By Monica Alleven
June 15, 2006
WIRELESS WEEK

Wireless Heads Out to Sea
Type "A" personality cruise ship passengers no longer have to leave their Web access on shore, so why should they leave their cell phones?

Executives behind the startup technology firm SeaMobile certainly have their eyes on the enterprise space. Except in their world, the enterprise floats.

The company is one of a few targeting the lucrative cruise ship industry with systems that extend cell phone coverage to ships. And it's not difficult to see why they're joining the club. So far, the market is fairly unpenetrated, even as the demographics of cruise ship passengers gravitate toward the younger set. Families with "always connected" youth, busy executives and nearly everyone in between want coverage when they're on vacation, and cruise ships are competing with land-based resorts that offer all of the amenities of Wi-Fi and wireless phone service coverage.

The systems are designed and roaming agreements are in place to enable passengers to make cell phone calls regardless of whether the underlying technology is CDMA- or GSM-based. And it appears to be a proverbial win-win for the players. The cruise ships gain a portion of the revenue from the carriers, wireless carriers rack up more minutes and passengers don't miss a beat back home, even though in some cases they're paying international roaming rates.

PAST THE STIGMA Early on, some in the cruise ship industry feared that enabling cell phone coverage on ships would disturb passengers. However, that hasn't been the case, according to Patrick Manuel, director of information technology for Island Cruises, the first Wireless Maritime Services (WMS) client to put cell phone coverage on a ship two years ago. In terms of complaints, "no news is good news for us," he says. "The reason this technology is so good for us is we're collecting revenue from the passenger, but it's not hitting their bill during their vacation."

"I think in the beginning people were kind of surprised that their cell phone works, but now on our ships we've already seen it's just turned into something that's seamless," he says.

Passengers might notice a slight latency in their calls at first but they're not complaining about it, according to Rob Marjerison, vice president at WMS. That may be especially surprising given that some 60,000 people a week are going on cruises. "Nobody is saying anything, but they're using the heck out of their phones," he says. The North American cruise market alone includes about 120 ships. WMS has deployed systems on more than 30 ships thus far and has more than 50 ships under contract. It uses gear from in-building solutions provider LGC Wireless, which supplies the inconspicuous distributed antenna systems.

"We're installing them as fast as we can," Marjerison says. "We're trying to replicate the experience that people would have in a resort."

NEWER ENTRANT WMS, a joint venture between Cingular Wireless and Maritime Telecommunications Network (MTN), competes with the likes of Norway's Maritime Communications Partner (MCP), which also has deals with wireless carriers worldwide. But while Seattle-based SeaMobile is newer to the game than Miramar, Fla.-based WMS, it's making waves. Last month, SeaMobile paid $168 million to acquire VSAT solutions provider MTN, making it a part owner of WMS. Last year, the company acquired the assets of SeaCom, including more than 200 roaming agreements with operators around the world.

Formed in 2005, SeaMobile actually provides more than cellular service onboard ships. It offers Wi-Fi, television, ATM and even newspaper services – pretty much anything that needs to connect back to land. In addition, it serves other members of the maritime industry, such as container ships and offshore oil and gas platforms.

In the cruise ship market, part of SeaMobile's strategy is pricing. Although a typical sea-to-land call costs about $9 or $10 per minute, SeaMobile's service takes that down to the $1.99 per minute range for calls to North America. The customer gets billed on his or her regular carrier bill. The service doesn't displace the on-ship calling services that have been available for years, but typically the existing high-priced satellite service doesn't get used, says SeaMobile President and CEO Bill Marks.

In the simplest form, the ship is the equivalent to a building – with all of the steel and moving parts that make RF challenging. SeaMobile deploys its gear on the ship, which communicates via VSAT. That, in turn, goes to the land earth station and is sent on to Ericsson's core network in Texas, where it communicates with the PSTN and mobile phones, fixed line phones and laptops.

SeaMobile has deployed systems on Silversea Cruises and Oceania Cruises ships and can get a system up in running in about seven or eight days, according to SeaMobile Chief Technology Officer Jim Ellis, who helped launch PCS markets when he was with AT&T Wireless Services.

While Seamobile looks like an acquisitive startup, practically everyone at the company, like Ellis, has been in the industry 10-plus years. Its leaders include Marks, a former DSS Direct/ Direct TV founder, as well as cable TV entrepreneur William Marks Sr. and former McCaw Cellular Communications executive Jack Donohue.

Lest anyone think SeaMobile's engineers "have it made" going on the ships, the installations that take place while a ship is docked are no day at the beach. Typically, the air conditioning and water services aren't running, and even when the ship is sailing, the engineers don't mix with the general passenger population, Ellis notes.

Why the big need for wireless at sea? According to Marks, consumers have come to expect their wireless phones to work wherever they are – at an affordable price and regardless of the air interface. Marks himself was on a cruise several years ago and noticed that as soon as the ship pulled into dock, passengers fired up their cell phones. Folks who didn't have cell phones waited in line at a payphone. "It was pretty clear there was a great demand for the ability to stay in touch," he says. "The market's quite large."

Both SeaMobile and WMS design their systems so that if or when the demand arises for advanced services such as EV-DO, the ships can handle it. Already, Marjerison says, the rapid growth in Treos and BlackBerries is driving usage on board ships.

A 2003 survey by Management Recruiters International of 730 executives found that 47 percent surveyed wouldn't use all of their vacation time and 58 percent said that the reason was job pressure. The same study also found that 35 percent said they wouldn't take a vacation because they have too much work to do.

Getting cell phone and Internet connectivity while at sea may be just what executives need to get out of the office. And if cruise ship passengers are as chatty as shoppers at the local mall, the market is ripe for the picking.

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