COMMUNICATIONS FORUM

Transcription

1 EV06y.S46 q g7@ COMMUNICATIONS FORUM WHAT IS THE FUTURE FOR VSAT'S-- IS IT BYPASS OR MORE? Octber 22, 1987 Seminar Ntes E MASSACHUSETTS INSTITUTE OF TECHNOLOGY I! j

2 MASSACHUSETTS INSTITUTE OF TECHNOLOGY COMMUNICATIONS FORUM WHAT IS THE FUTURE FOR VSAT'S-- IS IT BYPASS OR MORE? Octber 22, 1987 Seminar Ntes William P. Osbrne COMSAT Technlgy Prducts Bb Dunlap TEI, SkyNetwrks Terrence P. McGarty Applied Research, NYNEX Gail Kslff Rapprteur MIT

3 The fcus f this seminar was the cmmercial use r VSATs with a critical lk at the present and the future. All fur speakers at this frum agree that VSATs make sense tday frm an ecnmic and end-user needs perspective. They cncur that there are ptential cst savings fr many crprate users f VSATs, either in shared user r dedicated cnfiguratins, due t the distance insensitivity f satellite transmissin csts. (Exhibits A & B illustrate the difference between a shared user and a dedicated VSAT cnfiguratin). Hwever, ne pint f cntentin amng the speakers cncerns what is "driving" the usage f VSATs by crpratins tday. William Osbrne believes there are several reasns, in terms f applicatins and features, fr the grwth and acceptance f VSATs fr private netwrks, including: vide services; high-speed data requirements; reliability; quick installatin; transprtability; and cst cntrl ver the lngterm. Dr. Osbrne believes that there is n such thing as "VSAT technlgy," rather "VSATs are a natural evlutin f satellite cmmunicatin technlgy." Osbrne believes that VSATs are nt primarily a "bypass" technlgy. In his pinin VSATs wuld have cme t the market even if divestiture had nt ccured. He believes the technlgy has becme mre appealing t crprate users particularly because f decreased grund segment csts, especially the cst f the earth statin. (Refer t Exhibit C fr his verview f Ku-band VSAT Price Trends ). In his pinin, VSATs are "the next natural step in mving satellite cmmunicatins clser t the user." Osbrne cited the different mtivatins fr a cmpany pting t implement a private netwrk versus becming part f a reginal shared netwrk. Althugh, accrding t Osbrne, a typical crprate private netwrk will shw payback in three years and achieve 20-30% cst savings ver terrestrial service, he believes mst crpratins d nt want t take the respnsibility f wning and perating a netwrk even fr this type f gain. He believes the majr advantages f using a reginal shared netwrk fr the crprate end-user include: ptin t lease/buy OPT (n premises terminals); payment f mnthly fee fr Hub and space segment (thus avid capital risk); avid peratinal risk and cst;

4 ptin t cnvert all r part f netwrk; and ability t add services and pay accrdingly. In the future, Osbrne envisins VSAT peratrs unifying their netwrks t allw fr VSAT-t-VSAT data and vide cmmunicatins. Perhaps a trade assciatin r sme ther natinal rganizatin wuld crdinate the intercnnectin f multiple systems t prvide its membership with services like electrnic mail. TEI SkyNetwrks believes the grwth f the VSAT market is largely being driven by the needs f majr crpratins in secnd-tier markets which are lking t achieve cmmunicatin cst savings ver terrestrial slutins, mre predictable and cntrllable rates, and better ecnmies f scale ver terrestrial netwrks. TEI tuts the advantages t be achieved by majr crpratins in using a reginal shared hub cnfiguratin. In particular, crpratins are able t access the fllwing simultaneus VSAT services using TEI's VSAT facilities: data (high-speed, interactive); vide (ne-way, full-mtin, analg--prductin services); vice (16 KBPS, Digital); and backgrund music (varius frmats, dedicated netwrks). This arrangement allws crpratins t avid making majr capital expenditures and wrrying abut netwrk management. TEI explained that even thugh the netwrk is called "shared" each user really has a "partitined" hub (data is nt mixed between users) s security is nt an issue. Anther advantage f using TEI's service is its speed in making additins and changes t the user's netwrk: it takes TEI 2-3 days t d what the lcal telc needs 2-3 mnths t accmplish. Sme f TEI's current clients using its turnkey VSAT services include: Burlingtn Industries Cca-Cla Cnslidated Cummins Engine Netwrk Cmputing Crpratin First Data Resurces (American Express) Transprtatin Infrmatin Management Services (TIMS) Lwe's Crpratin Fr TEI, these "anchr" custmers play an imprtant rle in seeking additinal shared users f the systems.

5 1 Like the ther speakers, Terrence McGarty wuld nt argue abut the quickness and ease f installatin characteristic f VSAT systems. McGarty traced the histry f VSAT develpment and hw VSATs have benefited frm advances in Ku-band technlgy, namely that it allwed users t emply smaller antennas and t c-lcate them. He cited technical prblems inherent in the public switched system, e.g. while 99.5% f vice calls placed d g thrugh, nly 90% f data transmissins g ver the netwrk withut running int sme truble. In his pinin, VSAT technlgy is an effective way fr tday's cmpanies t btain mre reliable data transmissin services. Reflecting n the success that the VSAT industry has experienced, McGarty believes VSAT vendrs actually "stumbled" int the netwrk management business. (Refer t Exhibit D fr a schematic f what is invlved in "netwrk management" accrding t McGarty.) Furthermre, he wuld argue that fr the VSAT vendrs t cntinue t be successful they shuld tut "perfrmance, perfrmance, perfrmance" and nt place s much emphasis n the issue f ptential cst savings fr the end-user. VSAT pricing is very dependent n the number f terminals n a hub; Cylix has a shared hub system which has achieved $450/mnth per drp. (Refer t Exhibit E fr an verview f VSAT cst per drp per mnth cmpared t terrestrial transmissin). McGarty cited his experience in fixing-up peratins at ailing Cylix Crpratin as an example f the value f listening t client needs. In his experience mst Cylix custmers, including Purlatr Curier, Campbell Sup and Ferris Brwning, at the time were willing t bear substantial cst increases fr using Cylix transmissin facilities because they perceived the primary value f the service as the netwrk management cmpnent. This was als at a time when divestiture had left these mid-tier crpratins (with reginal, multi-drp lcatins) uncertain abut hw t deal with AT&T and the Bell Operating Cmpanies fr their netwrk needs. Accrding t McGarty the key VSAT cmpetitrs in tday's market are: Shared Dedicated AT&T Cmsat GTE Hughes Cntel NEC Tymnet Tridm Vitalink Vitalink Lking t the future, McGarty cited real pprtunities fr cmpanies t address the needs f crpratins which are lcated in areas f the cuntry still served by the independent phne

6 5 cmpanies (apprximately 80% f the U.S. land mass). In these areas telephne service is f pr quality and ISDN services will likely be slw t arrive. He mentined the develpment wrk f the reginal perating cmpanies in the area f netwrk management and cntrl prducts t address their reginal markets; these cmpanies are still cnstrained in what services they can prvide per the MFJ (Mdified Final Judgement). Furthermre, McGarty discussed the grwing cmplexity f the crprate netwrk and the predminance f the IBM netwrk architecture (SNA). In his pinin, the real issue becmes wh will be respnsible fr end-t-end management f the netwrk as it becmes mre a matter f managing cmputer cmmunicatins, nt data cmmunicatins. He sees IBM's strategy f launching "Netview" as a strategy t maintain its cntrl ver the custmer netwrk. Lastly, accrding t McGarty, the characteristics f the public switched netwrk can be expected t imprve slwly ver the cming decade. He believes these develpments will alter the envirnment fr VSATs. ~

7 ~ L VSAT (Dedicated) Central Site

8 VSAT (Shared) CustmerU 7 JIZ.3 I -. l - I Iu.3LWAAA I z'- J N

9 a9t _ Ku-Band VSAT Price Trends 1 I ~I ~splilli~blb~lr~lla~~ ~L r~a~n~ 1986: 1987: 1988: : $16,000 typical (100 units) $12,500 $ 9, % reductin per year $18K $16K $14K $12K $10K $ 8K $ 6K

10 Netwrk Management

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