Print

Comment

Email

Digg

Del.icio.us

Reddit

The VSAT service industry registered a steady growth rate of almost 35 percent in terms of VSATs added in the FY 2004–05. Though the figure of 47 percent in FY 2003–04, the number of operational VSATs went up by 9,818 in FY 2004–05 compared with 8,991 in the previous financial year.

There were minor hiccups like objections being raised by the Department of Telecom on the VSAT service   s being provided to uplink live video and subsequent cancellation of HFCL's VSAT license. TDSAT gave the judgment in favor of DoT. As of now, HFCL's license (under which the company had almost 60–70 VSATs), stands cancelled and the case is subjudice in the Supreme Court. Last year, RPG Satellite Communications too surrendered its license.

Despite all this, the VSAT services industry witnessed robust growth with good support coming from the government buyings. Even the broadband policy announced in October 2004 listed VSAT as an important medium to provide the high-speed Internet services. The only rider was that the service provider should have an ISP license.

The last year also saw Bharti Infotel, a subsidiary of Bharti Tele-Ventures, acquiring Comsat Max in a Rs 33 crore all-cash deal. With this acquisition Bharti inherited a strong list of financial and banking customers of Comsat. The latter brought 4,300 installed VSATs, two hubs in Mumbai and Delhi, and a data center to Bharti's kitty. There are now nine players holding VSAT licenses from DoT.

After the acquisitions, and with growing interest in the satellite medium, service providers are opting for multiple vendor platforms. Except HNS-which has HECL as its supplier-HCL Comnet, Bharti, Essel Shyam, Tata Net have Viasat as well as Gilat as their vendor.

V&D estimates  CyberMedia Research

According to VOICE&DATA estimates the VSAT market in terms of revenue was Rs 413 crore in FY 2004–05, a jump of almost 29 percent. In FY 2003–04, the total revenue estimated was Rs 320 crore. The reason for revenue growth not keeping pace with number installation was due to crashing of VSAT and hub prices. It is estimated that the prices are crashing at 10–15 percent per annum. But deal sizes and volumes have gone up.

Money Market Spins Money
The stock market and brokering segments bought VSAT connectivity in large numbers last year. HCL Comnet, Hughes, and Tata were all very active in this segment with Gilat's equipment dominating this market. The stock exchanges were not expanding much but the brokering community spread beyond the metros. The boomimg equity markets propelled the need for real time, reliable, connectivity. This segment installed almost 10,000 terminals in FY 2004-05.

Lottery, where Essel Shyam and Hughes had substantial stakes, slowed down in the last financial year. There were very few installations last year from the two service providers, and the issue of live uplinking and revenue sharing with the operators also hit the market. Further, five of the eight states that had allowed lottery have now banned it. Adoption of CDMA connectivity also pushed this segment away from VSATs.

Banking and the financial sectors were steady buyers and ATM roll outs gave good business. Bank of Baroda, Central Bank, Allahabad Bank, Union Bank, Punjab National Bank, ICICI, HDFC, UTI, and SBI bought from across the service providers.

Connecting retail and distribution channels in the auto, manufacturing, and oil sector would help in growing the VSAT service providers. Last financial year Reliance placed a Rs 26 crore order for its CDMA trunking backbone, with 275 VSATs from Hughes. Equipment for this deal would be provided by various vendors and HNS would be the integrator. Similarly, companies like Indian Oil, ONGC, and even Reliance Petroleum were very active in adopting VSATs and orders are expected to come from them this year.

This year, Tata Teleservices is planning to have a CDMA backbone on satellite similar to what Reliance Infocomm has done. This project is likely to be executed by Tata Net this financial year.

Tata Net also had Rs 12 crore order for 1,500 VSATs for Tata Motors and Bajaj Auto. These terminals were used to connect the dealer chain with the company. The VSATs supplied to Tata Motors are on extended C band. Tata Net closed a similar deal with Hyundai to connect its dealer chain.

For ITC's e-choupal, which has been a major buyer of VSATs, though the deployments slowed down, it still went ahead and installed 2,647 VSAT terminals and 29 hubs last year. The deployment was almost equally divided between HCL Comnet and Hughes. All VSATs for ITC are on TDMA.

But the real boost for the industry came from the government. After the launch of EduSat, ISRO came out with a tender for 20 hubs and over 1,200 VSATs. Viasat bagged this order along with Bell, and four hubs went to Hughes. ISRO is expected to expand its base this year and the launch of HealthSat on similar lines would also spread VSATs in health sector. Apart from EduSat, Tata Net also had an order for 175 VSAT from NIC, all of which were on DAMA.

V&D estimates  CyberMedia Research

Apart from ISRO and NIC, state governments' projects and the initiatives to take e-governance to the rural areas also helped the VSAT industry. Projects from e-mandi in Punjab, MP treasury, and move to connect the district headquarters to state capitals kept companies like Essel Shyam busy. The defense sector has also been making its purchases. HCL Comnet, Hughes, and Essel Shyam have been the main integrators for the sector.

Looking Ahead
Broadcasting and media segments are promising for the VSAT industry. Though there are roadblocks like live uplinking and broadcast, sooner or later regulators would realize the potential of VSATs and let this sector face the markets. As of now, VSATs on mobile vans are used to mainly to feed news from news teams in the field. But when reality TV and live programs come up in a big way, they too would require high-bandwidth VSAT connectivity-like it happened with the opening up of online lottery.

Bandwidth pricing is the main issue in rolling out new applications and services on VSATs. The hubs and antennas have become more powerful than ever, but with ISRO controlling the bandwidth prices, negotiating ability of the service providers remains limited to the equipment only. Once the service providers are allowed to purchase bandwidth from foreign satellites directly, VSAT connectivity would become cheaper. And, if volumes can be assured, these services would move out from enterprise segment to the home users too. DTH or broadcasting directly to users can bring out applications beyond just TV channels and Internet. Distance education (which at present is limited to community centers or a central location) and health services can be delivered directly to the end users.

Anurag Prasad