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VSAT: Gaining Steam

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VoicenData Bureau
New Update

As VSAT equipment prices have gone down, VSAT services are

becoming increasingly affordable. Also miniaturization of components and

increased economies of scale enabled service providers to offer a larger range

of VSAT-based solutions. These find applications in rural telecom, distance

learning, telemedicine, disaster recovery, offshore networks, and a host of

corporate and government activities.

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The drop in VSAT prices fuelled further growth, with many

organizations finding it more economical than the other available media on a

total cost of ownership basis. It has also increased the affordability of VSAT

as a backup to high-speed terrestrial links or critical enterprise locations.

The VSAT services segment grew at the rate of 20% with revenue of Rs 443 crore.

The key achievement of service providers last year was the

breakthrough in some sunrise segments that have been high on importance

worldwide, and are seeing tremendous growth in India. The digital cinema

initiative was one such in the entertainment industry. The next breakthrough is

in the cellular backhaul segment, where satellite provides a backhaul to

locations that are not reachable by microwave or fiber. The third one is in the

retail sector, where VSAT provide connectivity for credit and debit card

authorization service. This is more cost-effective than the traditional dial-up

connection and saves significant amount of delay. The traditional segments that

include government and defense, BFSI, oil and gas and other enterprises

continued to be the growth drivers for VSAT service providers.

The GamePLAN



HCL Comnet emerged as a market leader and generated revenue to the tune of

Rs 136 crore. The company implemented VSAT based networks for SBI for its core

banking projects. It also got a large VSAT network order from Indian Army. Ernet,

Assam PWD, Peerless, Emami, Steel Authority of India, Federal Bank, and ABN Amro

Bank were some companies where from HCL Comnet got orders last year. The company

generated Rs 136 crore in FY 05-06.

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The growth drivers for Hughes Communications were

e-learning, oil and gas, banking, digital cinema, retail, and telecom. The

company did projects for Kingfisher Airlines, Pantaloon, ISRO and Reliance

Petroleum. It generated revenue to the tune of Rs 96 crore. The company now

intends to be a complete managed network service provider. Hughes has also

supplied VSAT for backhaul to GSM and CDMA players.           

Similarly, Tata Indicom VSAT services generated revenue to

the tune of Rs 60 crore. The growth area was mainly the enterprise sector. The

company provided services in segments such as stock broking, extended enterprise

and banking. The major clients included Karnataka Bank, Suguna, Apeejay,

Parasram, ACC, and Almondz. The company is now seeing backhaul connectivity as

another area of growth.

Essel Shyam generated revenue of  Rs 54 crore. The company did projects for ONGC, defence and

stock brokers' networks.

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The growth areas for VSAT services were mainly the

enterprise and the defense sector. Initiatives such as ISRO's Edusat and

HealthSat enabled literacy and tele-medicine to reach to the rural masses to

some extent. Robust buying by the financial segment-stock and commodity

markets and banking-were also the key drivers of growth. High availability

offering for business continuity was one of the key applications that witnessed

exemplary growth this year.

Bundled Strategy



There are several vendors that bundle their services with telecom service

providers' offerings. For some selected enterprise segments, Tata Indicom

offers services through the Tata Indicom Business Enterprise Unit (TIEBU), the

single window interface for meeting needs of large enterprises. By virtue of

being a delivery organization to TIEBU, Tatanet offers not only satcom solutions

but also hybrid solutions in association with other delivery organizations of

TIEBU.



The Top Players

(FY 2005-06)

Rank

Company

Revenue (in Rs Crore)

1

HCL Comnet

136

2

Hughes Communications

96

3

TATA Indicom VSAT

Services

60

4

Essel Shyam

54

 



Others

97

 



Total

443

Others include-Bharti Airtel, ITI and GNFC

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Similarly, HCL Comnet works closely with telcos for

offering integrated, hybrid technology solutions to its customers. It is a

premier national system integrator for BSNL, for joint bidding of turnkey

projects that include networking equipment, bandwidth provisioning and network

operations and management.

Hughes Communications has a cross-selling arrangement with

Reliance wherein when the latter goes in for client implementation, it uses

Hughes' satellite technology in areas where fiber is unable to reach.

Technology Trends



VSAT, with its newer version, became more bandwidth efficient. Also, it now

incorporates many of the advanced features that allow more flexibility in terms

of bandwidth sharing and seamless standards-based integration with many other

terrestrial media.

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VSAT today enables higher coding rates, better compression

ratio and thus better utilization of transponders. With advancement in

technology, the gap between satellite and terrestrial has been bridged, thus

bringing both these technologies at par.



VSAT Base (as on

March 31, 2006)

Operator

Ex-C Band

Ku-Band

Total

HCL Comnet

7,409

9,132

16,541

Hughes Communications

2,612

12,200

14,812

Bharti Airtel

2,352

9,653

12,005

TATA Indicom VSAT

Services

1

2,569

2,570

Essel Shyam

234

2,256

2,490

ITI

50

-

50

GNFC

24

-

24

Total

12,682

35,810

48,492

Secondly, even smaller networks are going in for dedicated

infrastructure. Given the market need to be closer to the network and with

concerns of security being omnipotent, even customers with 100-200 locations are

setting up their own dedicated network.

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With banks giving due importance to rural branch

connectivity, extended enterprise connectivity has become important. There is

also a huge potential for VSAT connectivity in the BTS as backhaul connectivity

has become the need of the hour.

The Challenges



In spite of high input costs in terms of transponder resource and absence of

an open sky policy, the industry has witnessed robust growth. Falling unit rates

put pressure on revenue growth, but this was offset by growth in volumes, which

eventually resulted in more revenue generation for service providers.

Another big challenge was the market perception about the

cost and the quality of satellite broadband services. There is a wide spread

perception that satellite based services are expensive and not relevant in

today's context of telecommunication. Additionally, there are question marks

on the service delivery capability of satellites. However, satellite

communication is extremely relevant in the distribution networks space and has

successfully complemented fiber in some of the most developed markets including

the US.

At an industry level, the VSAT players are straddled with

restrictive government policies. Getting approvals take a lot of time, and

delays the network provisioning process for a customer. Therefore, by reducing

the policy related issues and fiscal costs, volumes can grow. The industry and

the government need to take concrete steps to remove such hurdles.

Rahul Gupta



rahulg@cybermedia.co.in

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