The Maritime VSAT Advantage:

A cost analysis of VSAT broadband

versus L-band pay-per-use service
Maritime companies worldwide are recognizing that VSAT
broadband networks are a strategic investment toward improving
crew welfare and increasing business productivity. The reasons are
clear: VSAT networks provide global broadband coverage for voice
and data communications. And they can do so at a dramatically
more cost-effective rate than typical pay-per-use L-band services
offered by carriers such as Inmarsat, Iridium and Thuraya.

It’s no surprise that the adoption of VSAT technology is projected

to jump by more than 400 percent through 2012, according to the
Comsys Maritime VSAT Report. Yet before maritime companies
upgrade to VSAT, they must compare its costs and benefits to their
current communications infrastructure. To do this, they need to
ask several important questions: How much does it cost to install
a VSAT system? When does VSAT become the right fit based on data
usage? How much can I really save per month? What is the payback
period? What is the return on investment?

This document outlines the business case for upgrading to VSAT

broadband communications. It compares the associated costs
of an L-band pay-per-use model to an always-on VSAT broadband
model based on a wide range of IP communications profiles.
The conclusion: Even for the most basic daily requirements,
VSAT networks are the most cost-effective choice for the large
majority of maritime fleets.

2
Why broadband?
No matter how a maritime company decides to
modernize its communications systems, there is
widespread agreement that the industry needs to
shift to broadband. Broadband networks deliver the
high data speeds required by rising communications
needs. They can reliably support a range of critical
onboard applications such as real-time business
applications, Virtual Private Networks, Voice over IP
(VoIP), Internet access and more.
Broadband increases business productivity.
Broadband networks can transform vessels into
high-functioning remote offices integrated with
business applications and fast-paced operations
back on land. They enable crew to maintain greater
contact with headquarters to share business and
operational data; with vendors to order supplies; and
with port authorities to speed up pre- and post-arrival
reporting. ERP systems can collect and send more
information between ship and shore in real-time to
provide valuable insight into operations. Additionally,
broadband networks can facilitate video surveillance
and provide medical support with onshore doctors.
Broadband reduces the cost of
vessel management.
As vessels are spending more time at sea, this leaves
less time in port for maintenance, repair and the
exchange of information. With broadband, crew can
utilize voice and high-speed Internet connectivity to
consult with experts, receive support in real-time and
solve a host of mechanical and technical problems.
Alternatively, these issues would need to be addressed
during an extended stay in port or by an expensive
visit from a specialist brought in from shore.
With a broadband connection, critical vessel
management tasks can now be handled from shore,
decreasing the need to have specialists onboard.
Professionals on land have a greater line of com-
munication to vessels at sea so they can improve
engine performance monitoring and resolve
problems more rapidly. This also extends to IT
systems management, with benefits including
remote computer access, IT trouble shooting and
software upgrades.
Broadband improves crew welfare and retention.
Crew today demand greater access to email, phone
and Internet for entertainment, managing personal
affairs and staying in touch with family and friends
on land. Newer generations of communications-
savvy crew are even harder to please and the costs
of replacing crew lost by attrition continue to rise.
Broadband brings greater levels of communication
onboard to address this critical issue. With a broadband
network, ongoing training of crew can also be
performed while at sea, improving competency and
professional development.
Broadband decreases fuel costs
and lessens delays.
Weather and routing setbacks carry major costs
implications, and tighter schedules leave much less
margin for error. Broadband networks keep vessels
running at a faster clip. They can deliver real-time,
accurate weather and navigation data via the Web.
This saves not only time, but fuel – heavy costs which
can far outweigh a vessel’s communications spend.
Broadband Connections
VSAT broadband can integrate a vessel at sea with
business operations and daily life back on shore.
♦♦ Remote office: Broadband establishes onboard VPN
networks that cover entire fleets and connect ships
to shore. This connectivity supports critical business
applications, carries VoIP traffic and increases a ship’s
access to the information and people it needs to
run a tight operation.
♦♦ Remote home: Broadband delivers regular access
to the Internet for email, file sharing and instant
messaging; more reasonable voice rates; and other
benefits. Crew can stay in closer contact with friends
and family, manage personal affairs and enjoy
entertainment content.
♦♦ Remote management: Broadband facilitates instant
communications with technicians, vendors and other
skilled workers to address mechanical and technical
issues in real time.
3
What are the options?

There are many different ways to procure a maritime
broadband network onboard a vessel. Each has its
advantage in cost, coverage, signal strength and
ease of installation.
C-band
C-band VSAT systems have traditionally been the
choice for vessels that follow trans-oceanic routes
and have significant communications requirements.
C-band beams provide global coverage and meet
broadband speeds. While they require large antennas
and a couple of days in port to install, they have
become an absolute necessity for many major vessels
today. C-band connectivity is typically provided
on a flat-fee basis and can reach data rates
exceeding 4 Mbps.
Ku-band
Ku-band systems are an increasingly popular choice for
broadband connectivity. Ku-band beams cover coastal
shipping lanes, and maritime service providers are
integrating these beams into expansive regional,
even quasi-global coverage areas. Ku-band equipment
is less costly and easier to install than C-band systems.
Ku-band beams provide a very strong signal. And
today, Ku-band is capable of covering deep water areas
and new technology overcomes rain fade challenges.
Ku-band service is also provided on a flat-fee model
and can reach data rates exceeding 4 Mbps.
L-band
L-band systems represent the industry’s incumbent
technology and are already installed on most vessels.
They are largely limited by narrowband data rates,
but newer models can nearly reach broadband
speeds. However, L-band networks are typically
pay-per-use and cannot economically handle the
traffic requirements of many vessels today. In addition,
L-band networks are often subject to congestion
in high-traffic areas. L-band can reach data rates of
up to 432 Kbps.

Maritime Network Options

C-band Ku-band L-band

Antenna size 1.8m - 2.4m .6m - 1.8m .6m or lower

Frequency 3-6 GHz 12-18 GHz Less than 2 GHz
Data rate Up to 4+ Mbps Up to 4+ Mbps Up to 432 Kbps
Beam coverage Global Coastal, regional, near global Global
Typical pricing model Flat-fee Flat-fee Pay-per-use
Future direction Required for large vessels Emerging choice for majority Incumbent technology, but
crossing deep ocean waters of small to large vessels becoming relegated to vessels
with minimal communications
Weaker signal than Ku-band, Smaller beam footprints, requirements, or as a back up
but has a larger coverage but can be overlapped to VSAT
to accommodate most
vessels routes

4
Why VSAT?
Before considering the respective costs associated with
C-band, Ku-band and L-band systems, we first need
to look further at the major differences in capabilities
between VSAT and L-band technologies. Both L-band
and VSAT systems are marketed with what appear to
be a shared set of features and benefits. Yet, VSAT is
based on an entirely different business and technology
model than L-band systems. As a result, VSAT broadband
offers several clear advantages.
VSAT is faster.
Today, L-band systems can approach broadband
speeds, but they top out at 432 Kbps, just short of 512
Kbps, which is widely considered to be the minimum
broadband rate. VSAT systems commonly reach speeds
of 4 Mbps or higher when required.
Another limitation of L-band service is that the
advertised data rate can decrease depending on how
many vessels need to access a specific L-band satellite
beam. L-band satellite capacity must be shared by
every vessel that is currently within a specific beam’s
footprint. It cannot be segmented by service providers,
and often the result is network contention and service
degradation in high traffic areas.
By contrast, VSAT capacity is leased to service providers
according to a fixed carrier size. VSAT service providers
can guarantee data rates because they can control the
number of vessels accessing their capacity.
VSAT is always on, not just always available.
One of the traditional benefits of a pay-per-use system
is that you pay for only what you use. But today, usage
is exactly this model’s primary challenge as bandwidth
requirements rise significantly. Pay-per-use L-band can
quickly add up to unacceptable amounts that are far
more than flat-fee VSAT services.
Even with newly upgraded, faster L-band systems,
the economics of this service model cannot cost-
effectively support the ongoing, daily communications
demands onboard many vessels today. While
additional bandwidth is always available at an added
cost, many vessels are forced to use the system
intermittently and restrict access after a cost threshold
has been met. With VSAT broadband, vessels are always
online, and crew do not need to watch the bandwidth
meter throughout the month.
VSAT enables a more cost-effective
use of satellite capacity.
The maritime industry first experienced VSAT
broadband in the form of Single Channel Per Carrier
(SCPC) connectivity, which provided each vessel with
a dedicated satellite link. SCPC links were costly and
inefficient since each connection had to be over-
dimensioned to guarantee reliable connectivity in
worst-case scenarios. Maritime companies with
small- to medium-sized fleets could not afford
dedicated SCPC connectivity and were forced to rely
on pay-per-use services as their only alternative.
Today, however, VSAT broadband service offerings
are typically built on IP-based Time Division Multiple
Access (TDMA) systems, which are much more efficient
and cost effective. TDMA networks dynamically allocate
bandwidth to multiple vessels over a shared platform
based on each vessel’s real-time needs. A vessel is
guaranteed a Committed Information Rate (CIR),
but can also tap into the broader pool of available
bandwidth, bursting to a much higher Maximum
Information Rate (MIR).
TDMA networks provide VSAT service providers with
greater flexibility in how they tailor Service Level
Agreements. For example, they can enable a vessel
to burst to a higher data rate at no cost when extra
capacity exists, especially in a situation where a
sub-segment of bandwidth is shared across a single
company’s fleet. On an L-band network, bursting
to a higher data rate usually means switching to a
distinct type of service where a streaming data rate
is guaranteed for a period of time. While this service
guarantees a higher CIR, it normally comes at an
additional cost per MB, which can be more than
1,000 percent higher than standard usage fees.
5
Comparing the costs: hardware

To choose which type of network is right for your Hardware costs

operation, you must consider two primary expenses:
equipment costs and monthly service fees. In general,
VSAT hardware is costlier than L-band hardware,
and installation may take longer. This can create a
perception that VSAT coverage is more expensive than
L-band coverage. Yet today, equipment costs have
fallen significantly. Antenna sizes are smaller and less
expensive, and installation times are much quicker.
On the other hand, VSAT service fees are often
dramatically less expensive than the fees most
vessels now accrue on L-band systems. So when VSAT
hardware costs are amortized and combined with
monthly service fees, the result can be much lower
costs than L-band systems.
The below chart depicts typical Manufacturer’s
Suggested Retail Price (MSRP) data per vessel
comparing C-band, Ku-band and L-band
communications hardware – satellite antenna,
installation costs and satellite network costs including
remote satellite router and typical proportioned
hub costs per vessel. The hardware costs below are
amortized over 36 months, which represents the
typical length of a broadband service contract. In
addition to the below costs, a VSAT service plan may
include additional monthly hardware costs based on
a number of criteria such as data usage profile and
network size.

Typical Hardware and Installation Costs

C-band (1.8 m) Ku-band (1 m) L-band (.5 m)

Satellite antenna $96,374 $54,374 $19,200

and router
Installation $15,000 $5,000 $2,000
Cost per month $3,094 $1,649 $589
when amortized
over 36 months

6
Comparing the costs: bandwidth
Bandwidth costs
After hardware and installation, the largest expense
for maritime connectivity is the monthly bandwidth
fee. In the chart below, we have calculated typical
costs per MB based on C-band, Ku-band and L-band
coverage. The rates are spread across a price range that
is determined by different usage profiles.
Based on a usage level of 145 MB per month, L-band
connectivity may cost approximately $11.00 per MB.
If usage increases to more than 2,000 MB per month,
the fee can drop to $4.50 per MB. In between these
ranges, one can expect fees that are likely to be $8.50
per MB at around 400 MB per month and $6.00 for
approximately 1,000 MB per month of usage.
We have also calculated a price range for VSAT
bandwidth since the actual cost per MB decreases
as usage increases, even though the service is
offered at a monthly flat fee. The base price for VSAT
is estimated using average satellite capacity costs
of $4,000/MHz/month for C-band and $5,000/MHz/
month for Ku-band.
The fluctuation, though, is derived from a more
complex calculation. Space segment charges vary
based on data rates (Mbps) and the number of
vessels that the Mbps rate is being shared amongst.
Bandwidth Cost per MB
C-band Ku-band L-band
Space segment $2 per MB (at 145 MB/month) $2 per MB (at 145 MB/month) $11 per MB (at 145 MB/month)
to $0.75 per MB (at 2,133 MB/month) to $0.75 per MB (at 2,133 MB/month) to $4.50 MB (at 2,133 MB/month)
Depending on the usage profiles, one can fit more
vessels with low MB consumption into the same data
rate pool than with higher MB consumption. That is
very advantageous since satellite operators generally
charge according to bandwidth commitment.
Also, when calculating the satellite space segment
costs for a particular data throughput (measured in
Mbps) one needs to understand that space segment is
priced based on power equivalent bandwidth. C-band,
while less expensive, consumes more power to reach
the same data throughput as Ku-band, which needs
less power. Therefore, in our example the Ku-band and
C-band fees are approximately the same.
When we compare the space segment costs for one
vessel with low MB usage (regardless of how many
vessels can be pooled together to take advantage
of bandwidth bulk rates) to a vessel with high MB
consumption and calculate the per MB space segment
price, the price for low MB consumption is generally
higher. In our example, when Ku-band or C-band usage
is based on 145 MB per month, Ku-band and C-band
connectivity may cost approximately $2 per MB. If
usage increases to more than 2,000 MB per month,
the fee decreases to $0.75 per MB.
7
Bandwidth usage profiles

How does this measure up to today’s
communications requirements?
We now need to compare the hardware and
operational costs established above to a vessel’s typical
monthly usage patterns based on total MB of IP traffic.
In the profiles below, usage is calculated based on
everyday use of applications like email, voice calls and
Internet access. We have determined four categories:
Very Low, Low, Medium and High. Based on these
profiles, we can easily determine an approximate level
at which VSAT becomes more cost-effective than
L-band, and vice versa.
What’s most important to consider in these profiles is
the total MB of IP traffic per month. Different vessels
may be running a different mix of applications and at
various data rates.

Very Low Usage

Average Days/month Usage hours/ Usage hours/ MB/month

Bandwidth day month

Email 5 KB 30 1 30 67.5
Internet browsing 10 KB (steady stream) 10 0.5 5 5.6
VoIP (inc Skype) 16 KB or 32 KB 5 1 5 72
IM (P2P or client/server) 28 KB - 128 KB 0 0 0 0
Streaming audio 32 KB - 64 KB 0 0 0 0
Streaming video 256 KB 0 0 0 0
TOTAL 40 145
Low Usage

Average Days/month Usage hours/ Usage hours/ MB/month

Bandwidth day month

Email 10 KB 30 1 30 135
Internet browsing 10 KB (steady stream) 20 1.5 30 135
VoIP (inc Skype) 16 KB or 32 KB 15 0.5 7.5 108.5
IM (P2P or client/server) 28 KB - 128 KB 2 0.5 1 3.15
Streaming audio 32 KB - 64 KB 2 0.5 1 3.6
Streaming video 256 KB 0 0 0 0
TOTAL 69.5 385
Medium Usage

Average Days/month Usage hours/ Usage hours/ MB/month

Bandwidth day month

Email 10 KB 30 1 30 135
Internet browsing 10 KB (steady stream) 20 1.5 30 135
VoIP (inc Skype) 16 KB or 32 KB 20 0.45 9 132
IM (P2P or client/server) 28 KB - 256 KB 10 2 20 252
Streaming audio 64 KB 5 0.5 2.5 72
Streaming video 350 KB and above 2 1 2 315
TOTAL 93.5 1,041

8
The break-even point

High Usage

Average Days/month Usage hours/ Usage hours/ MB/month

Bandwidth day month

Email 10 KB 30 2 60 270
Internet browsing 30 KB (steady stream) 30 1 30 405
VoIP (inc Skype) 16 KB or 32 KB 20 1 20 288
IM (P2P or client/server) 28 KB - 256 KB 10 2 20 252
Streaming audio 64 KB 5 1 5 288
Streaming video 350 KB and above 4 1 4 630
TOTAL 139 2,133

At this point, we have identified the core data we need
to determine which type of maritime communications
service is the most cost-effective given usage levels.
To calculate this, let’s combine amortized hardware,
installation, monthly bandwidth and operating costs,
and apply them to the above usage profiles. When we
do this, we get the chart below.
In this chart, we have calculated bandwidth fees
for each usage category based on the price range
established earlier and added a small operating fee.
For example, the cost per month for L-band at the Very
Low Usage level is represented by 145 MB multiplied
by $11.00 per MB. This equals $1,595. When added
to the $589 amortized cost of L-band hardware and
installation, the total is $2,184 per month.
Similarly, the monthly cost of $2,213 for Very Low
Usage Ku-band is reached when we multiply 145
MB by $2.00 per MB, which equals $290. Then we
add $1,649 for amortized hardware and installation
expenses, plus additional hardware costs (calculated
in this case to be $274) that typically accompany
smaller usage profiles.
The next step is to plot these numbers on an X/Y
graph to determine the break-even point. This
represents the point where the monthly costs for an
L-band service would be equivalent to monthly costs
for a VSAT service. Once the break-even point has
been reached for a specific VSAT band, L-band charges
exceed VSAT charges.

Comparative Costs per Month based on Usage Level

Very Low Usage Low Usage Medium Usage High Usage

(145 MB/month) (385 MB/month) (1,041 MB/month) (2,133 MB/month)

L-band $2,184 $3,853 $6,835 $10,187

C-band $3,657 $3,821 $4,126 $4,690
Ku-band $2,213 $2,376 $2,681 $3,246

9
The break-even point

The chart reveals the following break-even points for
Ku-band and C-band systems:
• Ku-band = 150 MB. For Ku-band systems, the
break-even point is reached at 150 MB per month.
This equates to a Very Low Usage level.
• C-band = 380 MB. For C-band systems, the
break-even point is reached at 380 MB per month.
This falls in the Low Usage profile.
In the Very Low Usage category, a Ku-band VSAT
system can cost less than an L-band system. In a Low
Usage scenario, both Ku-band and C-band can be less
costly than L-band, with Ku-band being considerably
cheaper. In a Medium Usage scenario, L-band has
significantly surpassed VSAT costs. And in a High Usage
model, L-band can be double the cost of C-band
service and triple the cost of a Ku-band service.
The break-even chart shows that the L-band model
follows a very different trajectory than VSAT broadband.
In a VSAT model, greater usage of the network drives
greater ROI. By contrast, in a pay-per-use L-band
model, greater usage drives up monthly charges.
And in today’s maritime environment, these costs
can be hefty.

The Break-Even Point

$9,000

$8,000 L-band
$7,000 C-band
Ku-band
$6,000
Costs Per Month

$5,000

$4,000

$3,000

$2,000

$1,000

0
Very Low Usage Low Usage Medium Usage High Usage
(145 MB/month) (385 MB/month) (1,041 MB/month) (2,133 MB/month)

Usage Per Ship

10
The payoff

Calculating the payback period The VSAT advantage

Another way of calculating the return on investment As you can see in this analysis, VSAT networks can be
of a VSAT broadband network is to determine the a much more cost-effective communications choice
payback period compared to the cost for an L-band for the large majority of maritime fleets, even for
service. VSAT equipment may be leased or purchased the most basic daily communications. For maritime
outright. In the latter case, it is important to know companies, upgrading their communications systems
how long it takes to recoup the upfront hardware and is more critical than ever as they continue to grow
installation costs. The chart below calculates typical their operations and work to recruit and retain talent.
payback periods based on hardware and service costs Investing in VSAT broadband can cut communications
and usage levels. In general, higher usage accelerates costs dramatically, boost network performance
the VSAT investment payback period. to handle greater voice and data traffic, and bring
For Ku-band, the payback period for Very Low Usage is onboard a smart technology ready for business.
38 months. This means that in a 36-month lease cycle,
both Ku-band and L-band are comparably priced.
Above this level, Ku-band service can deliver a higher
ROI than L-band. For C-band service, comparable prices
to L-band service are evenly matched at the Low Usage
level, with higher ROI as usage increases.
It’s important to note that the average lifespan of
a C-band or Ku-band antenna is 10 years, and the
average lifespan of a VSAT router is five years or more.
That means if an antenna is purchased, not leased, the
ROI for VSAT service is even greater after three years
until a vessel requires a hardware replacement.

Payback Period Based on Usage Level

Very Low Usage Low Usage Medium Usage High Usage

Payback for 87 months 36 months 17 months 11 months

C-band VSAT
Payback for 37 months 15 months 7 months 5 months
Ku-band VSAT

11
What’s right for you?
As this paper outlines, there are several options
for bringing broadband connectivity onboard a vessel.
Here are brief guidelines on how to assess your own
needs and make the right decision regarding network
technology and service plan options. When you do
your homework in advance, you can make a more
informed and cost-effective decision.
Examine your existing communications costs.
This is the primary consideration and often the
easiest to measure. Start by reviewing your monthly
communications invoices. Are they trending higher?
Do they fluctuate greatly? How do they compare to
the numbers presented in this paper? If you’re
spending on average more than $2,000 per month,
you may be a prime candidate for VSAT broadband.
VSAT service may also be a smart option if you want
your communications costs to be a more predictable
part of your operating budget.
Understand your opportunity costs.
If your monthly charges are low or show little change,
determine whether you are capping service fees at
the expense of crew welfare or business productivity.
Do you have onboard restrictions in place on Internet
and phone use? Are they too prohibitive? Are you
deferring plans to run critical business applications
onboard because you cannot afford the bandwidth
to support them?
Plan for the future.
No matter what your current onboard communications
infrastructure looks like, chances are you will soon
need to support expanded communications access
to and from shore. Are you planning to run new
business applications onboard that will increase your
monthly usage rates? Can you support multimedia
content – pictures, movies, etc. – that your crew may
be demanding? Make sure limited connectivity will not
be a barrier to future growth.
Consider a fleet-wide Service Level Agreement.
A service plan shared across a fleet of ships is often
more economical than providing coverage for a single
vessel. Greater usage drives down per MB bandwidth
costs. And with an integrated network, a maritime
company can craft a Service Level Agreement that
allows individual vessels to reach higher data rates by
tapping the fleet’s surplus capacity.
Map out your geographic coverage needs.
A final consideration is geographic coverage. Both
C-band and L-band support global service plans.
Ku-band service providers can reach near global
coverage. Making the right choice is a combination
of coverage, signal strength and vessel size.
Know your service providers.
In the past few years, a large number of service
providers announced new broadband offerings for
the maritime market. A majority of these are built on
TDMA VSAT networks, and some even offer multiple
bands to create a global coverage plan or to support
primary and back-up networks. Certain solutions come
out of the box, but have limited capabilities. Higher
end solutions are often accompanied by systems
integrations and 24/7 customer support. Many service
providers market more than one solution, so you
can expect them to closely match your specific
needs and plans.
To find a service provider in your area or to receive
more information about iDirect maritime solutions,
please send an e-mail to maritime@idirect.net
12
 iDirect
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Herndon, VA 20171
+1 703.648.8000
+1 866.345.0983
www.idirect.net
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