K4 Mobility’s Highly Disruptive New Business Model
Serving the maritime VSAT market has always been expensive and challenging. Locked in by inflexible long-term contracts with satellite operators and facing huge CAPEX and operating costs, maritime VSAT integrators are struggling to survive in a market rife with over-capacity and cut throat pricing. Here, duplication of assets and personnel costs is squeezing margins, and there is talk of integrator consolidation and vertical integration with satellite operators. In the midst of this economic chaos, K4 Mobility, an innovative, new entrepreneurial company, is seizing on an opportunity to disrupt the traditional maritime VSAT Value Chain Started in August of 2018 by former Gogo CEO, Michael Small, and CTO, Anand Chari, the company has raised $5 Million and now has 15 employees. In less than one year, K4 has developed the first all-digital, multi-net work platform and is already deploying it in the maritime VSAT market , starting with yachts. Leveraging the recent availability of operator managed services platforms that sell megabits and adding SD-WAN-like intelligence, K4 Mobility has created a service devoid of the capital and operating costs of teleport and NOC infrastructure.
In doing so, it has also avoided the long-term transponder leases characteristic of the existing business model. While existing integrators have considered buying megabits via the managed service model, for the most part , they resisted and continue to purchase megahertz. This approach enabled them to secure more megabits per/ MHz and thereby increase margins and also customize their service offerings. Of course, the downside of this model is the cost of CAPEX for teleport and NOC infrastructure, as well as the ongoing expense of manpower needed to manage the infrastructure. The K4 model, in comparison, relies on the purchase of megabits of capacity on the spot market , and deploying capacity when and where needed, allowing for services to be delivered at the lowest possible price – assuming, of course, that HTS prices continue their downward spiral. Using a Smartphone application, the K4 Mobility platform users adjust service parameters to their liking, and proprietary SD-WAN-like algorithms automatically select the best available network. Through proprietary optimization software, not only can the network intelligently switch between different providers, it also provides owners with secure, fine-grained control over all data usage on their vessel. For the first time, a complete picture of data usage, cost, and performance can be seen from a smart phone – all without the user picking up the phone to call the service provider. In addition, real-time and proactive notifications will alert users when new devices have connected to the network or are using too much data. Further enhancing the offering is a secure messaging platform that enables IoT applications and person to person communications.
The Initial target for the service is the yacht industry, vessels 80 feet in length and larger. The platform is complete, and the company already has its first customer, a yacht using a combination of VSAT and LTE. To jump-start sales, K4 has hired two very experienced salespeople from the yacht industry, and in the future, plans to sell through a network of distributors as well. While the yacht market is an ideal testing ground, it’s easy to see that the applicability of the business model is much wider, given its inescapable economic advantages and ease of use. Once proven, it could disrupt significant segments of other VSAT mobility markets and deliver services at price points and at levels of convenience far superior to current offerings. Given these unique advantages, K4 Mobility is definitely a company to be watched.