Race is on for more bandwidth as US fleet nears IFC saturation

Rotation

Over the past couple of months the market for inflight connectivity in the USA has essentially become saturated. Excluding planes carrying 50 seats or less, and ultra-low-cost carriers Spirit Airlines and Allegiant’s fleets, there are virtually no aircraft left looking for connectivity.

In its latest report on the global state of inflight Wi-Fi Routehappy notes that US airlines offer at least some chance of Wi-Fi on 66% of their flight miles system-wide. Equipage continues apace, and some aircraft that already carry connectivity are being upgraded.

United Airlines configured its first 70-seat regional jet with Gogo connectivity earlier this month and American Airlines will add Gogo’s service to all of its larger regional jets over the next two years. Virgin America recently announced the completion of its upgrade to Gogo’s ATG-4 service on all its planes and Alaska Airlines has indicated that it will pursue a similar upgrade plan.

While these aircraft are busy having the Gogo terrestrial solution installed, JetBlue, Thales and ViaSat are celebrating the one year anniversary of the Fly-Fi inflight Internet solution, which offers high-speed connectivity via a Ka-band satellite connection. Southwest Airlines, with its Ku-band satellite-based solution, is also expecting to see improvements in throughput as new satellites are pressed into service.

Now that the vast majority of the US fleet is spoken for, everyone is trying to get more bandwidth onto planes as quickly as they can.

But will it ever be enough?

ViaSat noted that per-device consumption has doubled on its flights in the past year. That’s a growth pace which seems nearly impossible to maintain. It also shows no signs of slowing. Furthermore, airlines and authorities are aiming to increase the bandwidth used for aircraft tracking and other maintenance or operations-related functions (e.g. real-time CC processing for onboard sales). Consumption demand shows every indication of accelerating its growth pace, not shrinking. So is there ever a reason to install a slower system over a faster one?

American Airlines chose to install the older ATG system from Gogo (~3 Mbit/s max speeds) rather than the newer, faster ATG-4 system (~10 Mbit/s max speeds) for the new regional jet contract. Sure, these are smaller planes with fewer passengers serving shorter routes where demand for the service is lower. But they are also planes which do not have in-seat entertainment systems; customers will be looking to connectivity for their distraction while on board.

What does the future hold?

There are plenty of visions about what the future will hold for inflight connectivity and IFE. Some have claimed that in-seat entertainment is a dinosaur (and United seems to agree, at least on its domestic fleet; a member of the carrier’s social media team went so far as to suggest this on FaceBook). Other operators, including American, Emirates and Delta, envisage a long shelf life for putting those displays in the face of every member of their captive audience.

In the world of inflight connectivity, however, the views are a bit less varied. Even an airline like British Airways – which  has been slow to commit to an inflight connectivity solution – seems to acknowledge that connectivity will inevitably arrive on its aircraft.

Glen Latta, president of the LiveTV unit at Thales, offered one vision of an integrated inflight entertainment and connectivity [IFEC] platform which could dramatically change the way passengers experience embedded IFE systems in the not-too-distant future. Latta sees a “natural evolution” of the systems which results in “the convergence of the entertainment system and the connectivity system. Right now you can connect them, but an integrated solution provides enhanced value to the customer, lower costs.…” There is the potential for them to dramatically change the end-user experience as well.

Latta continues,

“I believe that the cost per bit will continue to go down. I think you’re going to see that trend continue, higher and higher usage, lower and lower cost per bit, more and more satellites…bandwidth becomes a commodity over time. And I believe what that does is it potentially puts your entertainment from the cloud in your hand in an aircraft. When bits get cheap enough, rather than put on the aircraft what we believe people want, it might become economical to have access to your personal entertainment in your cloud wherever you are.”

This is, indeed, a lofty goal.

Steve Corda, VP of business development for North America for satellite operator SES has been busy working up models for new Ku-band satellite deployments to meet the growing demand for bandwidth as well. He describes the three factors at play in determining how much bandwidth to put over any particular geographic region as 1) how many seats are flying, 2) how many of those seats are using the systems and 3) how much bandwidth each passenger uses. And he acknowledges that as costs continue to drop take rates should increase (something ViaSat confirms with its JetBlue data). Speaking of a hypothetical future Corda suggests:

“We’ve got low costs – or free – so a lot of people are using it and there’s no bandwidth restriction so people are streaming video while some are still just texting. Streaming would [consume] about 600 kbit/second; texting would be a lot less than that.”

Even averaging down to only 300kbit/s consumption per passenger using the system suggests that a 70-passenger aircraft would require approximately 10Mbit/s of bandwidth to support a 50% take rate and 85% load factor (33 users on board). And those bandwidth and take rate numbers might be too conservative, especially when you consider Latta’s view on streaming cloud-based content to the passenger and the data ViaSat has shared regarding take rates and consumption patterns on JetBlue flights.

Sufficient bandwidth to truly stream anything to everyone on an airplane is not really affordable today. But new systems are being deployed on a regular basis. Whether it is additional Ka-band satellite coverage or new high-capacity Ku-band satellites with more efficient spot beams to deliver more bandwidth where the planes are flying, access to cheaper bits is coming. And it is not only the satellite-based operators making such moves. Terrestrial connectivity providers continue to seek out additional spectrum with which to offer up higher performance solutions. And then there are the low-earth orbit satellite providers who are expected to be launching massive constellations of smaller satellites into orbit in the coming years.

And, in the meantime, one has to wonder a tiny bit about American Airlines’ decision to install older connectivity systems on its aircraft, or similar decisions by major airlines to install the slower L-band satellite connectivity systems. Is there really anyone out there betting that consumption per passenger on board is going to decrease? And the older systems appear to be stressed already today. Emirates VP corporate communications Patrick Brannelly confirmed as much at International CES, saying that while the vast majority travelers are quite happy with the carrier’s free and near-free inflight Wi-Fi offering over L-band, a few heavy bandwidth users on each flight are pissed off and frustrated.

Is it any wonder why Panasonic is now touting the benefits of MB packages, even for Ku?

Travelers want more bandwidth, but it’s clear IFC providers must manage expectations as they do their level best to deliver on that demand.

Industry consolidation?

Meanwhile, Panasonic – currently the most formidable player in inflight connectivity – does not believe the airline industry can reasonably support the number of IFC providers on the market. During a recent interview with RGN editor Mary Kirby at International CES, Panasonic VP Global Communications Services David Bruner said the firm “absolutely” sees all major players as its competitors, including those offering Ku connectivity like itself, Gogo and Global Eagle, and Ka provider ViaSat in the regional markets where they’re active.

But, he suggests, “The business can’t sustain this many players in the market operating global networks. If you’re a ViaSat, or you can run on the Eutelsat network that’s really built for broadband in the home, then they’re not bearing buy-by-the-megabyte [cost] and you can operate. Not very many people can operate global networks. You have to have enough scale. Even we are learning – how much scale do you have to have to make money and it’s a lot of aircraft. I have really high confidence that you can’t sustain four [firms] trying to operate global networks.”

Related Posts:

[Photo above courtesy of Honeywell, which is providing the terminal units for Inmarsat’s forthcoming Global Xpress service.]

6 Comments

  1. Pingback: A few notes from JetBlue's annual earnings call - Wandering Aramean

  2. glen towler

    Air NZ has nothing at all when it comes to IFE it seems they say it just too difficult this far south of the Equator.

    • It is not too difficult; actually the capacity already exists for trans-Tasman connectivity as well as covering NZ and Australia. But it is not cheap and the total demand volume is still a tiny fraction of what North America, Europe and the TATL markets are seeing.

      But NZ or QF or VA could flip a switch (sign a contract, really) and have it on relatively quickly.

  3. Pingback: Faster in-flight internet planned for Southwest from Global Eagle, SES - Wandering Aramean

  4. Pingback: Stream from the cloud while in the clouds! - Wandering Aramean