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"During my trips to Iraq I noticed that ordinary American soldiers, in contrast to Polish soldiers, had literally no access to the internet or cell phones to get in touch with their loved ones. That is when we started to offer them wireless internet access via satellite. Groups of soldiers pooled money to buy our terminals. They referred us to their colleagues in other units and so on." - said Marcin Frąckiewicz.
Connecting through outer space
Warsaw Business Journal sits down with Marcin Frąckiewicz, CEO of TS2 Satellite Technologies, a global satellite access services provider
Marcin Poznań: The US Marine Corps, US Army Corps of Engineers, Poland’s GROM and many more use your services. How did you manage to gain these impressive contracts?
Marcin Frąckiewicz: To answer I need to go back to the beginning. I had the necessary experience from this sector to launch my own business in 2004. During my trips to Iraq I noticed that ordinary American soldiers, in contrast to Polish soldiers, had literally no access to the internet or cell phones to get in touch with their loved ones. That is when we started to offer them wireless internet access via satellite. Groups of soldiers pooled money to buy our terminals. They referred us to their colleagues in other units and so on. The popularity among regular soldiers brought inquiries from official US institutions, and this is how we were allowed to enter those big tenders with government orders and with contractors for the US Army. the US Army Corps of Engineers bought around 100 BGAN terminals – these are smaller than laptops, but are more expensive than over-sized VSAT access equipment. However, individual soldiers still remain our most important customers.
How many customers does your company have? Are these just military?
It is a list of about 50-60 institutional customers, not only military, but also private companies that use our VSAT internet access. With our partner we provide services for nine US embassies in Africa. The number of individual soldiers using our services in Iraq and Afghanistan is around 15,000. Non-military customers include Agora, for example, which equips its foreign correspondents with satellite phones. The World Bank also uses our phone services. This customer list comprises several hundred.
How do you make your services competitive?
Price is the key. We cooperate with cheap middlemen and also directly with satellite operators. We buy services in Dubai, where our partners’ warehouses as well as the distributors of the equipment are located. It is also a tax-free zone, so that eliminates those costs. We have a partner installation teams on site in the Middle East, so we are able to set up the VSAT access very quickly.
Our company tries to minimize operational costs, hence our small office and large network of partners. This is a business where you win by [being knowledgeable] rather than by building a big structure.
Will you suffer from the recently announced spending cuts at the Defense Ministry?
I doubt it. Eighty-five percent of our orders go abroad. Of course there will be fewer government tenders and the competition will grow. So we have to expect fewer orders for our satellite phones in Poland. Plus some contracts for internet access may not be renewed.
What will you do when the American troops withdraw from Iraq then?
From the business point of view obviously we are not looking forward to the US pulling out [of Iraq], as most of our activity is based on the US Army presence in the Middle East. We would need to come up with a solution to reorganize our business. But there would still be corporate customers left for us.
How do you see the future of this sector?
We are anxiously awaiting the launch of the KA-SAT, which is scheduled for 2010. The aim of this project is to make satellite access services cheap enough for the “regular Kowalski” to make use of them. The prices of bandwidths are expected to drop tenfold, while the equipment is also expected to cost a few hundred złoty rather than several thousand. Our company would also like to get involved in this new offer, because it will help us target individual customers.
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