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When prices vary that widely, net managers need to make sure they
know what they're paying for. Basically, there's more than
installation and per-site fees that go into the overall cost. There's
also equipment, maintenance, satellite capacity, and licensing fees
(see
Table 2
). And each can have an effect on an operator's bid.
Start with the gear. Operators have to make heavy initial
investments in such equipment a
s hubs and earth stations, and while
these costs are reflected in the overall price, the cost of the VSAT
antennas themselves actually plays a larger role. In fact, the four
highest bids came from operators that use the most expensive antennas:
the PES6000 from Hughes Network Systems (Germantown, Md.), which
carries a price tag of US$5,500 to US$6,000, and the Nexstar IV from
the Microwave and Satellite Communications Division of NEC Corp.
(Yokohama, Japan), which comes in at US$5,000 to US$7,000. And that's
before the markup: Challoner says he's been quoted prices of US$9,000
to US$10,000 for each PES6000.
Meanwhile, low-bidder HOT used the Hughes PES5000, which costs
US$3,500 to US$4,000. IBM used the Skystar Advantage from Gilat
Satellite Networks Ltd. (Petach Tiqva, Israel), which costs US$3,500
to US$5,000.
Joint Stock Company Romantis Ukraine (Kiev, Ukraine) was the only
operator to depart from this model. It included the high-end PES8000
from Hughes, which runs US$7,500 to US$8,000. A
lthough using the
PES8000 for this kind of network "is way over the top, even after
leaving room for growth," according to Challoner, Romantis turned in
one of the lowest bids.
Net managers also should keep in mind that the VSAT being used
could affect the operator's ability to accommodate new apps or added
traffic. Spaceline, for instance, says a 25 percent increase in
traffic over five years would result in a US$516,000 increase in
project cost. That's because all of its Nexstar VSATs would have to be
replaced. "The Nexstar IV doesn't have the capacity to accommodate
higher traffic rates," says Markus Willmann, director of sales and
marketing. "It peaks out at 64 kbit/s."
And adding voice also could add to costs. The PES5000, for
instance, doesn't accommodate voice at all. The PES6000 accommodates
voice but not while configured to route LAN traffic. The Nexstar IV
can handle voice "but not very well and we probably wouldn't recommend
it," says Willmann. The more expensive PES8000 answers th
e voice call,
but so does the bargain-rate Skystar—something networkers should
keep in mind.
A final word on the VSAT. Sometimes there's a lot of confusion
about what's approved for use where. Take the PES5000. "The PES5000
does not meet local regulations in any Eastern European country except
Hungary," says Gabor David, general manager of Banknet. "There's an
effort to get it approved for use in the Czech Republic and in Poland,
but that's not complete yet." Not so, counters Sampath Ramaswami,
Hughes' senior marketing manager for Europe, who says the PES5000 is
approved for Eastern Europe.
Dishing It Out
We also found out that dish size can make for substantial
differences in price, scalability, and reliability. Operators
determine the appropriate size by calculating a number of variables to
arrive at the link budget. The key variables are data rate,
availability, and BER (bit error rate).
Unfortunately, operators that want to lower their bids can tweak
these results
—often at the expense of network performance. Using
a 1.8-meter dish instead of 2.4-meter antenna could cut hundreds of
thousands of dollars off installation charges for the entire project,
but smaller dishes can only be used in central locations. That's fine
for most of Europe; in fact, dish size could go as low as 0.98 meters.
But out in remote parts of Russia, dishes should be at least 2.4
meters in diameter.
Maintenance-Minded
In addition to getting the goods on gear, net managers building a
VSAT network also need to find out the particulars on maintenance. In
fact, says Challoner, it's crucial. "No matter how good the system is
technically, it can all be undermined by poor customer service."
So what makes for good customer service? How about having engineers
on call and ready to make repairs? HOT says it will have an engineer
on site within two hours of a call. "We can promise those numbers
because repairing a problem with the Hughes equipment is usually just
a matter of swap
ping out a card," says Simon Watts, European product
group manager. "Users call in the problem code that appears on the
front panel and we know what spares to bring to solve the
problem."
Every other operator says it will have an engineer on site within 4
hours of a call in Western Europe and 8 to 12 hours in Eastern Europe.
And when it comes to response time and repair time, Challoner has a
big piece of advice: Specify them as separate items in the SLA
(service-level agreement). The caveat stems from personal experience.
"We've had times in Africa where engineers would arrive on site
without the correct spares," he says. "Other times, they would leave
the branch without ensuring that it had full communications to our
computer center—and then they'd have to return to complete the
work."
There's something else to look out for: Low maintenance costs might
reflect fewer engineers and fewer spares, not an operator's ability to
distribute its cost out over a wider area.
Big pl
ayers like HOT and IBM might already have the people in place
that allow them to charge less. According to Challoner, they can
amortize those service and support costs over a much larger customer
base in far more countries than an operator like Belgacom (Brussels,
Belgium), which only has one or two sites in the different
countries.
On the other hand, smaller operators might have to contract local
partners in order to meet their customer support promises. And
sometimes it's still not enough. On top of that, local talent comes at
a high price—particularly in such countries as Russia. And guess
who ends up paying? That's right: Serge Van Herck, the marketing
manager for satellite services at Belgacom, says local partners' fees
can add up to as much as 20 percent of the monthly charge.
Another factor affecting cost is the scope of the maintenance
agreement. In short, around-the-clock care costs a lot more than
coverage during, say, business hours. "We looked into 24x7 customer
support for ou
r branches and found that it would boost the per-site
charge by as much as 50 percent," says Challoner. "So in our RFP we
stipulated 24-hour coverage only for the hub and satellite; for remote
offices, we wanted coverage from 8:00 a.m. to 6:00 p.m. six days a
week."
Still in all, VSAT services are generally very reliable. Most
operators guarantee availability of 99.9 percent per month in Western
Europe, which is a lot better than typical guarantees for terrestrial
services. Even in Eastern Europe, VSAT guarantees of 99.8 percent
availability are common.
Of course, there are ways to further ensure uptime. Some customers
might be interested in a restorable-space segment. Here, the satellite
provider (Eutelsat or Intelsat) switches a customer's capacity onto a
transponder or another satellite in the event of a satellite failure.
An unrealistic worry? Not really, since satellites have a life
expectancy of only 10 years or so.
But it's a costly step to take: Networkers can expect to spend 5
0
percent more than they would for a nonrestorable spatial segment, says
Stephane Surget-Route, a bid manager for Transpac. Every operator
claims to factor restorable segments into their bids.
Room to Run
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