Survival of the Fittest

VoicenData 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.


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


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


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.


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.


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

  • 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

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


Smaller 1m antenna with easier mounts and installation procedures is making

it handy for urban locations.


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.


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.


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