Inmarsat finally gets a right to reply…

Interesting to read Frank Coles, president of Inmarsat Maritime making a strong riposte to the AMMITEC letter in the latest issue of DigitalShip (http://www.thedigitalship.com/conferences/2006/news.aspl), which along with MaritimeInsight has at least provided some balance to the more numerous but far more partisan forums elsewhere.

It’s been a sobering process to watch Inmarsat’s competitors and their paid consultants thrashing away at Inmarsat as if it was some kind of maritime Aunt Sally for whom no criticism is low enough. In running AMMITEC’s complaint and Coles’ answer DigitalShip has done what no one else has so far bothered to do – set out the argument and let users make up their minds.

In fact as Coles points out, the real change in this debate is that Inmarsat has never really talked about price to this degree. As a wholesaler it traditionally left end-user pricing to its channel partners and their service providers.

That changed to some extent with the acquisition of Stratos and subsequently ShipEquip but this battle was always coming down the pipe. One of my regular questions to Inmarsat when writing on Lloyd’s List a decade ago was when they would renegotiate the LESO agreement and get in the game of selling direct.

These days the DPs have consolidated to the point where users get small variances in cost and flavour of services. SPs are probably the more agile in terms of seeking tailored packages to fit end users. Talk to them as I have recently in Singapore, Stamford and Japan and they are concerned about the effect on margins; but there is no suggestion that they think the howling inaccuracies and misleading marketing of the opposition present a viable alternative.

As already pointed out on the blog, Coles reminds readers that GMDSS is a free service, which is not the same as saying Inmarsat-C traffic is free. He also takes a dig at competitor constellations as being unable to provide the kind of uptime and service reliability demanded by IMO to support GMDSS. Rumours last week that one Inmarsat competitor was recalling a bad batch of handsets does little to erase such doubts.

Coles goes on that the price increases on E&E services are an understandable adjustment to an evolving market situation. Some owners and managers clearly think 10 year-old data speeds and service levels are OK, but would they accept the same on land? If so, we’d all still be on dial-up, but in any event, he says there are no plans, as AMMITEC claims, to retire Fleet.

Coles is pretty upfront too about the changes to FleetBroadband pricing – not just that the package prices have stayed the same or come down – and he mines a theme he’s been scraping away at since before CMA.

Inmarsat is keen to move the debate away from the negative implications of cost and towards the sunlit uplands of value. Coles argues FleetBroadband used as a back-up should cost more because the customer requires on-demand flexibility when the VSAT crashes.

“We have asked users for a $3 a day commitment” he says, an “annual fee of $1,095 equivalent to one and half tonnes of bunker fuel,” which he thinks could be claimed back many times over by better use of satcomms to power smarter shipping operations and the use of techniques such as virtual arrival and weather routeing.

There is no doubt that increasing the price of FBB as a back-up to competing VSAT systems will be unpopular among customers who are using it for just this purpose, but it hardly seems a stretch to suggest that users should pay a premium for convenience, especially when Inmarsat is offering its own VSAT stepping stone Xpress Link with FBB back-up ahead of the full Global Xpress service in due course.

He says that small customers concerned about price rises will be given the option to use a ‘small boat package’ to which they can transition and it’s probably fair to say that there will be low cost operators out there for whom the minimum required satcoms connectivity will be just about enough.

This underscores the point that has struck me repeatedly over the last couple of weeks. As Inmarsat’s detractors have lined up to take a kick, I have never once had the feeling that they had the user’s interests at heart. Instead it seemed to me they were using a sense of moral outrage as a smokescreen to sell alternative solutions.

Inmarsat may be combative in its style and certainly far from perfect, but it appears to have less to hide than its competitors, despite having a considerable amount of skin in this game. For that at least, it deserves the fair crack of the whip that DigitalShip has given it.

You know it when you see it – how innovation is back on the agenda

Lloyd’s List’s Liz McCarthy was one of the few journalists to give the CMA session on best operational and financial practices a fair crack of the whip. Despite the fact that the organisers had changed the session title, the running order, and the idea behind it, there was still plenty to absorb.

If owners are content to moan about high bunker prices, then presumably the evidence that BP Shipping had saved $1.5m on bunkers by combining satellite communications with Virtual Arrival principles will fall on deaf ears.

There are other areas, too where owners and managers need to work smarter, not least in increasing the volume of ship to shore data while also managing the paperwork burden. More technology onboard ship comes with risks too, but if properly managed by an owner who takes responsibility for ship crew and cargo, then there is no reason these bugs cannot be ironed out of the system.

Liz quotes Inmarsat Maritime president Frank Coles as saying that:

“it was possible to save as much as $100,000 a year per ship by using efficient communication, and with unlimited internet access available for $100 per day or $3,000 per month, the cost of rolling out wifi on ships was easily recuperated.

His company’s clients had reported significant savings across their businesses; $32,000 per year crew-related cost savings, information technology efficiency saving $20,000 per year and route optimisation saving $30,000.

At a time when owners are looking for viable options to shave money off their total fuel consumption — as prices continue to hover at record levels in the $700 per tonne range — numbers like this start to look extremely attractive.”

But there are reasons for caution too. As Liz’s article continued:

“The internet was a cause for concern regarding navigational safety, panellists at the conference believed, with at least one example already of a collision created after a crew member on the bridge was browsing the web rather than looking where the vessel was heading, Mr Coles said.

He added that some of Inmarsat’s shipowning clients stated specifically that they did not want wireless internet connection on the bridge, to ensure due diligence while performing navigational duties.

Just as trucking companies would not want drivers text messaging while on the road or airlines allow pilots to surf the net while flying a plane, area restrictions could support internet use in shipping.

Other services being looked into are whether the internet can be switched off when the ship approaches coastal areas, such as 30 miles offshore, to ensure all crew are alert and not distracted by phones or computers.”

Read Liz’s article in full here (http://www.lloydslist.com/ll/sector/ship-operations/article394589.ece) – LL sub needed – sorry, I don’t make the rules.