Reconnecting the skies: the return of inflight broadband: two years after Connexion By Boeing bit the dust, inflight broadband is poised to stage a comeback. Inmarsat is leading the way in the L-band space, but Intelsat aims to bring Ku-band back in the game. Just one thing: will it ever be profitable?

Telecom Asia, June, 2008 by John C. Tanner

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The 2004 commercial launch of Connexion By Boeing (CbB) seemed like a no-brainer, as service concepts go. Lots of people bring laptops in their carry-on bags, and they're a captive audience that has anywhere from two to 20 hours worth of flight time to kill. Why not add internet connectivity to the inflight entertainment options? Put in an Ethernet hub or a Wi-Fi access point, and use Ku-band satellite links for the backhaul. Passengers wanted it. Airlines wanted it. What could possibly go wrong?

Quite a bit, as it happened. Two years later, Boeing was looking for someone to buy the business from them. No one wanted it for what Boeing was asking, and in August 2006 Connexion was permanently disconnected. The problem was partly related to the technology, which worked fine but was expensive and heavy to install, the latter being a particularly crucial issue for aircraft, as extra weight means more fuel consumption. But the real Connexion-killer was the economics of the service.

According to a post-mortem from consulting company Telecom, Media and Finance Associates (TMF), CbB was racking up operating costs of $150 million a year, but pulling in a measly $11 million a year--which wasn't even enough to cover its satellite capacity costs. Some industry pundits have also noted that Connexion's hefty $29.95 price tag for unlimited usage was likely a contributing factor to slow-take-up.

Still, the concept behind CbB has refused to die. In the wake of its demise, various inflight comms trials are still in play. Airlines like Qantas, Air France and Ryanair are trialing OnAir's inflight technology, while Aircell has agreements with American Airlines and Virgin America, and Row44 has a trial running with Alaska Airlines. And in March this year, Emirates Airlines debuted the first-ever inflight-cellular service for GSM-based voice and SMS services.

All of which is potentially good news for satellite operators that want to beef up their aeronautical communications businesses by supplying the backhaul connectivity for inflight broadband and cellular. Inmarsat is targeting the market with its Swift Broadband service, which utilizes its I-4 satellites. (OnAir is already a customer.) And last month, Intelsat announced a deal with Panasonic Avionics to offer an inflight broadband/bandwidth package to airlines, with Intelsat's GlobalConnex Network Broadband service handling the backhaul link.

The latter is significant for a couple of reasons. One is that Panasonic's eXconnect platform was the heart of the CbB service--the Intelsat deal offers them a second chance to make inflight broadband a commercial success. The second reason is that Intelsat's move is the strongest indication yet that FSS operators with Ku-band capacity can still play in the aeronautical broadband business. All they have to do now is convince the airlines.

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Light, cheap and flexible

That may take some doing, given that over a dozen airlines were burned by the Connexion experience. But satellite players are quick to point out the differences between CbB and the next generation of inflight broadband.

For a start, says Mark Hoskins, Swift Broadband commercial development manager for Inmarsat, the onboard technology has evolved considerably in terms of cost and weight.

"CbB's equipment weighed 800 lbs, and that's something you have to make room for, whether it's less cargo or fewer passengers," he says. "Nowadays, the satcom part weights 10 kg or less."

David Bruner, executive director at Panasonic Avionics, says his company's eXconnect solution has been completely redesigned so that every component is smaller and lighter without sacrificing performance, and offers greater coverage at lower operating costs.

"Every cost variable of the network and airborne equipment was reduced by 30% or greater," he says. "We also made significant improvements to the revenue model by supporting mobile telephone and other entertainment services."

Indeed, service flexibility is another attractive selling point compared to CbB's laptop-oriented service. Hoskins notes that passengers in the Middle East and Asia tend to want to use other devices besides laptops, which is a much smaller addressable market compared to mobiles and PDAs.

"If you figure that the average flight runs at 85% seat capacity, then you have to look at how many of those passengers have a laptop, and how many of those would want to connect to the internet and how many of those would be willing to pay," he explains. "That's where the CbB model broke down, because you ended up with maybe five passengers that were willing to pay money. If it's a wider offering and it's easier for people to use--say just pulling out a mobile or PDA instead of digging out a laptop--you have a greater reach."

Another way of looking at it, says Claude Rousseau, senior satellite communications analyst for telecom market research and consulting at NSR, is that all players are basically older and wiser after seeing where Connexion went wrong.