VSAT industry growing at a steady pace of 20,000 terminals y—o—y

The
VSAT segment has demonstrated an unparalleled growth in the last few
years. Driven by technological changes, the industry is growing at a steady pace
of 20,000 terminals y—o—y. India can see a penetration of over 5 mn VSATs in the
next ten to fifteen years-across enterprises, government, SMEs and consumer
segments.

The VSAT installations touched 123,807 in fiscal 2009-10 from 101,773 by
growing at 21.7%. Bharti Airtel
grew by 21% with a market share of 31%. Its
nearest competitor Hughes showed 20% growth and commands marketshare of 29%.

Major Orders

Hughes has launched high QoS VPN VSAT, managed broadband services and
digital media services in 2009-2010. Hughes also got some path breaking
assignments last fiscal-a huge order for Rs 40 crore with the Indian Navy. ISRO
is planning to put satellites, especially for this. The deal is important given
the fact that it will be connecting submarine aircrafts.

In the field of distance education, Hughes dominated by securing orders with
Edusat and Educom. Through 2,500 VSAT's of Hughes, nineteen movies per week were
screened as well as it supported the live telecast of IPL matches. Launch of the
DVB-S2 technology by Hughes in India with the latest ACM/AIS on its HX platform
is an important technology breakthrough. This offers customers high QoS
bandwidth to run their core applications.

Airtel also launched 'One Airtel for CSCs' as a packaged service for SCAs (CSC
operators) which reduces their dependency on immediate success of G2C services
and enables a continuous revenue stream. 'Bandwidth-on-demand' and 'Pay-per-use'
models have been launched for increasing the affordability of the VSAT services.
Airtel is also offering VSAT services on an opex model. The company claims that
it has brought the VSAT pricing by 40%.

Tatanet's managed services offerings cater to the demand by focusing on
complete network management needs spanning from LAN to WAN. In the enterprise
segment its customers include-Tulip, Rignet, Federal Bank, Syrian Bank, VESTAS,
and Lanco. HCL Comnet has planned to shift all SkyEdge VSATs from INSAT-3B to
INSAT-3E. The VSAT shifting activity from INSAT-3B to INSAT-3E would involve
realignment of VSAT antenna installed at member's location.

Also, companies are doing there bit in 'going green'. As the power
requirement for VSATs is low, solar power, wind turbine based system and hybrid
system are being considered for VSAT applications. These alternate energy
sources are considered for powering VSATs with essential SCADA applications and
in islands and other remote locations.

Challenges

In spite of the tremendous growth that the industry is exhibiting, there are
many challenges facing the industry. From security clearance for the import of
equipments to importing VSATs with connected antenna, a lot has to be done by
the government on the imports front.

Also, private players have issues with the
USO funds funds being given to BSNL
only, they have a strong take on the matter that they say that subsidies should
also be given to private players in the segment as well. An industry expert
feels that the dish size should be reduced to 50%. The reason that the US has
world's maximum number of VSATs is because the dish size of the VSATs are
comparatively smaller which has subsequently allowed the penetration in houses
as well. VSAT deployment should also be made easy like the set-top boxes.

Newer technologies like 3G
and BWA are expected to start services towards the
end of the year, and so the industry is awaiting the way these services will
unfold. Overall, the regulatory environment remains the biggest hurdle for last
three to four years and it is yet to be overcome. Other challenges that are
looming large are-capex for VSAT networks, poor infrastructure, providing better
SLAs, visibilty in terms of up time and overall value for money. Fluctuating
dollar price can also escalate the already existing pressure on the industry.

Year of Opportunities

The year 2009 has shown several opportunities in the field of defense,
banking and other government funded projects. The momentum in these sectors will
continue in 2010 as well. With the economy going the right way, private sector
projects in banking, broking and e-learning are expected, which have
traditionally been VSAT segments.

The Indian VSAT market has an installed base of around 1 lakh terminals and
is poised to grow at 20% in terms of installed bases by the year end.

Archana Singh

archanasi@cybermedia.co.in