Inmarsat is edging ever closer to making a decision on whether to serve airlines directly when it launches integrated air-to-ground (ATG)-S band satellite-supported inflight connectivity service in Europe, or to forge independent partnerships with resellers as it has done with the vast majority of its current services.
“Going direct is not a strategy or goal of ours per say, but we’re looking at a pretty dramatically changing environment when giant name brands in telecommunications are entering the business, and so there is much higher interest in adjacent markets like mobile communications to cause us to want to study the right way to go to the market,” confirms Leo Mondale, president, Inmarsat Aviation.
Satellite operator ViaSat’s decision to sell connectivity directly to airlines – and obtain its own STCs to compete with its Thales/LiveTV partner – is also giving London-based Inmarsat some further food for that. “Sure [it is], but the way I’m increasingly viewing that is, aerospace is an industry dominated by bundles. Panasonic Avionics has a bundle; ViaSat has a bundle of technology and services; so there are relatively few players in this space. We are actually just a connectivity provider. We don’t build equipment, and we don’t want to sell content. We don’t produce television programing, but where we’re different is our bundle is multiple connectivity platforms, given to the right geography, irrespective of what type of aircraft, or how big a fleet. That makes us different because we’re not saying, ‘buy IFE and we’ll give you connectivity for free’. We say, ‘you decide, and we want to give you the best connectivity’.”
But another consideration for Inmarsat is the fact that telcos are circling the space. “It’s not trivial when you look at potential brand tension between national household [airline] brands and a national household brand that’s a telecommunications provider. It seems as if the airline brands are prevailing in the connectivity space. Gogo’s brand is shrinking over the coming years, and it’s all good. There is a lot of affinity for adjacent markets that will benefit other adjacent market players. We’re still trying to navigate that space, and the right thing to do is develop your options and then figure out what’s best and pick them when you need to.”
Even if the satellite network operator became a direct service provider to airlines, it remains open to partnering with AT&T and or Gogo, says Mondale. Satellite industry consultant Tim Farrar said the company re-emphasized this point during its investor day. His takeaway was this: “An option is to partner with Honeywell and AT&T [on their roll-out of 4G LTE in the US], and ride on the back of that. AT&T is deploying its network and is close enough in frequency range that they could use the same antennas to roam from one to another.”
Of course, even if international operators used the same ATG kit while over the US and Europe, they would still need an over-water solution for transatlantic flights. This is where Inmarsat’s Global Xpress Ka-band service fits nicely, says Mondale. “It looks like the satellite piece of the pie is going to be significant forever because we have a lot of thin routes out there. Furthermore, ATG will meet the throughput demands, and that will push up the appetite for satellites.”
But where does this leave Inmarsat’s Global Xpress (GX) partners, such as its service distribution partners OnAir and Gogo? Isn’t this a wee kick in the pants to partners seeking to drive GX business at European operators? “It depends on the partner,” suggests Farrar. “If the partner’s business model is about making money off of providing service, that can be a problem for them. If it’s about selling equipment and systems to airlines and installing everything, then why would they worry? For Rockwell and Thales [Value Added Resellers of GX] it might be even better, because you don’t have to take the risk. Is there a business for being a standalone connectivity service provider as opposed to an equipment vendor or not?”
Mondale believes the airlines, being stringent cost managers, “have a limited appetite for too many solutions”, and ATG is the right connectivity choice over landmasses. “It wasn’t easy for a satellite company to embrace the technical reality. But for high-density route areas, satellites can’t keep up with ATG. Sometimes you have to be honest with yourself and we believe that’s the case. We pretty much had a ‘if you can’t beat them, join them’ kind of moment so we’re joining them [Gogo and AT&T’s model for connectivity over landmasses],” he says.