Beam Communications poised to benefit from explosive growth in mobile satellite technology

Beam Communications ASX BCC mobile satellite device ZOLEO
Beam Communications plans to launch its wearable mobile satellite device, ZOLEO, later this year.

Mobile satellite technology developer Beam Communications (ASX: BCC) is on the verge of launching a new device for the mass market that will make it easier and more affordable to communicate anywhere on earth.

In our first world society, the ability to access available means of communication whenever and wherever has turned into a basic human need.

Speaking with Small Caps, Beam chief executive officer Michael Capocchi said people nowadays want to be connected at all times and stress when they’re out of cellular coverage.

And while mobile satellite technology does not yet replace the speeds of typical mobile phones or landline infrastructure, it can be critical in an emergency situation, such as when cellular networks go down in a natural disaster or someone needs to be rescued outside of mobile coverage.

This requirement to reliably stay in touch is driving mobile satellite technology from niche markets to the mainstream, making it an opportune time for Beam to capitalise on the industry’s expansion.

Transition from niche markets to mainstream

Communication technology has changed extensively over the past 30 years. We have gone from mobile phones that were as convenient as carrying a brick around in your bag to devices small enough to fit in your pocket, or even on your wrist.

Calls from a mobile were short and succinct and you wouldn’t even dare make an international call unless you were some kind of nobility. Nowadays, most mobile plans offer unlimited standard calls and texts, and overseas calls aren’t quite as anxiety-inducing.

As technology evolved, the cost of both devices and their usage tumbled, and the market exploded accordingly.

The same is starting to happen in the mobile satellite space. While mobile phones depend on land-based towers, mobile satellite devices are connected to satellites that are orbiting the earth or in fixed geostationary orbits.

This enables the devices to receive phone coverage anywhere in the world – far from these mobile towers, and even far from land altogether. This makes them particularly useful at sea, in remote locations and in disaster and war zones.

In the past, satellite communications were limited to small groups of people due to cost. But like the evolution of mobile phones, the mobile satellite industry is changing – costs are falling, choice of solutions increasing and markets are growing as a result.

Untapped, growing markets

Beam aims to benefit from this transition with the upcoming launch of a new wearable mobile satellite messaging device called ZOLEO, which will hit the market before Christmas.

ZOLEO works as an extension of your mobile phone. The device automatically switches your phone to satellite when you move out of cellular coverage.

In August, the company announced it had entered a joint venture with North America-based Roadpost Inc to develop this device to target three key “untapped but large and fast-growing” markets: adventure tourism, rural residents and the lone worker.

According to Mr Capocchi, cellular coverage still only covers about a quarter of Australia’s vast land mass. While this coverage does provide signal for the majority of the population, there are still many people who work, live or play and  travel in and out of typical mobile phone reception.

“There’s a lot of requirements now for businesses to provide a duty of care to make sure their workers are safe wherever they are in the world,” he added.

Analyst firm Berg Insight has forecast the ‘lone worker safety market’ in Europe and North America to double in size to €260 million (A$423.5 million) in 2022.

Mr Capocchi said there is also a large global market of adventure tourists, who may find themselves out of cellular coverage while mountain climbing or kayaking, for instance, and need to be rescued or at least tell someone they’re safe.

According to Allied Market Research, the global adventure tourism market is forecast to grow by 17.4% per year to reach US$1.3 trillion per annum by 2023, with Asia Pacific being the fastest growing region.

In addition, Mr Capocchi said Australia in particular has many ‘grey nomads’ (retirement-aged travellers) who would benefit from the devices.

“They can send an SMS to people at home letting them know they’re safe and have set up camp. I think constant communication is what people really want,” he said.

The competitive advantages

When Iridium launched satellite phones in Australia some 20 years ago, they were priced at around $5,000, according to Mr Capocchi. Today, they’re about one-fifth of the price, plus they can do a lot more.

“For around $1,000 today, you can buy a light compact device called an Iridium GO!, which was developed by Beam and we’ve now sold almost 40,000 of these to Iridium. The GO! is great and enables you to have connectivity with your smart phone. You can make calls, receive calls, send text messages, do small social media updates – just text, not images,” he said.

Beam Communications Iridium ASX BCC

“The GO! device also has an SOS button so, in the event of an emergency, you can press the SOS button and an emergency response will be coordinated to rescue you.”

According to Mr Capocchi, the new ZOLEO device has been designed as a much lower cost terminal, making it more affordable for the mainstream market to justify the purchase of a secondary device. It will be a wearable technology that can be clipped onto a belt or backpack.

“It will be considerably cheaper than a sat phone and we see it as being a companion to your smart phone. A bit like carrying a battery pack around with you – you would carry one of these devices as something that would get connectivity when cell service isn’t available,” he said.

Along with its cheaper price, Mr Capocchi said ZOLEO will trump the competition in these markets due to the device being “more compact, more versatile and [due to its] ease of use”.

Other product launches

Beam has a few more new products in the pipeline. Mr Capocchi said the company is launching a new range of 4G LTE routers which are currently progressing through Telstra’s approval process.

These products can be installed on off-road vehicles or campervans to provide a range of functions including internet hotspots, vehicle tracking and other internet-of-things applications.

Beam Communications LTE Route ASX BCC

Mr Capocchi said the devices can also be used in an outdoor media application, such as for providing information at bus or tram stops or used by utility and mining companies.

In addition, Beam will be one of the first companies in the world to develop and launch a new generation of mobile satellite devices using the upgraded Iridium Certus 9770 transceiver.

“Iridium just spent US$3 billion replacing all their satellites and as part of their upgrade, they’ve enhanced network speeds on these new satellites,” Mr Capocchi said.

“There’s an opportunity for us to bring the product we’ve been making for the last 17 years for Iridium to work on the new satellites with faster speeds… we’ve been chosen as one of the initial launch partners by Iridium to develop a land-based product,” he said.

According to Beam, the new devices can reach speeds of up to 88 kilobits per second, which is more than 35 times faster than the previous generation of narrowband transceivers.

They are anticipated to launch “later in 2020”, Mr Capocchi said.

Solid background

Beam is an established and reputable player in the field, having been in the mobile satellite industry for close to two decades.

“We’ve been making products for Iridium for almost 20 years, which really holds us in good stead for future opportunities to develop products for Iridium and their new network,” Mr Capocchi said.

Beam is also a preferred supplier to Telstra and runs an online satellite phone shop called SatPhone Shop. SatPhone Shop is Telstra’s largest mobile satellite equipment dealer.

The company anticipates Telstra’s approval of its LTE products within the month , which Mr Capocchi said would give the products “good credibility”.

“Telstra approval on the products will be a good recognition that Telstra’s given it the big tick, and obviously in the Australian market, that’s important,” he said.

It is also worthy to note that Beam’s market capitalisation of $10 million is less than the record $18.5 million revenue it achieved in the 2019 financial year.

Danica has extensive experience writing and editing business news in the Oceanic and Southeast Asian regions. She has written across a range of industries including oil and gas, mining, energy, science and research, retail and travel. Danica has covered small and large cap companies listed on the Australian, Singapore, Hong Kong, Indian, London and Toronto exchanges.