Image courtesy of NASA

Introduction
It’s coming to the end of the 2024 yachting season in the Mediterranean and the majority of these luxurious leisure vessels will migrate west over the Atlantic to the Caribbean. So as the season finishes, maritime connectivity service providers will begin reviewing their performances in 2024: what worked, what didn’t and, most importantly, what is next on the horizon?

This year can be summarised as the impact of one player: SpaceX’s Starlink Maritime. Every leisure vessel, small or large, has enquired about the Low Earth Orbit (LEO) service.

Satellite installations on vessels, previously, have typically been a two to six-month project – that is for just one vessel. By comparison, in 2024, a service provider could install Starlink on more than 40 vessels over the same time frame. Abstractly comparing this to wrestling, the business model has changed from one wrestler facing another, to a Royal Rumble, an en masse frenzy of action of moving parts, services and installation on vessels.

Future adaptions
The leisure yacht market has always been one of the first responders to new technology and this provides an ideal testing bed for new maritime connectivity technologies and services. OneWeb’s Kymeta flat panel terminals were deployed by leisure maritime service providers (e3, IEC Telecom and OmniAccess) well before Starlink appeared. Recently, with the explosion in Starlink deployments, both indirect and direct, the market segment has proven to be an excellent weather gauge for these new offerings and services and how well they could perform in the wider commercial maritime sphere.

That said, there are several potential changes that will shape LEO offerings in 2025; the first, Starlink, will tighten geofencing [a virtual perimeter for a real-world geographic area] for vessels operating away from shore.

Many early independent boat owners ‘gamed’ Starlink’s service in early 2022/2023, using land RV (ROAM) data packages rather than the more expensive maritime ones (non-priority – land versus priority – maritime). To combat this, Starlink introduced some location-based contract rules that record the ‘time out of their home port’ and limited free standard data to which the user had access. However, readers should note these terms aren’t bulletproof. ROAM can generally still be used up to 22 kilometres from shore.

These geofencing limitations have been applied rather haphazardly. For example, Macedonia is not a country licensed by Starlink, but Starlink maritime service works fine in its local waters.

Talking about its maritime-specific services, the LEO service has a number of prohibited zones, countries and regions. Starlink introduced a 500-metre geofence where if a vessel is within that distance from shore, the service will not work. In the European leisure market, in the prominent case in point, Turkey, and some parts of the Middle East, Starlink is prohibited. Nonetheless, it has been noted by some users these geofencing limitations have been applied rather haphazardly. For example, Macedonia is not a country licensed by Starlink; it neighbours Turkey, but Starlink maritime service works fine in its local waters.

Additionally, the LEO will soon start fine-tuning its geofencing further. Some vessels that operate very close to shore, say leisure vessels between Ireland and Wales or the south coast of England and France, will only briefly operate in Starlink’s priority zone. As such, they can get away with a 50GB plan (for that small portion of the journey in a priority zone), as they predominantly journey in a non-priority zone time.

However, they could still access bandwidth speeds of 80 to 200Mbps. Even if the vessel exceeds its data allowance in the non-priority zone, the vessel’s overage data bandwidth speeds will be limited to roughly 50Mbps downlink. From February 2025, overage bandwidth speeds will be severely cut. Previously, users sometimes didn’t notice that they had consumed all the data packaged (for example, 150 to 50Mbps). The new overage of bandwidth speeds will soon be unusable in today’s connectivity sphere, around single-digit Mbps downlink.

Users will notice this change in speed.

Additionally, tightening these perimeter zones will probably make many vessels increase their plans in the coming 12 months. Furthermore, the Starlink constellation is constantly being refreshed, and it is touted that possible speeds of 500Mbps downlink in 2025 will be on the horizon with updates to the LEO satellite constellation and upgrades to the Flat Panel Antenna (FPA) terminals.

Impact, options and next steps
LEO broadband services have affected the incumbent GEO VSAT and cellular services, mostly in the leisure market. Maritime service providers claim that GEO VSAT consumption has dropped by 50 to 75 per cent in 2023 from 2022, and cellular has recorded similar declines of 40 to 50 per cent over the same period.

Many users have opted to move their cellular usage to pay-as-you-go package plans, but GEO services are being pigeonholed into standby status or bare minimum usage plans. Some may have hoped Starlink’s best-effort service would be more erratic and thus the market would see more requests to activate GEO VSAT. But this has not come to fruition for GEO VSAT proclaimers.

In the future, leisure vessels will probably opt for an LEO primary and backup, Starlink and OneWeb (a Eutelsat business), followed by GMDSS L-band safety service, where applicable. The peculiarity of this scenario is that the user will be paying slightly less for its primary comms services than back-up (unless on the minimum OneWeb plan), which seems odd, but it does guarantee the customer a very high level of service.

Is the customer willing to ‘throw away’ a parabolic antenna worth between $50,000 and $150,000 because the service is no longer cost effective?

For example, users could opt for OneWeb’s 100GB 12-month contract plan. It’s a 30Mbps downlink speed service that costs around $200 monthly. However, a one-month contract is a little bit more expensive. This service will be hosted on Intellian’s new OW10M FPA system, which is priced around $10,000 for the full system, a lot less than a parabolic VSAT system. Readers should note a few differences in the services, such as automatic rollovers with contract terms and no free overage data or port data (priority/non-priority).

The challenge is, what will vessels do with their existing GEO VSAT systems kit?

The answer is very much horses for courses. Sailing boats have been keen to remove GEO VSAT systems from their vessels for lighter, more compact flat panel systems. Having a bulky 60 to 150kg VSAT system mounted on a mast when you could replace it with a 10kg rectangle panel is a no-brainer.

For others, there are two key parameters to consider: is the customer still in contract for the equipment; if so, the equipment stays on board on standby. If not, is the customer willing to ‘throw away’ a parabolic antenna worth between $50,000 and $150,000 because the service is no longer cost effective?

We will leave the answer to the reader; however, one interesting point to note: most medium or large yachts are built with a specific spot for the VSAT antenna to be placed on board. Without them, the vessel looks peculiar, similar to someone with no eyebrows. Leisure service providers have claimed some customers are paying $10,000 for just the antenna casing of a VSAT to be placed on the ship, with no other purpose. There is a third outcome, too. Some users will simply have no idea what to do with old GEO hardware and will simply keep it for the sake of matters.

The plan for 2025
It is an indubitable fact that connectivity in the maritime space has become greatly commoditised. If companies primarily generated revenues based on airtime sales, this has been greatly impacted in terms of volume of GEO VSAT and cellular and profitability of now primarily selling LEO broadband services.

For example, IEC Telecom plans to be much more flexible with its Starlink maritime 50GB and 500GB packages when new changes are introduced in Feb 2025. Yacht owners will be able to transfer unused data to other vessels or roll over to the following months.

Where is the wiggle room?

Maritime connectivity providers will become more holistic in their approaches in the coming year. Connectivity is still the centre point of the service from a customer perspective, but it will not be the key metric for financial success for the sellers.

Greater emphasis will be placed on educating vessels on cyber-attack risks and other potential risks. As such, more consultancy services and protection package services will be required.

There are three key components to consider:

Firstly, the accessibility to faster bandwidths has highlighted that the legacy IT management systems on board most vessels are outdated and ill-suited for today’s connectivity speeds. Overall systems upgrades, selling consultancy services and IT engineering services to remedy this will be key to selling with connectivity in the coming years.

Second, these premium services will likely be charged between $20,000 and $250,000 to retrofit an entire vessel as a one-off occurrence, and ongoing remote support services can also be between $2,000 and $25,000 per year, depending on the package type in the leisure market.

Interestingly, at Valour, we believe this will not be a big business case for the commercial merchant shipping market.

Additionally, greater emphasis will be placed on educating vessels on cyber-attack risks and other potential risks. As such, more consultancy services and protection package services will be required.

Finally, ESPN, TNT, Sky, DirectTV and others will create more content packages for the mobility market, rather than users downloading all their shows before leaving shore or using VPN services to disguise their locations to the likes of Netflix, Disney and Amazon Video Prime.

Conclusion
Our key takeaway is that connectivity is becoming more commoditised, and the best effort or committed information rate has become an obsolete parameter in the leisure market.

We will see much greater permutations on data packages on LEO, cellular and potentially GEO VSAT services, combinations of packages, and other offerings. The quality of connectivity service is likely to be better than the cellular coverage in most countries, bar South Korea, Denmark and Norway*.

Consultation and selling expert personnel to upgrade IT systems and networks on board leisure vessels will become lucrative businesses over the next two years. In addition, hub services such as e3 with its eHub and IEC Telecom with its OneGate, will blend all the customers’ connectivity network parameters and other services together.

The days of TVRO are probably over in leisure, and only cruise and offshore energy will use the services in small volumes. Soon, content providers will package sports and other entertainment packages for maritime users, and users will be able to get their WWE Raw fixes over Netflix in the coming years.

As such, leisure services will look to cultivate unique entertainment experiences. One example is IEC Telecom’s captive portal that serves as a gateway for superyacht guests to track information about the journey and receive captain updates or other concierge support on-demand services.

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