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Survival of the Fittest

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Voice&Data Bureau
New Update

The VSAT market is poised for a high growth for enterprises taking a keen
interest in this section. The VSAT industry has been witnessing technological
changes driven by the demand to reduce the cost of bandwidth and by the
innovations in hardware technologies like high speed VLSI, high power Gallium
Arsenide devices, etc.

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VSAT as a medium is best known for its excellent uptime and ease of
deployment. A typical VSAT will give an uptime in excess of 99.5% and can be
installed in less than an hour's time. Since all VSATs work through a central
hub which is modular, and it can be virtually expanded, customers can increase
their installations seamlessly and some customers have even gone up to 14,000
sites in a single CUG.

As per industry analysts, the VSAT industry is expected to grow at 12-15% in
revenue terms and around 18-20% in terms of the number of terminals.

Expert Panel

Kaushik Mandal, chief operating officer, Tatanet

K Krishna, head, marketing, enterprise and CTO, Hughes Communications

Sanjay Gupta, associate vice president, customer support, HCL Comnet

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Operators are currently working on VSATs for simpler applications like
education and CRM to complex ones like SCADA.

Technically Yours

Over the years, satellite terminals have successfully adopted IP as a native
protocol. However, it is important to understand the back-end technologies that
have enabled to bridge the gap between satellite as a medium and the terrestrial
medium in terms of cost and performance. Digital video broadcast (satellite)
version 2 has been an important technological milestone. This has helped
operators provide a cost effective and high performance service to its
customers. This coupled with adaptive coding and modulation have also
tremendously helped mitigate the effect of rain in the Ku Band frequency of
operation.

Today, every terminal supply to customers are based on the DVB-S2 and ACM
technology and have provided customers with cost effective bandwidth service and
higher uptime.

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What's New

The industry has stabilized on the technological front, similar to other
mature markets and hub based solutions. As a result VSATs have become much more
affordable with the costs coming down. This has further pushed the demand for
VSATs and more customers/users/states are looking at it as the most feasible and
viable option to roll out their networks.

Data compression techniques, packet size optimization, spectrum efficient
modulation with adaptive coding (DVB-S2 with ACM) and feature-rich network
management systems have helped optimize the cost of bandwidth. The newly
introduced DVB-S2 based technology deliver significant bandwidth efficiency
gains to commercial and government organizations. Though the input transponder
bandwidth cost remains the same, introduction of this new technology not only
helps in reducing the bandwidth price for customers, but also renders VSAT an
attractive option for high bandwidth applications.

CIO Concerns

  • Better and reliable connectivity
  • Competitive prices
  • Cost performance metric
  • Outsourcing network management to IT

The other major shift is that the market is moving from technology oriented
to service oriented. Services are pushing this adoption.

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Positioning VSAT

The new deployments from VSAT are:

BFSI: VSAT in BFSI segment continues to be the preferred medium. This
year we have witnessed various banks coming up with the RFPs for rolling out
ATMs and core banking solutions

Media and entertainment: Digital cinema, sharing of media content over
the satellite medium

E-commerce, e-governance, e-finance, health: State wide area WAN for
centralization of applications and processes

Mobile VSATs: Communication on the move is a strong trend nowadays. It is
strongly used and deployed by government agencies for providing medical
facilities, education and as a communication medium in the defense segment

Utility segments:
Electricity boards, SCADA networks are in strong demand.
With reforms in the power sector and all the grids being consolidated for power
distribution, it has become imperative to connect all statewide grids together
in the first phase. This will follow up with connecting all the state grids to
the national grid with an overall ariel view on the overall generation,
transmission losses, and distribution

Stock trading and commodity segment:
They continue to be dominant in the
VSAT market

Oil & Gas: With so much focus on oil exploration in Indian waters, there
is an increased need for providing faster and much reliable communication using
VSAT technology with their base units for real-time exploration communication,
Internet, voice and video connectivity

Education: In virtual classrooms for various educational content
providers, running services from a central studio, broadcasting content to
various locations spread across the country

Leased lines and MPLS: Providing mission-critical backup connectivity for
primary connectivity mediums such as leased lines & MPLS

VoIP and videoconferencing: The rising demand for higher speed services
for new value-added applications like two-way videoconferencing, voice over
Internet protocol telephone services and other real-time applications that
require higher bit rates and faster links

Hybrid services: The use of hybrid services that combine more than one
technology leading to cost effectiveness

Rural connectivity: Strong reliable communication infrastructure for
remote areas, hence providing rural connectivity

Shared hub services: Growth in shared hub services model for delivering
services for VSAT service providers.

Tips for Choosing VSAT

  • Interoperability: Vendor agnostic service provider
  • Hybrid solution availability: Ability to minimize
    TCO for customers with various technological and connectivity options
  • Operator: Availability of satellite space with
    operators
  • Sound credentials: Service provider/operator should
    be reliable and also geographical redundancies/DR infrastructure of
    service provider
  • Project management capabilities: Especially for
    large scale and complex projects
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The year 2009 has shown several opportunities in the field of defense,
banking and other government funded projects. A momentum in these sectors will
continue in 2010 as well. As the economy recovers, private sector projects in
banking, broking and e-learning, which have traditionally always been VSAT
segments will also see a high. Fast food companies like Barista, Pizza Hut, and
McDonald's are expanding their business and considering the satellite route to
connect their outlets. Similarly, multi-brand stores like Shoppers Stop, Big
Bazaar and Subhiksha are looking at VSAT to link their shops.

The Performance

The DVB-S2 standard along with ACM/AIS technology helps in reducing weather
related link attenuation substantially and the resultant link downtime. An
increasing number of customers are evaluating the use of DVB-S2 in combination
with Ku Band technology, as against the traditional extended-C Band, to save
costs.

Smaller 1m antenna with easier mounts and installation procedures is making
it handy for urban locations.

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But the most significant solution is VPN VSAT with high QoS bandwidth and
application performance, which is making an attractive proposition for
enterprises to use these VSATs either as a primary or a backup link.

Requirement of reliable back-up networks will get more pronounced in the
coming times and the VPN VSATs will be a good substitute to the ISDN lines used
for back-up traditionally.

Ka Band has also been successful. This offers far higher bandwidth per
terminals (a few Mbps per site) and also offers site-to-site mesh capability for
VoIP and video applications.

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Though VSATs were being used as a back-up to MPLS, ISDN, or other wireless
technologies, volumes show that satellites are still much in demand. The
cut-throat competition among vendors has eroded margins. Prices are expected to
crash, with some indications already there. The cost-performance metric has been
the pressing demand of CIOs as seen in the recent times. This will be met
through new innovative managed services model and several more projects being
deployed on this model going forward can be seen on the way.

Demands

Over the years, the role of VSAT has transformed from being the only
available means of connectivity, to its present complimentary role in supporting
the more prevalent terrestrial solutions. Technology has emerged as a winner in
broadcast and multicast applications, which are being extensively used in
banking, broking, and manufacturing segments, for their enterprise core
networking requirements.

Price, although, has remained the main point of discussion for enterprises
opting for VSATs; other factors like feasibility, bandwidth capacity, and
reliability are also being seriously contemplated at all levels.

Outsourcing network management to IT solution providers is increasingly
gaining importance globally and in India. Today, organizations are looking at a
fast, reliable, and secure IP network to run their integrated business
processes. However, maintaining a robust network involves regular investments
towards networking infrastructure, network security and training, and they would
rather dedicate their IT resources to the core business than constantly deal
with network management and security issues.

An extra pressure on service providers for providing better bandwidth and
hardware costs have remained more or less constant. Customers are also exploring
services on various operating expenditure based models.

Drivers of Growth

It is clear that the VSAT industry growth will be fueled by new applications
and pressures on margins will continue. Service providers will have to evolve
and offer value added services in order to stay ahead in the race. A positive
regulatory framework will aid in the growth of the segment significantly.

The year 2009 has shown several opportunities in the field of defense,
banking and other government funded projects. We see the momentum in these
sectors to continue in 2010 as well. Depending on the recovery of the economy,
we are also hopeful of private sector projects in banking, broking, and
e-learning, which have traditionally always been VSAT segments.

Key drivers of VSAT growth in India have been common service center (CSC)
programs in rural areas, BFSI, telecom, energy, education, and health. Along
with these, telemedicine, interactive distance education, digital
signage/cinema, etc, will drive VSAT growth in the next two to three years.

Technology Gaining Interest

Mesh technologies is on a high due to benefits like:

  • Large data capacity
  • Higher throughput
  • Frequency use and reuse
  • Multi frequency hoping
  • Bandwidth sharing technique
  • Single HOP communication

The Indian VSAT market has an installed base of approximately 1 lakh
terminals, and is poised to grow at 20% in terms of the installed base, which is
expected to reach 1.2 lakh terminals by the year end.

The pressures on the bottomline are significant as service revenue is
witnessing a progressive decline and trends indicate a decreasing interest
because of hardware price points. The industry is expecting the government to
give its consent to the open sky policy which will bring down transponder costs,
and thereby improve margins.

Also, with the terrestrial infrastructure witnessing revolutionary changes
and cable, VPN, CDMA/GPRS being introduced, a critical issue for VSATs has been
matching the recurring charges with these options.

The requirement of reliable back-up networks to get more pronounced in the
coming months and the VPN VSATs will be a good substitute to the ISDN lines used
for back-up traditionally.

The extended C (Ex-C) band remains the preferred band for critical
interactive applications like stock broking and commodity trading; as this band
is immune to rain conditions or rain fade. On the other hand Ku Band is the
preferred technology for ATMs, e-governance and other enterprise applications
due to lower initial investment costs of CPE equipments.

VSATs will continue to be used extensively in defense applications and in the
oil & gas segments due to connectivity requirements in remote locations, tough
terrains and harsh conditions.

It is clear that the government's focus on the 'aam aadmi', VSAT's deployment
in education, health, infrastructure, and energy sectors will be boosted. Even
globally, it is a similar scenario with the countries extensively concentrating
on the energy and education sectors.

VSATs are poised to play a critical role in bridging the digital divide by
addressing remote and rural areas.

Green being the new buzz, there is a serious exploration of energy that is
taking place in VSAT. Since the power requirement for VSATs is low, solar power,
wind turbine based systems and hybrid systems are being considered for VSAT
applications. Essential SCADA applications, use of VSAT in islands and other
remote locations, consider these alternate energy sources for powering VSATs.

Archana Singh

archanasi@cybermedia.co.in

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