PRIVATE vs. ZONE MAINTENANCE AGREEMENTS MAINTENANCE AGREEMENTS - - PowerPoint PPT Presentation

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PRIVATE vs. ZONE MAINTENANCE AGREEMENTS MAINTENANCE AGREEMENTS

Ove Smidt

ALCATEL-LUCENT

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Presenter Profile

Marine and technical background with the education as a master mariner. Started in industry in TDM 19 years ago. Working with the day-to-day operation of the TDM Vessels, project management of projects as well as marine maintenance

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projects as well as marine maintenance then becoming responsible for all the sales and marketing activities. Now Alcatel-Lucent responsible for the sales activities of maintenance services and system sales in the Baltic and Nordic Region. Ove Smidt Senior Sales Manager Email: ove.smidt@alcatel-lucent.com Mobile Tel: +45 20201619

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Opening remark(s)

Once a cable ships and her crew is on the cable fault ground they will do their best regardless of type of agreement and contractual arrangement. contractual arrangement. Marine maintenance services are very costly; most people consider it to be expensive – although it’s very cheap.

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Agenda

Characteristics for the two main types of maintenance agreement The Challenge The Challenge Where will the resources come from What will attract the needed resources when money is a constraint

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Characteristics

Zone Private

Service availability Shared Shared/individual Priority Often based on Size Often based on type of fault type of fault Service level Common Basic service common/individu al SLA’s etc. Pricing structure Common Individual Control Cable owners Contractors

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Services outside the basic scope

Charting and Documentation Management of Chromatic Dispersion Offshore Liaison/Cable Awareness Repeater and Cable testing Cable Station support during a repair Land Cable repair operations UJ Jointing Kits Provision Wet plant spares provision

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The Challenge

During the next 2-3 years many of the world’s cable maintenance agreements have to be renewed. Agreements then have to be operative for another 3 – 5 years 5 years The world’s cable ship fleet is steadily growing older and shrinking Will there be sufficient and adequate resources to renew the (all) agreements – and will the performance be adequate.

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Age Development inst/maint.

• Average age of

maintenance vessels approx 6 years older than installation vessels here

• Age of maintenance

15 20 25 n Years Installation Maintenance

• Age of maintenance

vessels increase faster

• Going to be worse in 3-4

years time with no new vessels coming online

5 10 15

• Av. Age in Y

2008 2010

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Age Development inst/maint.

• Installation vessels

having a healthy age distribution with only a few vessels becoming

• bsolete due to age

5 6 7 8 9 able Ships

Installation Maintenance

• Maintenance vessels

having a less healthy age distribution more vessels becoming obsolete due to age

• Going to be ugly in 3-4

years time unless replaced

1 2 3 4

• No. of Cab

5-10 11-15 16-20 21-25 26-30 >30 Years

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Where will the ships come from - 1

New builds/modifications Cable ships currently serving other markets “Dip” in installation market releasing ships “Dip” in installation market releasing ships Better utilisation of current resources both within market segment and across installation and maintenance “Insurance model”

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Where will the ships come from - 2

New builds/modifications require large Capex. Also cable ships currently serving other markets can require significant capex due to markets can require significant capex due to the need for modifications prior to return to the cable industry Only likely if reasonable and predictable revenues can be obtained

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Revenue erosion

• Shipbuiling price index

Index

Atlantic region maintenance revenue development

• Consumer price index

Atlantic revenue index Index revenue needed

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Where will the ships come from - 3

Short term (4-5 years) most likely we will have to cope with the current resources Long term market forces will sort the problems – but due to the long lead time for new – but due to the long lead time for new resources (2-3 years) - customers may face some shortage of service unless the contractors/customers put proactive measures in place

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Where will the ships come from - 4

Short term

• Extending life time for current maintenance ships
• Extending life time for current maintenance ships
• Hoping for a “dip” in the installation market
• Creating a better utilisation of current resources within

both market segments and across installation and maintenance

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Using an older ship

Increased maintenance cost to run the ship. Increased contractual risk due to ships performance weakening Contractual risk of being forced to replace ship Contractual risk of being forced to replace ship during contract period Risk of dramatic change in legislation (emission control and green house gases)

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Using a newer installation ship

Revenues that can be obtained unlikely to cover both operational cost and all financial cost Installation market being cyclic – chance of Installation market being cyclic – chance of missing opportunities (contractor/supplier)

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Better utilisation of current ships

Better location of base ports – a more global view Better flexibility between installation and Better flexibility between installation and maintenance ships Strategic spares or USC kept on board

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Better utilisation of current ships -2

Good service

PM ZM

Poor/no service

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How to do it – Who can do it

The key words are “who is in control” To get the best utilisation tight control of the resources and rapid response is essential – so far the zone model has not been able to deliver this model has not been able to deliver this Therefore the most likely outcome is that the private model in some form will be the prevailing one in the future But I’m happy to be proved wrong

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Food for thoughts

Investors should urgently diversify the web of undersea cables that serve as the world's information and banking arteries to address soaring demand and piracy concerns and reduce the risk of catastrophic

• utages.
• utages.

So says a report by a multinational research project that calls for the building of global backup routes for the submarine network that carries almost all international communications, including financial transactions and Internet traffic.

Tue Apr 20, 2010 LONDON (Reuters)

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Questions ?

2010

enabling the next generation of networks & services

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Pacifico Convention Plaza Yokohama & InterContinental The Grand Yokohama 11 ~ 14 May 2010 www.suboptic.org The 7th International Conference & Convention

• n Undersea Telecommunications