Northern Sky Research

Narrowband VSAT a Classic Hit

Jan 7th, 2013 by Jose Del Rosario   More from this Analyst | Profile

The satellite industry these days almost exclusively focuses on big-pipe broadband VSAT services for high value segments like maritime, oil & gas, consumer broadband, and government-backed rural connectivity and school networks. Yet, the December 2012 announcement that Hughes India will connect 27,000 ATMs with what is essentially a narrowband VSAT network is much like hearing a great old but nearly forgotten classic hit on the radio.

Even if the total network is allocated a few Mbps of capacity, the average provisioning of services like ATM networks is typically only a few tens of Kbps per site. And because of this low capacity requirement per site, narrowband VSAT networks can provide a very cost effective connectivity solution per site while at the same time offering a superior quality of service with uptime in excess of 99.9% and a large area of coverage allowing all sites to be managed by a single service provider. For anyone who has been around the satellite industry for a while, these attributes are about as basic to VSAT services as a back beat is to a classic rock song.

Yet, for many of the “young generation” of potential clients who are more inclined to tune into the latest terrestrial services like aDSL or 3/4G, these benefits of VSAT often go unrecognized. The reality is that services like 3/4G or aDSL don’t actually have true universal coverage, these services suffer from congestion that impacts QoS, and one must typically deal with numerous different service providers in order to stitch together a large network with the same service providers always trying to blame the “other guy” for any network problems. In the rush to use the latest “chart topper” service, the clients often don’t know or have forgotten just how good classic narrowband VSAT services are and how predominant in fact they remain even if they don’t get a lot of “play time”.

The Indian ATM network deal is just the latest announcement in a stream of recent narrowband ATM/bank deals in India stretching back two years. And it is not only in India where these deals are occurring. Indonesia and Brazil, among others, have seen a string of ATM and “bank agent” networks installed in the last several years. Plus lottery networks, another classic narrowband VSAT service, often count as among the largest VSAT networks installed in any country. By NSR’s count, there are at least 200,000 lottery sites using VSAT for connectivity services in the USA alone, and the Camelot lottery network in the UK is the single largest VSAT network in all of Europe. Other significant lottery networks can be found in Latin America and Africa, and additional lottery networks are in the works in a number of countries.

In the latest Broadband Satellite Markets 11th Edition study, NSR forecasts that the global installed base of two-way narrowband VSAT sites will increase by over 170,000 in the coming years with the majority of the growth coming for ATM and lottery networks plus a smaller contribution for other services such as point-of-sale and Low Data Rate/SCADA monitoring networks. NSR does believe that growth in the global installed base of narrowband VSAT sites will slow in the future. However, this decline is mainly an issue of existing networks being upgraded to broadband provisioning. In fact, narrowband VSAT clients often are a critical pool of future broadband VSAT users. This is exactly what has occurred in the last few years in the retail segment as many former narrowband point-of-sale networks have been upgraded to broadband services as more applications were added to the VSAT network.

Bottom Line

Narrowband VSAT may be a golden oldie to some, but they still offer a cost effective solution with a high quality of service and a solid value for the end client. Plus, they can be a source for future industry growth as clients start with a simple narrowband VSAT network to meet a core need and then expand and add capacity and capability as new applications and services are added to the network. Like any classic hit, narrowband VSAT can still be a great service for the latest generation of VSAT clients.

Information for this article was extracted from NSR's report Broadband Satellite Markets 11th Edition