The Disconnect In Demand For In-Flight Broadband And Service Success

from the something-doesn't-match-up dept

Boeing's decision to shut down Connexion, its in-flight broadband service, wasn't too surprising, given the few carriers that had rolled out it. But in some sense, it was puzzling, because there's such an apparent interest in in-flight broadband -- something backed up by yet another survey about it. So, if interest is so high, why can't somebody make in-flight internet access work? Connexion has failed, Tenzing's big plans never took off, and Airfone's overly expensive and underwhelming services were never popular. The biggest problem is the tremendous cost of outfitting airlines with the equipment to make the systems work, with Connexion's costs reported to be up to $500,000 per plane. With the airline industry bouncing from one financial crisis to another, and the most successful carriers being those that can hold their costs down the best, this is a pretty insurmountable hurdle. The bigger problem is that the real demand for this service, in all likelihood, isn't as high as all these surveys and media stories would indicate -- or in a world of free WiFi hotspots, demand falls off the table once a fee is introduced. Interest in the services carries on, with several companies participating in a recent FCC auction to secure licenses for air-to-ground spectrum. It sounds like most of these companies will use different technology than Boeing's satellite-based system, which could help them lower costs, but the more fundamental question they've got to answer is whether the demand to pay for this sort of service actually exists. Airline JetBlue was one of the winners of that auction, and it could use free in-flight internet access in the same way it uses its in-flight TV: as a perk to encourage business. That could be a more workable model, but still, an expensive one.

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  1. identicon
    Glenn Fleishman, 30 Aug 2006 @ 12:11pm

    There's demand, and there's cost

    Connexion's system used old satellites--which they argued were available at commodity prices--coupled with an 800-lb, one-week installation of gear. It worked well. It delivered much more bandwidth than Inmarsat's 4G system can hope to offer at a much lower price....if you had 2,000 planes equipped and dozens of passengers per flight. It wasn't so much the cost of installation, but operation. 800 pounds = about 4 passengers and their luggage worth of fuel. And the satellite bills had to be paid for massively underused transponders, because Connexion's approach required hundreds of transponders worldwide paid on a fixed basis. AirCell can use much lighter and simpler gear for their system, adding < 100 lbs. JetBlue only won a 1 MHz license, and it's symmetrically split by frequency range, so they have only 500 KHz to push to a plane. That could be used for streaming video or streaming live video to cached on-board servers.

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