the prices given to the consumer are not realistic.
The prices do not factor the growth in infrastructure cost, and research and
development, leaving no scope for operators to run a profitable business

Apart from all the infrastructural challenges, the other barrier in their way
is from the regulator perspective. The time taken by regulators to draw the
guidelines is herculean. Krishna says, “All VSAT providers pay 5% of their
revenue to the government for universal service operator fund, but nothing comes
back in return. The providers have time and again made requests to the
government to come out with a scheme that would benefit them in terms of

Inspite of the challenges VSAT industry has potentials to grow at the pace of
fiber-based Internet. For a mid-size to large enterprise, the cost to install
VSAT would not be more than Rs 50,000, which is equal to installing cable
broadband. At this price satellite broadband becomes comparable to any other
medium like the MPLS.

Sunny Sen

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