VSATs: Exploring New Skies

In the recent months, the entire ecosystem of VSAT services in India has
undergone a significant change. This change has been driven by a number of
significant policy changes, which in turn, have allowed service providers to go
in for new technologies and services. Besides, a paradigm shift in the marketing
strategy of the service providers can be seen in the fact that they are now
moving away from plain-vanilla connectivity offerings to the attractively
suitable solutions for the corporate enterprises.

Market Trends

One of the important amendments that was recently affected in
DoT’s VSAT policy was the allowance of data speeds up to 512 Kbps. This opened
up avenues for new higher bandwidth applications. Moreover, with the government
allowing the use of Ku-band as well as more powerful foreign satellites,
enterprises using VSATs or contemplating to use them, can look forward to a set
of new services. Even though all this is yet to impact the users in a
considerable way, the changes surely would have far-reaching consequences in the
coming months, as service providers begin to deploy new services, aggressively.

The VSAT services market has witnessed a number of other
changes as well.

In the mesh market, things have moved away from shared hub
and now, many dedicated networks are happening, primarily in the government
sector. Four-to-five broadband networks and five-to-six SCPC networks are now
operational. Shared hub operators are also expected to implement Ku-band.
Several data networks on SCPC are coming up. People are now talking about data
speeds of 128 Kbps with Internet applications on SCPC network. SCPC can provide
up to 2 Mbps links.

Prices of VSATs have also become reasonable and are down by
more than 50 percent. A VSAT that used to cost Rs 15 lakh a year ago, now costs
around Rs 6.5 lakh. And that too, with added features like 2 Mbps links,
asymmetric data and video conferencing. Video conferencing is now a possibility,
as higher bandwidth has been allowed by DoT.

In the star market, Gilat, Hughes Networks and Viasat, have
become quite active in the recent months. "In this market, broadband is
presently based on TDM-TDMA, which is an older technology. They are yet to come
up with products that can get higher returns with 300 Kbps as the upper speed
limit. The world market is maturing fast with new technologies and high-return
bandwidth", points out Feroz Khan, country manager, Viasat in India. He
adds that PCMA, CRMA and MFTDMA, are taking speed and throughput to a much
higher level. With this, the rhythm of traditional VSAT on TDMA/TDM, is also
going to change.

However, the Indian market has been less receptive to the new
technologies. "There has been a lack of interest between the service
providers and the users in going for new technologies because some of the
regulations are either still restrictive or vague in nature", observes
Puneet Jhingan, director, business development, Gilat Satellite Networks India.

Even without regulations, some industry players feel, the
market has been slow in adopting new technologies. Citing the case of acceptance
of DVB standards of outgoing link, Khan claims that only a couple of months back
Indian Oil Corporation had rejected a DVB solution on certain technical grounds.
"Today, STPI, NIC and ERNET are happily using DVB", says Khan.

Throughout, the world shakeout is imminent on the broadband
side. However, this would not be the case here, in India, as very few service
providers are going to be active in this space. Still, service providers will
have to be more innovative with their products and services, and will have to
offer better speeds and throughput. Price too, will be more competitive.

Services on Ku-band

Of the nine VSAT service providers in India, three–Hughes
Escorts Communications Ltd (HECL), Comsat Max, and HCL Comnet–have been quite
aggressive in introducing new services. Incidentally, these three have under
them the major share of the market. Obviously enough, the three had been the
first to talk about the launch of services on Ku-band. HECL has already deployed
ninety-four Ku-band VSATs and HCL Comnet has deployed fifty-eight. Comsat is
expected to follow them soon.

HCL Comnet is now offering a range of Ku-band services, on
both TDMA and DAMA systems, targeted to fit different business requirements.
"As a first initiative towards targeting high-potential market segments,
including dealers, brokers and ATM through utility-based pricing, we have also
introduced several unique propositions branded under this banner. These services
encompass the country’s first VSAT, priced at Rs 99,900; connectivity for ATMs
and retail POPs for only Rs 99 per day; and connectivity for SAP users for only
Rs 199 per day’’, says I V Rajesh, general manager HCL Comnet. The service
provider has also introduced a service called "Magic of Nite Services"–evening
connectivity for day-end applications, such as file transfers, back-up services
and the traditional end-of-the-day applications for only Rs 99 per day. HCL
Comnet is also planning to launch several other customized and focused
initiatives, individually targeting segments, such as finance, manufacturing,
PSUs, education, etc’’, adds Rajesh

From its Ku-band hub in Gurgaon, Haryana, HECL is offering
its Ku-band services. The hub caters to such services as high-speed Internet,
webcast, newscast, multimedia, etc, for both corporate as well as consumer
markets.

Comsat Max, the Mumbai-based VSAT service provider, is also
expected to launch services on Ku-band frequency, broadband services and
point-to-point, high bandwidth, on-demand links. "VSAT services via Ku-band
will allow Comsat Max to provide remote terminals, which will use a smaller
sized antenna and a lower RF. This is expected to bring down the remote cost for
the customers. The use of Ku-band will also allow Comsat Max to use
international satellites, thereby improving the availability of services across
the country", says Joyjit Chatterji, general manager, sales and marketing,
Comsat Max.

What Next for Corporate Customers?

It is now a reality that VSAT services today, are much more
attractive, and service providers are offering much more than what they were
offering so far. In the past, VSATs were often seen as a reliable alternative to
the costly, unreliable as also scarcely available terrestrial links. And they
were, as mentioned earlier, just plain-vanilla connectivity options. Today, they
are much more than that. And on the other hand, today, terrestrial links too,
are neither that scarce nor that costly. What does all this mean for those using
VSATs or planning to do so? Should they stop considering other connectivity
options in favor of VSATs? After all, are they not much more reliable than the
other links? Is it not much easy and less time-consuming to deploy VSAT networks
than getting a leased line?

Take it from the horses’ mouth. "We feel that both
leased lines and VSATs would continue to co- exist, in the future. In fact, they
would compliment each other to provide reliable and cost-effective connectivity.
Today, corporates not only need customized, reliable and high-performance
solutions, but also require cost-effective propositions", emphasizes Rajesh
of HCL Comnet. Rajesh recommends the use of hybrid networks with a mix of VSATs,
lease lines, radios and VPN, for ensuring reliability and cost-effectiveness.

No doubt, all the leading service providers, in India, are
now offering a mix of VSAT, leased line, radio link and VPN, service to their
customers. With emphasis on cost-effectiveness and zero downtime, customers can
consider the option of using hybrid networks.

Another important issue for customers is that of pricing,
especially in the face of declining terrestrial rates. Stating that cost
comparison between VSAT and terrestrial links is always complex, Chatterji
remarks that for a true "apple-to-apple" comparison, redundant links
need to be considered in the terrestrial scenario. "With the VSAT prices
today at a two-lakh level and with the shift to a revenue-sharing regime, VSATs
will compare quite favorably". Trying to make a point, he says that
terrestrial links are usually available only in sizes of 64 Kbps or 2 Mbps.
"This means that if a customer needs 10 Kbps at a site as bandwidth or say
256 Kbps, he needs to pay for 64 Kbps or 2 Mbps respectively", points out
Chatterji. The lesson for customers is to always be on guard while signing up
for services.

Another important issue for customers would be the pricing of
different types of services, within the VSAT services. They should always demand
different cost structures for different kinds of services. In other words,
customers should demand different package of pricing for Internet services
because their bandwidth requirement is going to explode. Similarly, the price
for Internet applications has to be different from the TDM/TDMA pricing. Also,
customers need to understand there is always a difference between speed and
throughput, as such, they should be cautious when signing up for new
broadband-based services.

Ravi Shekhar Pandey