German airline Lufthansa sees itself as a pioneer in bringing in-flight connectivity services to passengers. The company launched its FlyNet in-flight broadband service in 2010 and has now been operating the service for almost two years utilizing the Panasonic Avionics Global Communications Suite.

Bernhardt Seiter, director, product competence center, Lufthansa, said in 2010 that these services were crucial in terms of the company’s product strategy at the time. The airline is still in a very good a position to talk about the changing dynamics of this market in 2012, with 66 aircraft equipped to handle the service.

“The highest take-up rate we see is for U.S. West Coast flights followed by U.S. East Coast flights and then Japan and Korea,” says Seiter. “The take-up rates for flights to the Middle East are certainly lower as those flights are mainly night flights and that impacts on the take-up rate. I would say our best flight so far is the Munich to San Francisco for take-up. We have had take-up rates of 30 to 50 simultaneous users on these flights.”

Satellite companies play a key role in this solution. MTN Satellite Communications provides Ku-band satellite network services for Panasonic’s Global Communications Service business. Panasonic has contracted with EMS Technologies’ Defense & Space Division to provide the advanced dual-panel, and collaboratively develop the satellite-tracking antenna.

When Lufthansa launched the services, Ka-band satellites such as Viasat-1 and Ka-Sat had not been launched. Having moved early with a solution based on Ku-band, some wonder whether or not Lufthansa would consider a move to Ka-band. Seiter says the airline still doesn’t see any realistic alternative to Ku-band and probably won’t change its opinion for the next two to three years. “We definitely see Ku-band as an absolutely competitive service from things such as the hardware equipment to the actual services themselves compared to Ka-band,” he says. “We will watch Ka-band develop in the future, and we will examine things like the cost of on-board equipment as well as the actual coverage it is developing. Both of these are absolutely not mature at this stage. We also see a couple of companies developing a hybrid Ka-/Ku-band service in the future.”

Row 44 is a company that established its presence by providing an in-flight connectivity and entertainment platform to some of the most recognizable names in the international commercial airline business. In 2012, the company signed deals with Icelandair and Transaero Airlines in Russia. Row 44’s flagship customers are Southwest Airlines in the United States and Norwegian Airlines. John Guidon, CTO, Row 44, says that the network that places the most stress on the company’s equipment is probably the European network because it’s a free service for the passengers. “It is very common for us to have 80 people on a plane simultaneously using the system,” notes Guidon. “Very often we get 50 percent uptake or more on that network and we know the system can handle the load of a large number of people. Of course, when operating any broadband network we can put more fuel on the fire and more bits on the satellites to satisfy the needs.”

While Guidon admits that Row 44 has explored the possibility of developing a Ka-band strategy, he adds that it could take as long as five years before the company looks to adopt this technology.

“We are watching the Ku-band industry improve some of its technology with mobility in mind and we see Intelsat developing spot-beam architecture with Ku-band satellites,” says Guidon. “Those will be deployed in a time frame similar to the more interchangeable Ka-band infrastructure. Even then, there will be quite a lot of trade off between the two bands. All things being equal, Ku-band is an easier band to communicate off of because of licensing and its weather penetration.”

The costs involved with deploying a platform based on Ka-band make it difficult to justify the investment, according to Guidon. He admits that Ka-band initially appears to have considerable benefits, including the perceived smaller size of Ka-band antennas. “These benefits evaporate after further examination of the financial and technological realities,” says Guidon. “The antennas, for example, are said to be smaller for Ka-band, but we believe the antennas will be the same size. The reason has to do with the licensable power for transmission as well as weather conditions. We don’t believe there is a significant size advantage for Ka-band. This is in sharp contrast to the initial industry hoopla that planes would have antennas the size of paperback books that would receive 50 Mbps. It is just not going to happen.”

Price of Equipment

Most importantly, Row 44 sees the price of Ka-band equipment as very high, with at least a 50 percent premium on RF subsystem components such as the antenna, the high-powered transceiver and the radome. Guidon knows his company cannot get complacent about Ka-band and says he is keeping a close eye on the technology. “At some point in time, it may be the case that the Ka-band infrastructure is sufficiently available, commoditized and its components are sufficiently fungible that we could deploy a dependable system under acceptable economics and we will not be late to that market if that happens,” he says. “But today the satellites are not truly fungible, they are not a commodity and in some cases they’re largely sequestered inside a business model, which is Inmarsat’s, in which case they are not really available for open competition. And I think competition is how passengers and airlines get the best deal.”

Southwest Airlines has been fast out of the blocks with in-flight connectivity and entertainment services with plans to have Row 44 equipped on 85 percent to 90 percent of its aircraft by the end of 2014. In 2009, Southwest made the decision to begin installing Row 44 satellite-delivered broadband beginning with its next-generation Boeing 737-700s. Then, in 2011, Southwest acquired AirTran, which has been operating its own Wi-Fi-enabled aircraft with the Gogo air-to-ground connectivity system. For Southwest, early research proved the viability of such services.

Dave Ridley, Southwest’s senior vice president and chief marketing officer, says the airline began investigating in-flight connectivity solutions almost five years ago and that it was driven largely from a connectivity standpoint. “When we first started down the road, it was all geared toward Wi-Fi-enabled laptops, which weren’t even ubiquitous at that point; not every laptop you bought was necessarily Wi-Fi-enabled and the robust cell phone/mobile market was also relatively infant,” says Ridley. “We started basically with a desire to bring connectivity to the aircraft, but within short order it became more and more clear that the technology we would use to provide connectivity easily transitioned to in-flight entertainment as well.”

Other airlines are placing their bets for the future and most have an in-flight connectivity plan in place. Thai Airways International launched in-flight connectivity services to its passengers in Asia this year, with 13 aircraft initially being equipped for the service. Like many executives in this market, Khun Krittaphon, vice president of product and service development at Thai Airways, had to look at the technology and solution choices facing the airline. “Solutions based on Ka-band are still under development and we have already selected Inmarsat’s SwiftBroadband,” says Krittaphon. “When the technology comes online in the next three to five years, we may move to Ka-band. The technology investment is not cheap. It is new technology and it costs in the tens of millions of dollars range.”

Timing

Timing is also an issue in the airlines’ decision-making process. With Ka-band solutions still in their infancy, some airlines feel like they can no longer wait to offer these services. Takahiko Ebata, assistant manager, product and service strategy development for Japan Airlines, says his company considered a Ka-band solution, but found that it wasn’t a service that could be immediately launched. “We wanted to start offering this service as soon as possible, so we chose the Ku-band option,” says Ebata.

While some airlines are happy to go with a solution based on Ku-band and are not looking to change any time soon, others are already placing their faith in a Ka-band solution. JetBlue announced a deal with ViaSat in September 2010 to bring in-flight connectivity solutions supported by its Ka-band satellite ViaSat-1. Jaime Perry, director of product development at JetBlue, recalls that making the choice between a Ka- and Ku-band solution presented a bit of a conundrum for the airline, especially since it had extensive experience with Ku-band.

“The LiveTV connectivity that we have right now comes across the Ku-band spectrum so the Row 44 Ku-band product is something that we are a little bit familiar with just because of our experience in that space,” says Perry. “That is something that was not going to bring greater bandwidth than ground to air. The feedback we heard from others who use it was that the reliability of the kit was not great.”

This feedback drove the airline to solidify a deal with ViaSat and place its bets on a Ka-band solution. “It became apparent to us quite quickly that Ka could probably solve the challenges we had in that they offered a much higher bandwidth at a much lower operating cost than Ku-band,” says Perry. “It appeared to be what we were looking for. The problem with it was of course no one was doing it so it was pretty much green-field technology. We had to think about whether we wanted to risk being later to market than we’d like with something that was generally groundbreaking, or just be the same as everybody else. We decided that we wanted to do something that was actually worth having and to do it properly, even if that meant it would take us a bit longer than we would like to come to market.”

Inmarsat, which is working on mobile connection capabilities with Honeywell, believes Ka-band is a viable solution. John Broughton, director, product management Global Xpress Satcom, Honeywell, says, “Ka systems represent the future of satellite communications in the same way fiber optics do on land. Once Ka is available there is no purpose to continue with a Ku system. Ka-band systems have been the future of airborne connectivity for years; what was needed was the right team of companies to come together to make it happen.”

The airlines’ endless quest to provide the most vibrant in-flight connectivity service has created a healthy business for Row 44, Inmarsat, ViaSat, Panasonic Avionics and all the companies in the value chain. Tim Farrar, president of analysis firm TMF Associates, says that the biggest change he has seen in the market is that airlines are actively deciding on their connectivity strategy instead of taking a wait-and-see approach. “They are also taking Ku-band very seriously, not least because Intelsat’s planned EpicNG satellites promise to reduce the price of Ku-band capacity to the same level as Inmarsat’s Global Xpress,” says Farrar. “Panasonic has done a lot to make this shift happen and has gained a very large number of orders as a result. Inmarsat’s GlobalXpress will be competing head-to-head for the long haul market with Panasonic, so if Panasonic get a good fraction of their 1,200 committed planes installed by the time GlobalXpress comes to market in late 2014/early 2015, it will be hard for Inmarsat to catch-up.”

Future Plans

If Panasonic suffers from delays in installations, perhaps as a result of building a new antenna production facility, then GlobalXpress will have more space to compete in the market, according to Farrar, who adds that airlines are also trying to determine the best technology approach for their business. “I think some airlines are unsure whether they need to jump to Ku-band right now, or whether L-band will be good enough for the immediate future,” says Farrar. “An airline choosing L-band has the option to wait and see whether they upgrade to GlobalXpress, or whether L-band is good enough for their key business travelers.” The two main things to watch for in the next 12 months, says Farrar, are data on the take rate for paid Ku-band services and whether auxiliary services such as streaming IFE are capable of generating material revenues. “Positive news on both fronts will go a long way to determining the enthusiasm of airlines for a program of rapid deployment of satellite connectivity,” notes Farrar, who sees a highly competitive market developing in both the long-haul and short-haul markets. “Different providers are focused on different parts of the market. In the long-haul market, Inmarsat and Panasonic will battle it out, and we shouldn’t ignore SwiftBroadband as a simple, low-cost solution for some airlines. The short-haul market is a different matter, and we still don’t know whether other regions will see rapid deployment like in the United States. That will be a bigger factor in determining the fate of players like ViaSat and Row 44. In terms of new contracts, some of the biggest decisions will come from North American and European airlines on what to fit on their long-haul fleets.”

In-flight connectivity and entertainment services have become a necessity for airlines. Passengers now view these types of services as a necessary feature of flight. The airlines that don’t keep up with the consumer base may very well find themselves far behind their more technology savvy rivals. And while there are clearly merits behind both Ka- and Ku-band solutions, both from a technology and timing perspective, airlines must choose their future path carefully. The likelihood, according to the airlines and satellite providers, is that there will be a place for both solutions based on budget, geography and application. Ku-band has perhaps outperformed expectations so far, but the battle for hearts and minds is far from over.