Northern Sky Research

The How and What of Big Data via Satellite

Jun 22nd, 2017 by Brad Grady   More from this Analyst | Profile

As anyone attending a “mobility” satellite-communications centric conference can attest (such as the recent Global Connected Aircraft Conference in DC), IoT is THE big buzz-word. It permeates conversations, presentations, and marketing materials.  And, for good reason! There are tremendous opportunities within the transportation sector for satellite players to offer services and connectivity to enable these emerging applications. But the industry is asking not just what is its role, but increasingly how to capitalize on these bits streaming from engines, containers, and vehicles.

 

According to NSR’s Big Data via Satellite Report, the opportunity for satellite players to provide an end-to-end Big Data solution is largest in the Transportation sector – upwards of 45% of the nearly $600M total revenue opportunity in 2016.  The sector will also provide more than one-quarter of the revenue growth over the next ten years to 2026.  So, is there more than just ‘hype’ beyond the buzz words? NSR thinks so.

However, IoT/M2M-based Big Data opportunities do present challenges from a deployment standpoint.  For example, deploying a sensor monitoring network to capture engine RPM and fuel burn requires a complex set of on-engine sensors, interface with the engine management system, an onboard system to capture and store that data, and then eventual integration to the communications network where data can then be offloaded for additional analysis.  With each end-user having unique equipment configurations, different operational standards and practices, and different viewpoints on the ‘what’s important’, deploying these services is not entirely as ‘off-the-shelf’ as other arenas.  This determining the ‘noise from the value’ is where Big Data applications and experience will come into play, enabling machine learning, high volume storage infrastructure and connecting that with reliable network connectivity.  From the service provider’s standpoint, it requires a different skillset than traditionally required for building communications networks such a knack for application layer development and unique knowledge of M2M/IoT equipment protocols – all combined. Tapping into these new revenue streams for transportation-centric satellite service providers in areas such as maritime or aeronautical is not as simple as adding another sensor to the network.

These challenges have not stopped, or even slowed down, the industry.  Instead, service providers are responding through a stream of acquisitions, partnerships, and collaborations with customers to build these next-gen applications.  What is clear is that to be successful, service providers need to look towards doing more than just moving bits.  Orbcomm’s recent acquisition of inthinc is just the latest example of a service provider continuing the pivot from building networks to selling an M2M/IoT-centric application.  With inthinc’s presence in vehicle/fleet management, Orbcomm can continue to build additional value-added propositions where selling connectivity is the ‘how’ instead of the ‘what’ of a customer’s service.

“What’s the market driver?”, some people are asking in the satellite communications sector (or more bluntly, is this ‘fact or is this fiction’?) In an article recently published by Allianz, an insurance company with a practice in the maritime industry, “VDR [Vessel Data Recorder] analysis can be used to inform risk management decisions, and could potentially be reflected in insurance premiums.”  Unlike other applications which have nebulous or indirect impacts on a maritime customer’s bottom line (such as crew welfare), insurance companies are taking their experience ashore with vehicle telematics, and looking at ways to deploy that experience into other vertical sectors.  Maritime is the next lowest branch, and we can expect that aeronautical will also be on the roadmap.  

Bottom Line

Beyond land-based fleet management, which is the more ‘developed’ emerging market for transportation Big Data applications, aero and maritime segments will follow similar routes.  While customized engineering, development, and systems integration expenses will be higher as the sectors settle in on what needs to be monitored, how often, and what types of value can be derived from deeper insights one thing is clear – as the connectivity part of satellite service provider’s business models face challenges, everyone needs to look at monetizing the bit.