AT&T’s newly announced plan to launch a 4G LTE-based air-to-ground (ATG) service in the continental United States in partnership with connectivity hardware provider Honeywell betrays broader global ambitions involving the two multinational giants.
Among its deliverables to the AT&T program, Honeywell will develop the “fast”, “omni-directional” and – interestingly – “flat” antennas that will be fitted on the underbelly of aircraft to support AT&T’s ATG connectivity service, says Honeywell VP marketing and product management Jack Jacobs.
But, notes Jacobs, “We’re both global connectivity companies so this is step one.”
Indeed, Honeywell – which is the exclusive developer of terminal units for Inmarsat’s Global Xpress (GX) Ka-band connectivity service – is already preparing to pitch hybrid connectivity solutions to the market. The LTE-based ATG system will be able to “operate seamlessly” with Honeywell’s GX and L-band satellite systems.
“We think if you marry this ATG technology with a global offering as well, you can do both,” he says. “Some airlines might want a hybrid system because they fly over land and water. Some might just want ATG. Some might just want to do global for long haul. We’re in the business of connectivity and that means multiple pipes to people.”
Just as Honeywell sells GX to the business aviation community, so too will it sell AT&T’s LTE-based ATG service to business operators in the United States. AT&T will remain the face of the service in the commercial sector, though there may be specific times where it makes sense to “exchange roles” to tailor a product to a particular customer, says Jacobs.
It’s logical to presume that, when the ground infrastructure is built, AT&T will be well positioned to provide attractive pricing to current AT&T subscribers in the continental United States. “I think there is a lot of value to be created with existing end user contracts and you can use your imagination for that,” says Jacobs. “There are a lot of opportunities that AT&T is not ready to address publicly.”
One area that AT&T is not ready to address is spectrum. While AT&T teased the market by saying it will use “spectrum already owned” by the company, it declined to comment on any details pertaining to spectrum, other than to say it will file all requisite applications with the US Federal Communications Commission (FCC). This left analysts, investors and even some tech savvy airline passengers scratching their heads about how the company will accomplish its ambitious task when Gogo already owns the spectrum allocated by the FCC to ATG service.
Satellite industry analyst Tim Farrar says AT&T has the spectrum it needs. At the end of 2012, AT&T received approval from the FCC to acquire spectrum in the 2.3 GHz WCS (Wireless Communications Service) spectrum band, which it said it would use for LTE service. In an “ironic” twist, notes Farrar, Gogo had previously petitioned the FCC to use the WCS spectrum to provide broadband connectivity to passengers. At that time, Gogo argued that its request was “fully consistent with services currently permissible for the WCS and those contemplated generally by the commission’s National Broadband Plan”.
Though Gogo’s stock price plummeted on the news that AT&T is gunning to make its new LTE service available by late 2015, Gogo stayed positive, calling AT&T’s move “justification of what a great business Gogo has created” and “validation of the business we created a long time ago”.
A Gogo spokesman notes that between Gogo and its competitors – i.e. Panasonic Avionics, ViaSat and Global Eagle Entertainment – the US market “is pretty spoken for with various long-term contracts”. Indeed, Gogo holds revenue share agreements with Delta Air Lines, American Airlines, Virgin America, Alaska Airlines, US Airways and Frontier Airlines, and the earliest agreement expires in 2018. Virgin America is also poised to launch Gogo’s Ground-to-Orbit hybrid ATG-Ku offering.
As one industry observer quipped, “Which airline is AT&T trying to attract? Spirit Airlines?” Of course, after 2018, the market will start opening up. And Honeywell’s hybrid offering may give US majors further food for thought. After all, several airlines have already selected GX for their aircraft.
Meanwhile, Gogo is certainly not sitting on its hands. The company is rolling out traditional Ku-band connectivity on Aeromexico, Delta and Japan Airlines, and recently revealed plans to develop a unique 2Ku system, which is being billed as offering twice the spectral efficiency of current Ku antennas and speeds of 70mbps over current satellites. Gogo is also a service distribution partner for GX so it too will be working with Honeywell. Air Canada recently announced plans to offer Gogo’s ATG service across its North American fleet. The Canadian operator has also agreed to trial both 2Ku and GX through its Gogo partnership.