When introduced, Connexion by Boeing was hailed as a breakthrough productivity tool, but the service lost millions of dollars before being grounded after a few short years. Today, other providers are looking to capitalize on this still promising aircraft market.

Although Connexion is still used by government and military customers, Boeing’s departure from the commercial airline market created a void, and new suitors are courting the airlines for the chance to take Connexion’s place. These service providers use either improved satellite- or ground-based technologies, but have they learned valuable lessons from Boeing’s costly mistakes or are they doomed to repeat them?
While Connexion brought the benefits of the Internet to business travelers, the equipment needed to provide the service proved to be its downfall. The transmission equipment takes up quite a bit of rack space inside the aircraft along with along with being extremely heavy. Most weight estimates range from 750 pounds to 1,000 pounds for a complete system — the equivalent of five regular passengers — so that only the largest aircraft could afford such a weight penalty, preventing fleet-wide deployments for many major carriers. The airborne platform sports a large antenna housed inside a radome extending from the fuselage that creates a tremendous amount of drag on the aircraft. So in addition to being a fuel thief, the drag from the radome puts additional stress on the airframe that required reinforcement.
Installing a system in a typical Boeing 747 also required extensive work. The interior had to be stripped, airframe modifications performed, ducting installed to cool the equipment racks, the satellite system installed, and the interior had to be put back together. The initial time projected to complete this process was 21 days, but often it took longer. Grounding a 747 costs an airline roughly $1 million dollars a day in lost revenue. With this lost cash flow also factoring into the equation, the decision to deploy Connexion took a large leap of faith, and the system never seemed to provide the promised revenue to make up for initial expense incurred.

Market Changes

The market has changed dramatically changed in the five years since Connexion’s commercial demise. Computer applications are now interwoven into the fabric of business life and access to the Internet has become a necessity. In addition, mobile devices are commonplace and no longer a novelty reserved only for international road warriors. Blackberries, PDAs, iPhones and laptops are standard fare, not only for business travelers but for consumers as well. The Internet has become an important source of entertainment as well as a medium for business communications, and public now expects to be connected regardless of location; quite a different market dynamic than when Connexion was in its infancy.
Connectivity while aloft is coming to an airliner near you, but what services will be provided — e-mail, web surfing, streaming video, cell phones? The answer depends on two things: Which transport technology an airline adopts and the regulatory body governing the airspace.

Technology Wars

Once completed, the Inmarsat I-4 constellation will provide a global footprint allowing airlines to use a common service anywhere they fly, and this oceanic coverage is attractive to airlines flying international routes. Cell phones and other wireless devices will connect to picocells inside aircraft and the signals will be relayed to ground stations via satellite.
ViaSat, a key supplier to Connexion, is leveraging its expertise providing Internet connectivity to business jets to establish itself in the market. Using standard Ku-band satellite communications gear and a spread spectrum antenna, ViaSat’s system will allow much higher throughputs to aircraft at a dramatically lower price per bit, says Bill Sullivan, director of strategy and business development for ViaSat. Wireless access points within the aircraft will route traffic from passengers to the satellite system. “There are large numbers of transponders in orbit we can leverage. As uptake increases, both revenues and the demand for bandwidth grow. Our business model allows us to add extra bandwidth as revenues increase,” he says.
Row 44 also will provide services using Ku-band satellites under an exclusive relationship with Hughes Network Systems. Hughes “has a direct global presence in over 100 different countries,” says Greg Fialcowitz, president and co-founder, Row 44. “We are able to leverage their existing infrastructure, which is shared by a large number of users and drives down costs. Plus, all of the necessary redundant systems are already in place.”
LiveTV and AirCell will offer connectivity in the United States using air-to-ground technology. Both own spectrum previously utilized to operate Verizon’s Airfone service — of the original 4 megahertz (MHz) piece of spectrum, AirCell was awarded 3 MHz in a U.S. Federal Communications Commission (FCC) auction, and Live TV received the remaining piece. LiveTV, which is owned by JetBlue, provides television and audio channels to passengers through its segment, with data connectivity available through a special e-mail agent.
AirCell will begin its service with 92 cell sites blanketing the continental United States. The cells project overlapping cones of service into the atmosphere and can be further segmented if demand calls for that in the future. Unlike satellite-based service providers, which can offer limited bandwidth to start and grow with customer demand, AirCell was required to build the infrastructure to blanket the entire continent. “We will provide service from coast-to-coast and border-to-border,” says Tom Weigman, the company’s senior vice president. “We couldn’t provide service along heavy flight corridors because weather problems occur and flights quite often have to travel 150 miles out of the way to avoid weather.”
AirCell’s system will provide high-speed links to aircraft, and communications hardware in the belly of the airplane will relay traffic to wireless access points in the cabin. Weigman did not divulge exact numbers but says, “If you estimated that the investment required to buildout the network is in the high-eight figures, you would be in the right neighborhood.” The company boasts system performance of 1.2 to 1.9 megabits per second throughput to individual users on an average basis. “It would require 45 to 90 transponders to provide the same throughput as our system. AirCell’s air-to-ground system provides a two times to three times cost advantage,” he says. Competitors counter that AirCell’s finite amount of spectrum limits its future growth. Since cells are 250 miles in diameter, it is feasible that hundreds of aircraft, each filled with bandwidth-hungry users, must contend for the same bandwidth, severely reducing the throughput capabilities.
American Airlines will test Aircell’s system on fifteen 767-200 aircraft flying transcontinental routes. “Passengers expect a DSL-like service,” says Doug Backelin, manager of in-flight communications and technology for American Airlines. “We must deliver a quality service at the proper price point. If we do that, we will enhance our value to our customers and Internet connectivity will be something you come to expect on flights in the very near future.” Angela Vargo, product manager of in-air products for Southwest Airlines, also expects Internet connectivity to become commonplace on commercial aircraft. Southwest has announced a test with Row 44 involving four aircraft. “Passengers want in-flight services to mimic on-ground experiences. We are in the proof of concept phase right now but if the decision is made to move forward, we will equip our entire fleet,” she says.
“The airline industry and the service providers have all learned valuable lessons from Connexion by Boeing,” says Tim Farrar, president of TMF Associates. “The new service providers have focused on reducing equipment size, weight and costs. In addition, they are all striving for antennas that reduce drag. Equipment costs have come down significantly from the $500,000 price tag on a [Connexion] system. The installed price for an Inmarsat system is around $250,000 and a Row 44 system is in the $350,000 range. AirCell’s equipment is quite a bit less, about $100,000, but they have a major investment in ground infrastructure they must pay for somehow,” he says.

Cell Phone Use

The next step for frequent business travelers is being able to use their cell phones during flights, and U.S. and European regulators have taken diametrically opposed views regarding the use of cell phone frequencies in the aviation market. The FCC, which has been lobbied heavily by cell phone providers, has decreed that frequencies licensed by a terrestrial carrier cannot be reused in the air. European regulators, on the other hand, decided that frequencies granted to cellular carriers were only valid on the ground, thereby allowing their use inside aircraft. The net result is that airlines in Europe, the Middle East and Asia can provide cell phone service along with Internet connectivity during a flight, while U.S.-based airlines are forbidden from offering cell phone service.
Many companies are lining up technologies that will allow cell phone use on aircraft, and the primary obstacle holding back widespread use on aircraft is not really technical but instead the idea of being trapped in an aircraft next someone shouting into a cell phone for several hours, and it should be noted that the FCC was flooded with input from business travelers specifically requesting the ban on cell phone usage in American airspace. “The problem of cell phone usage on aircraft is overstated in the media,” says David Coiley, director marketing and strategic relations for AeroMobile Limited, a partnership between Arinc and Telenor. AeroMobile Limited provides services on a global basis using the SwiftBroadband service from Inmarsat. “Airlines already provide voice connectivity through Seapak services. 6,000 to 7,000 voice calls are made every month. The cost per minute constrains casual conversations. Cell phone usage within aircraft requires a little common sense, and airlines will encourage appropriate cell phone behavior, like in restaurants and movie theaters.”
Veronique Blanc, CTO at OnAir, a company owned by SITA and AirBus, echoes Coiley. “Airlines are experts at managing the cabin environment. OnAir’s system can be fully managed, giving an airline a great deal of flexibility. For instance, airlines can turn off the cell phone coverage during evening hours or Sunday mornings. The usage model can be tailored to adapt to passenger’s expectations.” OnAir also uses Inmarsat SwiftBroadband services which provide circuit speeds up to 432 kilobits per second. The throughput limitation will serve as a throttle to in-flight calling. “Twelve voice calls being made at the same time on a wide body aircraft isn’t going to be disruptive,” she says.
Both OnAir and AeroMobile will provide service on aircraft flying to the United States, but their cell phone services must be turned off when they enter American airspace. These divergent rules, along with the Open Skies Agreement that went into effect in March, could put American airlines at a disadvantage in the business traveler market. The agreement allows U.S. and European carriers to compete for transatlantic routes in each other’s market, and since cell phone traffic will be allowed on European flights but not on flights in U.S. airspace, American flag carriers will be forced to consider how to serve the domestic market as well as the best way to support cell phone traffic on international routes.
“Airlines will use connectivity to differentiate themselves, regardless whether they cater to business or leisure travelers,” says Farrar. “In the beginning, the airlines will generate a revenue stream from the services. Airlines operate on very thin margins and must justify financially the investment in hardware installed on aircraft. Everyone will charge a fee but as soon as one airline starts giving the service away, all the other airlines will quickly follow suit.”

What The Future Holds

While the flying public is hungry for connectivity, the actual conversion rate of aircraft likely will be disheartening. “Airlines are reluctant to take planes out of service to put in new gear,” says Paul Domorski, president and CEO of EMS Technologies. “Equipment has to be certified for every different type of plane. In addition, individual airlines may require their own unique certification. People underestimate the time to get a program going.” Licensing is another hurdle for Ku-band service providers in the United States. It currently takes 12 to 18 months to secure a mobile license from the FCC. ViaSat has an existing mobile license, but Route 44 has not yet received its license.
“The most important business lesson learned from [Connexion] is not to go overboard,” says Farrar. “Service providers should scale their businesses for relatively slow growth. Airlines have to take planes out of service to retrofit them with communications gear. They also need to make the call whether to retrofit older, less fuel efficient aircraft they may sell in a few years. Those decisions slow down fleet rollouts.”
Look for airlines to launch commercial service in the near future. The next question will be: Can the market support multiple service providers?