Will ‘star wars’ takeover benefit shipping?
The takeover of Inmarsat by Viasat has hit the headlines because of the price agreed. But the scale of the acquisition underlines the immensity of the technology revolution sweeping the world of connectivity
Viasat bought its British rival because of its global footprint, its fleet of satellites, and its vision. But perhaps more than any of these, the acquisition has brought a considerable cadre of satcom expertise under one roof
LET’S admit it: Viasat didn’t acquire Inmarsat for its maritime connectivity. Shipping is a small part of the equation.
Viasat offers connectivity to residential, aviation, and defence customers in North America. Inmarsat, its British rival, increasingly focuses on aviation and the UK’s Ministry of Defence, although the maritime legacy remains in the name.
Crucially for this deal, Inmarsat offers the global footprint that Viasat lacks.
Shipping has been caught up in a connectivity revolution that began slowly and has picked up pace since the pandemic began.
The shock waves of that revolution have spread to all corners of the maritime world to such an extent that digitalisation is now regarded as the enabler of decarbonisation.
The satcoms sector is growing fast but is still highly fragmented.
New entrants, including SpaceX’s Starlink; OneWeb, in which the British government also has an interest; and other mega-constellations will keep the sector intensely competitive for at least the next 10 years. All that is good news for shipping.
It’s a sign of star wars ahead that Inmarsat will next year send into space five powerful geostationary satellites (GEOs), together with a further two set for highly elliptical orbit, known as HEOs, and has unveiled plans to add at least 150 low earth orbit satellites (LEOs). The multi-orbit constellation will link up with 5G terrestrial connectivity to create a constellation called Orchestra.
While scale and scope are important, latency may become the overwhelming concern.
It might not sound much in a world where it can take several months to repatriate a ship’s crew, but the 120 milliseconds taken for a signal to reach a GEO satellite and 120 ms for that signal to reach the ground, and the same in the opposite direction — a total of half a second — is critical in the world of the internet of things.
Round-trip latency of a GEO satellite is 12 times that of a terrestrial network. That’s why Inmarsat’s new fleet of LEOs is so important in this deal, and in turn that’s why Inmarsat’s investment makes it so attractive.
Will shipping actually benefit from this agreement to merge — supposing a rival bid doesn’t emerge from outer space? What does Viasat bring to the table for maritime?
Probably little, if we focus on the hardware. But speaking at the announcement, Viasat executive chairman Mark Dankberg noted the fusion of “teams, technologies, and resources” together with Inmarsat’s “excellent technical and operational talent worldwide”.
It’s not just the hardware that is undergoing a revolution, it is also the expertise required to make the hardware work.
Technology experts are fond of saying that data is the crude oil of the coming generation.
However, the real crude oil is talent. Viasat has paid a huge sum to bring Inmarsat’s expertise on board — although that doesn’t mean they can’t jump ship if the terms are not right.
This story is not really about the price, although $7.3bn is way more than the $3.4bn paid for Inmarsat by equity investors just 23 months ago.
And it’s not really about the number of GEOs, HEOs, and LEOs. It’s about gathering technological expertise — a scarce resource — and keeping it from competitors.