The comsys VSAT Reportth edition13

iDirectMarket Summary &Company Profile

1. Summary

Since the last publication of The VSAT Report in 2012, iDirect has undergone a major strategic transformation. The company has spent the past two years transitioning to a much larger organization, while re-engineering its core ground infrastructure platform to meet higher performance standards, driven by skyrocketing bandwidth demands and propelled by the dramatic influx of High Throughput Satellites.

The transformation was underpinned by iDirect’s impressive achievement in 2011, when it won the contract to design and supply the ground segment for Inmarsat’s ambitious Global Xpress Ka-band satellite system. As the industry enters a phase of rapid expansion into the higher frequency bands, all VSAT manufacturers have sought to build a strategy to participate. iDirect’s partnership with Inmarsat and close relationships with Intelsat, TSBc and Yahsat have helped it achieve this feat in spectacular fashion.

The company has flexed its engineering muscles and laid a new and solid foundation for a new round of rapid-fire developments. Also, a number of key technological innovations and important business partnerships have powered iDirect’s continued strong performance.

iDirect is now the world’s largest VSAT systems manufacturer by enterprise hardware sales after making an estimated $245 million in revenues in 2012 and turning in another highly profitable year. The company continued to lead IP hub sales in the satellite market, selling more than half of all hubs between 2011 and 2012, and has seen its share of terminal shipments in a fast growing market quadruple from five per cent in 2004 to almost 20 per cent in 2012.

Enterprise TDMA Hardware Revenues 2012 System Vendor Shares

Hughes30.5%

Gilat17.2%

ViaSat9.1%

iDirect32.0%

DVB-RCS6.9%

Others4.3%

“iDirect is very different

from the company of a

few years ago, but it is

just as innovative and

now very well positioned

for the next stage of its

expansion where it is

placed to play a pivotal

role in the development

of the satellite industry

as a whole.”

~ Simon BULL Senior Consultant

COMSYS

2013 was a pivotal year for iDirect as it introduced Velocity as a new product line to complement Evolution. Velocity is designed for satellite operators deploying HTS architectures. It enables service providers and operators to meet the requirement of high-speed mobility specifically in multi-spot beam environments. The first iteration of Velocity will be seen in the deployment of Inmarsat’s Global Xpress system in mid-2014 followed by Telenor and Thor-7 in 2015. Velocity represents a step-change, which moves the capabilities that iDirect can deliver to an entirely different level, whilst also diversifying and expanding the markets it can address. Evolution will continue to be the optimal system for the majority of its customer base. Evolution is designed to meet a broad range of customer requirements from narrowband to demanding high-bandwidth applications. Evolution supports mobility networks and operates in all frequencies on all satellite architectures, including new High Throughput Satellites. The two products will be unified through a new common Network Management System, called Pulse, and will share a range of remote terminals that can be used on either system. Pulse brings greater scale, resiliency and functionality to iDirect’s overall Platform and will significantly enhance the performance of the Evolution product line. Pulse will see its first iteration late in 2014, followed by a rapid development roadmap. Building on 10 consecutive years of increased revenue, iDirect has firmly consolidated its lead in the corporate segment of the market. And at the same time, it has built a larger foundation for its future. iDirect is very different from the company of a few years ago, but it is just as innovative and now very well positioned for the next stage of its expansion, where it is placed to play a pivotal role in the development of the satellite industry as a whole.

2. Market Statistics

Data Sources and Methodology

The information in this Executive Briefing was compiled from the latest 13th edition of the COMSYS VSAT Report, unless expressly indicated otherwise. Apart from information and product data already held in our library, direct contact was made with almost all of the organisations in the report to gather up-to-date information. Visits have been made to a large number of existing and potential suppliers and service providers in Europe, Asia/Pacific, Latin America and North America. COMSYS maintains an extensive database covering all VSAT networks and tracks a wide variety of information for all individual networks. These databases form the basis of most of the statistical analysis in this report.

Robust Growth in Enterprise Services

By 2011 new foundations had been laid for a strong 2012, which the industry delivered and then built on in 2013. Growth has come with a major series of changes which have brought a trifurcation of the primary areas of business into specialised and high value corporate and mobility networking; an increasingly hybridised part of the total end user connectivity solution; and Internet access bridging the digital divide and serving the consumer. In 2012 the market grew by all major measures – global VSAT service revenues increased by $200 million to $7.2 billion, and hardware revenues rose to over $1 billion on the back of a 12 per cent growth in shipments which firmly cemented the reversal of three years of decline. The number of enterprise VSAT sites in service topped 1.5 million based on a 5 year CAGR of 5.2 per cent, and TDMA service revenues posted a 5 year CAGR of 4.5 per cent, growing to almost $3.9 billion in 2012.

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iDirect Continues to Dominate Hub Sales

iDirect’s cost-effective and innovative hub solutions coupled with high levels of functionality and ease of use have made it almost a de facto standard within many of the most valuable vertical markets. Following its dramatic growth, the company has consistently achieved around half of all hub sales over the past seven years. Our most recent figures show that iDirect took 57 per cent of global enterprise hub sales between 2011 and 2012.

The unique capabilities of the iDirect system have cemented its strong position in the market with its original core customer base – the small integrator, IT systems houses and entrepreneurs – all of whom see the company’s platform as the key to be able to grow a valuable service business with controlled and proportional capital expenditure, yet with few barriers or penalties to scaling up if the business grows. At the same time iDirect has seen its wide portfolio of major carrier and telco customers – which now include BT and BT Latin America, France Télécom and Orange Business Services, PCCW, Telstra Global, SingTel, Tatanet, Telefónica, TSBc,

Verizon and Vodafone – leverage its products within the core of their service portfolios. Many of the most specialised VSAT service providers, such as Airbus Defence & Space, GBA, Harris CapRock, ITC Global, MTN, OmniAccess, SkyStream, SpeedCast and RigNet, also make extensive use of the system.

iDirect Shipped TDMA Hubs 2011/12: 492 of 863

Hughes13.3%

Gilat11.2%

ViaSat1.7%

iDirect57.0%

DVB-RCS7.0%

Others9.7%

iDirect Leads in Enterprise TDMA Hardware Revenue

iDirect reached an estimated $245 million in revenue in 2012, turning in another impressive year of growth and profitability. Between 2004 and 2012, iDirect saw its share of terminal shipments quadruple from 5 percent to almost 20 percent and bring in almost a third of all enterprise VSAT hardware sales to become the largest enterprise VSAT systems vendor in the world by revenues. iDirect is the first company since Hughes which has essentially created a market on its own and without any leg-up. To put the company’s success into perspective, it has been outselling the DVB-RCS vendors – Advantech, STM, ND SatCom, Newtec, Thales, Alcatel and NanoTronix – two to one since 2002 through a combination of flexibility of platform, richness of IP features, continuous development, market strategy and professional and pervasive sales and marketing.

Vendor TDMA Terminal Shipment Market Shares

Hughes37.9%

Gilat30.3%

ViaSat5.2%

iDirect14.4%

DVB-RCS7.3%

Others4.9%

2011

Hughes44.6%

Gilat22.9%

ViaSat3.6%

iDirect17.2%

DVB-RCS9.6%

Others2.2%

2012

Vendor TDMA Hardware Revenue Shares

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50%

60%

70%

80%

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100%

04 05 06 07 08 09 10 11 12

Others

DVB-RCS

ViaSat

Gilat

Hughes

iDirect

3. Key Developments

A number of key technological innovations and important business partnerships have powered iDirect’s continued strong performance.

iDirect and High Throughput Satellites: In 2011 the company was awarded the contract to design and supply the ground segment for Inmarsat’s ambitious Global Xpress Ka-band satellite system, which is due to enter commercial service in mid-2014. With the latest addition of Velocity to TSBc’s soon to be launched Thor-7 Ka-band maritime platform and a close working relationship with Intelsat and its EpicNG initiative, iDirect has further consolidated its position in this key vertical. As the industry enters a phase of rapid expansion into the higher frequency bands, all VSAT manufacturers have sought to build a strategy to participate. iDirect’s partnership with Inmarsat and close relationships with Intelsat, TSBc and Yahsat have helped the company achieve this feat in spectacular fashion. One of the most critical initiatives iDirect is undertaking today is a total re-engineering and expansion of its ground infrastructure platform. iDirect’s development strategy is centered on a common hub and Network Management System, with separate product lines to meet diverging requirements. iDirect plans to pursue an aggressive development plan across the entire platform to meet growing performance demands and market requirements and to drive satellite communications increasingly toward mainstream adoption. Evolution and Velocity are both designed to address increasingly higher performance standards demanded of VSAT networks. Specifically, Velocity is designed for satellite operators deploying HTS architectures. It also enables both service providers and operators to meet the requirement of high-speed mobility in multi-spot beam environments. Evolution is designed to meet a broad range of customer requirements from demanding high-bandwidth applications to narrowband systems. It supports mobility networks and operates in all frequencies on all satellite architectures, including new High Throughput Satellites. iDirect has always been keen to maintain as much backwards compatibility as possible with its new products. Coupled with a completely new Network Management System, the X7 forms the initial connection between Evolution and Velocity. The X7 has only recently begun to show its potential with the release of the iDX 3.2 software and the introduction of the terminal in customer networks, but we believe this only hints at what is likely to come over the next one to two years. With the release of iDX 3.2 and once the Velocity platform is proven for Global Xpress, iDirect’s development programme almost becomes more intense. Some of the key features on the product roadmap for Evolution and Velocity are 32APSK modulation, which is a requirement for the high powered beams on many new Ka-band satellites; other bandwidth efficiency improvements, such as a better version of LDPC; new routing protocols; new spread-spectrum waveforms; and, potentially the introduction of DVB-S2 Extensions (the most recent upgrade to the standard).

Network Unification: iDirect has developed an entirely new Network Management System, iDirect Pulse™, for its platforms. Pulse provides a unifying element that brings together the different personalities inherent in Velocity and Evolution and supports services across both platforms with vastly increased performance in terms of service delivery and the scale of networks that can be deployed. Pulse will be a product in its own right and have its own separate roadmap.

4. Platform Enhancements

Bandwidth Efficiency: iDirect’s initial design of its VSAT platform focused on bandwidth

efficiency and it consequently developed an IP-based system with its own proprietary outbound and inbound TDM/TDMA access scheme. The system uses an inbound access scheme known as Deterministic Multi-Frequency TDMA, which, unlike most conventional TDMA systems, does not make use of contention. To support enterprise IP services, the platform enables the allocation of a certain amount of bandwidth continuously to each remote station. This allocation dynamically changes several times a second depending on the queue depth, the CIR configuration, the QoS and prioritisation settings and the rate limiting at each remote. Evolution supports various bandwidth efficiency features such as multi-frequency TDMA inbound channels, which allow remote terminals to frequency hop between inbound carriers, and a 2D 16-State FEC on the inbound channel with a greater variety of MODCODS. Customers have the ability to switch a remote between TDMA and SCPC access schemes via a configuration change from the NOC. Switching to SCPC mode is ideal for some of iDirect’s high-value market segments, such as oil & gas rigs, cellular backhaul and maritime, which require the flexibility to switch between operating modes based on changing bandwidth requirements. With iDX 3.2, iDirect introduced Adaptive TDMA inbound channels – the ability for a single network to support heterogeneous carriers with different symbol rates, modcods and spread factors. This enable a network to dynamically adapt to different attenuation conditions and remote terminals to be sized depending on the throughput requirements whilst maintaining maximum speed and efficiency. An enhancement for the outbound carrier in the form of selectable roll-off factors was also added which can bring gains of a much as 10 Mbps in IP throughput dependent on carrier size. Within the same release, new modcods, lower thresholds, improved frequency and phase tracking were included, bringing further efficiency improvements. All of this illustrates iDirect’s continued focus on improving both the efficiency and the ability of its operator customers to deliver solid SLAs for the demanding customers that many serve on the Evolution platform.

Platform Flexibility: The company emphasises the ability of its inbound and outbound channels to be lit up anywhere across five different transponders and five different satellites, allowing an operator to grow its capacity when it needs it with whatever bandwidth is available and in different frequencies if its business demands it. Service providers who have purchased iDirect’s systems have informed us that they have done so because it offers them a highly flexible and functional platform, yet does not require

them to make a huge investment in a hub system. It has been this flexibility, running from the basic architecture to IP functionality, that has allowed the system to adapt so effectively to almost all of the high-value niche vertical markets that operators serve.

VNO Model: The iDirect platform can also support what iDirect refers to as a “Virtual Network.” In this scenario, a Virtual Network Operator (VNO) literally buys the capacity of a line card in the hub chassis of a Host Network Operator (HNO). This allows a VNO to offer highly competitive broadband IP service, without a significant upfront investment. Through iDirect an operator is able to start a service and select from a range of hub products, unmatched by any other vendor, to cost effectively support independent networks of between 15 and several thousand sites. This additional VNO capability can be employed either as an expansion option – many operators extend their service to different satellites uplinked from a different continent this way – or as a standalone business model in its own right.

Hub Options: iDirect offers two main hub options: a 4 slot chassis which can support up to 4IF connections and which replaced the previous private hub model adding better redundancy and expansion capabilities (the Industrial 4IF is a ruggedised version of this product); and the full 20 slot 5IF chassis that can operate with five different transponders on five different satellites in different frequencies and has full automated redundancy in a 1:n configuration.

Mobility Focus: Mobile services of all types are iDirect’s heartland underpinned by a unique set of high level features:

Global Network Management System (G-NMS).

Automatic Beam Switching (ABS).

Spread spectrum waveforms to support high-speed mobile applications and very small antennas.

“Superburst Acquisition” that improves network acquisition times by as much as five times.

Traffic prioritisation based on a number of parameters.

Class-based queuing which allows an operator to assign a percentage of its bandwidth to each class of service.

Enhanced AES and TRANSEC encryption. This has made iDirect’s platform the de facto standard in the maritime segment and positioned the company as one of the strongest suppliers to the US military. Its position in the maritime segment was further endorsed with its selection by Inmarsat to provide the ground segment for the ambitious Global Xpress platform. The pivotal role that iDirect’s technology plays in Global Xpress also places the company in an extremely strong position for the land mobile and aeronautical markets where Inmarsat also has extremely ambitious plans. iDirect’s strong showing in this area of the market clearly impressed Panasonic which has emerged as a key customer in the commercial airline services sector from which it now has commitments for more than 2,000 aircraft. This also explains why new spreading factors, high speed COTM capabilities and very specific features, like skew angle adaptivity, are all areas of focus for the company.

Terminal Options: iDirect’s range of VSAT terminals has grown in stature and capability with the X1, a powerful, but low cost terminal available in a traditional indoor modem/outdoor antenna configuration or in an all-outdoor package designed to withstand hostile environments and operate with different power sources; and the high performance X7 which can operate and roam between the Evolution and Velocity platforms. The X7 finally takes the brakes off iDirect’s system and brings huge IP throughput increases which are progressively being unlocked with the release of new versions of each platform’s operating system. Alongside the X3 and X5 workhorses, iDirect also offers a range of Velocity and Evolution board-based modems able to be integrated into military, aeronautical and other specialist terminal designs. The following table outlines the features of each option.

1. Future release.

Group QoS – Advanced Bandwidth Allocation: Group QoS (GQoS) is another innovation

unique to iDirect. The GQoS algorithm was designed to give an operator a high level of granularity over bandwidth allocation. GQoS can provide different users, terminals and applications with specific QoS levels in a hierarchical structure across the entire system. iDirect believes that GQoS brings substantially greater levels of management functionality and enables both more efficiency in the use of the available bandwidth and a significant increase in a network operator’s ability to support complex applications, customer deployments and service profiles.

IP Routing: Both the iNFINITI and Evolution platforms TCP/IP support capabilities that essentially incorporate all of the features of a high end router. These include RIPv2 and Static Routes, IGMPv2 IP multicast, DHCP/NAT, TCP acceleration in both directions, 3-way handshake acceleration and local DNS caching. These are all features that a network operator would have to add in the form of a separate unit to some other systems.

Adaptive Coding and Modulation (ACM): The need for GQoS was heightened with the introduction of Adaptive Coding and Modulation (ACM) in the Evolution platform. ACM offers the ability for the hub to step modcods up and down to suit changing weather patterns and maintain availability, allowing the elimination of a costly link margin buffer of capacity which has to be calculated based on worst case conditions. The benefits of ACM are widely known and can bring up to 50 percent efficiencies while increasing availability.

iDirect has integrated its ACM feature with GQoS, allowing operators to set an Extended Information Rate (EIR) that guarantees throughput under virtually any weather condition, taking bandwidth from less disadvantaged links and redistributing it to higher rate services. This allows an operator to provide a higher quality service to those customers prepared to pay for it, but it can also be used to ensure that all sites within a network receive the same level of service, however bad the prevailing conditions might be at just a few of the locations. GQoS also generates reports which allow an operator to record how much network resource a customer required to achieve a set EIR and bill accordingly.

Integration with Terrestrial Carriers: iDirect has also emphasised integration of its systems with mainstream terrestrial network infrastructure as a result of its large carrier customer base. The likes of Verizon, BT, PCCW Global and Orange all have core business strategies focused on the deployment of large, extensive and pervasive MPLS network deployments. Carriers that do make use of VSAT are increasingly looking towards systems to be able to extend the reach of their networks and obviate the need to use unreliable terrestrial partners in some areas. iDirect has developed support for features, such as BGP routing, in a general move towards greater integration with MPLS, pushed by some of its larger carrier and enterprise customers. Highly successful operators like Elara, ITC Global and Newcom International leverage these capabilities within their service portfolios.

5. Future Direction

iDirect has a clear vision of the objectives for its development efforts for Velocity and Pulse, as well as an equally impressive development plan for Evolution, driven by higher throughput and greater efficiency. Velocity and Pulse represent a step-change which moves the capabilities the company can deliver on to an entirely different level whilst also diversifying and expanding the markets that can be addressed. At a more general level, the company has adopted more rigorous development procedures, involving strict timescales related to selection of feature candidates and meeting completion dates tied to a rigid stage gate process. Software releases are now associated with specific applications – for example military markets or transactional enterprise networks – allowing an operator to decide whether a new release is relevant to its market and therefore worth implementing. The attitudes and values within the management and staff are enthusiastic and vibrant, and this is a cause for greater optimism about iDirect’s future. It’s nice to find that the company can continue to surprise us and has managed to retain the loyalty and appreciation of its customers even as it has matured to become less of the maverick and more of a pillar of the VSAT industry. iDirect is very different from the company of a few years ago, but it is just as innovative and now very well positioned for the next stage of its expansion where it is placed to play a pivotal role in the development of the satellite industry as a whole.

6. About this Report

This Report was created for iDirect by comsys from extracts from The VSAT Report, 13th Edition. No new material was generated for these extracts which are wholly-based on comsys‘s independent, third-party analysis. The information, facts and opinions expressed in this report belong to comsys and have not been written for or sponsored by any company or party mentioned. More information on comsys, the 13th Edition of The VSAT Report and how to purchase it can be found at www.comsys.co.uk.

“iDirect continues to lead in

terms of a feature-rich set of

IP capabilities … and the

flexibility of its 5IF hub

continues to outpace every

other alternative. The

company has managed to

add functionality whilst

somehow preserving the

simplicity of implementation

and operation in a

combination that has made

its products so attractive to

its customers.”

~ Simon BULL

Senior Consultant COMSYS