Make no mistake about it, Gogo “will find a next generation air-to-ground (ATG) solution, regardless of the spectrum”, CEO Michael Small tells RGN.
The company has absolutely no intention of ceding its position as the dominant provider of inflight connectivity in the United States, and it envisages ATG as being very much a part of the picture going forward, even as it works to bring 2Ku to market.
An optimal scenario would see the US Federal Communications Commission (FCC) authorize air-ground mobile broadband service on a secondary license basis in the 14.0-14.5 GHz band (within the Ku band primarily used for satcom), as originally requested by chip maker Qualcomm and supported by Gogo in myriad filings to the commission.
“I don’t know any other place you can find 500 MHz of spectrum so – while having complications in secondary use – it is still by far the most spectrum and the most intriguing. Bringing it to our industry would be great,” says Small, who is the first to admit that Gogo’s current ATG network is capacity constrained.
Though we’ve heard for some time that the FCC is nearing a decision about the auction – and there hasn’t been a fresh filing on the matter in months – Small says he doesn’t have any special insight into when or if the FCC will give the green light. But, he adds, “We expect they will and think there is a good chance of it, but we’ll have to wait and see.”
Gogo has been evaluating this spectrum for years, and acknowledges that meeting the obligation not to interfere with Ku satellites would represent “the next level of engineering complexity” because the terrestrial network would be seen as a secondary service that must always yield to primary satcom services. Yet Gogo also believes it is best equipped to tackle the challenge. “Everything is solvable but we think our expertise in this area will be immensely valuable should the opportunity present itself,” says Small.
But will the opportunity present itself? Qualcomm and Richard Branson’s Virgin Group recently signaled their intent to invest in OneWeb (formerly known as WorldVu) and its vision to operate a global network of low-orbiting Ku-band satellites to provide Internet access to fixed and mobile terminals. OneWeb’s spectrum is the NGSO Ku-band that was previously assigned to SkyBridge, notes satellite industry consultant Tim Farrar.
As “satcom guru” Peter Lemme previously pointed out, Qualcomm’s initial proposal to the FCC regarding re-use of the 500 MHz of Ku spectrum for ATG was “predicated on the fact that there is no NGSO constellation in Ku-band”. That was before Qualcomm announced its partnership with OneWeb to help create the very NGSO it said doesn’t exist.
Farrar, who has been tracking the OneWeb saga, tells RGN, “I think it’s unclear there has been any conclusion on how to protect NGSO Ku-band systems so the fact that those systems now appear to be teed up and intending to move forward means it will be quite difficult for the FCC to come up with a set of rules as to what your rights would be as a secondary operator [for ATG]. The rights you’re buying in auction would be extremely poorly designed. It’s hard to imagine anyone would have much confidence as to what they could build out.”
Farrar believes that “a more plausible proposal”, particularly in light of Qualcomm’s support of OneWeb, would be for Gogo to lease AT&T’s C and D spectrum blocks of Wireless Communications Services (WCS), something the Chicago area firm has expressed a willingness to discuss with AT&T.
Gogo’s Small tells RGN that while the company still believes there is a “good chance” the FCC will auction ATG licenses in Ku, if the commission opts not to do so, “Gogo will explore all other spectrum bands” including AT&T’s WCS, “and will find a next generation ATG solution for North America.”
He adds, “The advantages of ATG are very clear; it’s faster, lower cost, has a lighter weight install, and inherently lower latency. The disadvantage is you’re confined to a particular landmass, which may or may not cover all the flight routes. The US is the best; we have big continuous geography, and the highest concentration of traffic. There is probably no better location for ATG than the continental US. Europe and China maybe isn’t shabby.”
Indeed, ATG is so attractive that Inmarsat’s proposal to fit Lufthansa’s short-haul fleet with it hybrid ATG/S-band service – and service the contract directly – is under serious consideration by the German carrier, multiple sources tell RGN.
But gaining the right to use new spectrum for ATG-based inflight connectivity in the United States is just part of the equation. “This is a new system; it will leverage the fact that we have a lot of cell sites out there, which is highly valuable; and our in-cabin network stays the same – the WAPs and server would stay the same – and all the technology in our data centers to manage bandwidth can stay the same, but that link from the ground to the plane is an entirely new network. In many cases it will share the same tower and same backhaul, but these are pretty sophisticated antennae and totally different than our current ATG system,” says Small, confirming a suggestion made in a JP Morgan note several weeks ago.
Then there is the question of capex. “Where is the money going to come from to build a new network, which will require new antennas and terminals? They can do everything, but they have to have someone give them the money to do everything,” notes Farrar.
Certainly Gogo continues to make gains in the ARPA (average monthly service revenue per aircraft online) arena, and more than one executive has pointed out that the market doesn’t fully appreciate its progress in this regard. But at the same time, the company’s expenditure on Ku capacity to support its contracts for Delta Air Lines’ long-haul fleet and Japan Airlines’ domestic fleet – and other aircraft that will come on line with Ku – is nothing to sniff at either.
“Panasonic is big enough to sustain a $50 million to $60 million per year of margin going into connectivity if only through its IFE product support business; it’s extracting high margin out of a warranty system,” observes a deeply embedded source. It’s difficult to see how Gogo, or indeed Global Eagle Entertainment, can afford the upfront cost of offering Ku connectivity globally, he says.
While Panasonic VP David Bruner has never talked specific spend with us, he is on record saying he believes the business “can’t sustain this many players in the market operating global networks”. Asked recently if a pairing of Gogo and Global Eagle would make sense, Bruner said, “The problem is they both have paper money. Nobody has got cash so what do you do? So you could issue stock. But who’s got real money?”
From a pure technology standpoint, Gogo believes its current Ku-band connectivity system is performing better than those on offer from Panasonic and Global Eagle, even though the core antenna and modem are similar
“I just flew to Japan and back. I flew on Japan Airlines [with Panasonic Ku] going and Delta coming back. I’ve seen all our statistics and I know our Ku works better than anyone else in the world from those statistics, but I was actually amazed with how much better our Ku experience was than anything else I’ve flown in the US, and I’ve taken the Lufthansa flights [with Panasonic Ku]. The Gogo service worked continuously from Tokyo to Seattle. An hour west of Seattle, I had a one-minute outage and I said, ‘I hope that’s the handoff between satellites, and yes, that’s what it was.’ So we’re now sub-one-minute handoffs where we see the competition taking a few minutes or many minutes or hours later successfully completing the handoff. The [Gogo Ku] service is like an ATG-4 kind of service the entire time, even though it may be obnoxious to say so.”
The reason Gogo’s Ku is out-performing the others, adds Small, is that “Gogo has been at this for years and has tens of millions of sessions and flight hours. We know mobility management. There are all kinds of ways to make that handoff go better, and within days of first launching Ku, on the punch-list of things to improve was how to reduce handoff times from one to two minutes to under a minute. It took more work but we got it done. I do not think most of our competition has any ability to get those items on the punch-list, much less solve them so over time it leads to a more reliable, consistent, higher performing service.”
Even so, Gogo’s next generation 2Ku system is going to be a “much superior solution”, says Small, as it “raises your peak speed, cuts costs and [boasts] a lower profile radome”. Gogo will continue to install more traditional Ku systems for a spell, “but very quickly we will be installing almost exclusively 2Ku”, reveals Small. “It covers an additional quarter of the earth’s surface without having a skew angle; why would you install [regular] Ku?”
So should we expect Delta and Japan Airlines to naturally cut over to 2Ku installs once the system is certified? “I can’t answer that,” says Small, adding however, “If we’re going to add a new system to the Delta fleet so they get over-water coverage I’m pretty confident it will be 2Ku.”
He explains, “2Ku will generally go on aircraft where there has been no other satellite solution before. It may go on ATG-equipped planes; that upgrade I could see, but going from Ku to 2Ku – and taking one antenna off and installing a new one – is a more cumbersome process. I would expect 2Ku goes on new aircraft for the global aircraft, and will be a replacement system for some of the US aircraft that fly over water.
“If you play this out, the requirement will be every plane, everywhere, all the time [will need inflight connectivity], so if communications is critical to your business, you don’t tolerate outages in the office and you won’t tolerate it in the sky. If you’re flying to Hawaii, and [suddenly] you have five hours of no connectivity, that will just become unacceptable in the aviation industry.”
Obtaining linefit offerability for 2Ku is certainly a goal for Gogo. “We are going to actively work to get all our solutions linefit,” says Small. But Panasonic continues to suggest 2Ku doesn’t meet the ARINC 791 spec – and ergo won’t meet Boeing’s requirements for linefit. Bruner, for instance, showed this slide to attendees of the APEX Expo in September, and Panasonic has included the graphic in its new promotional video.
Gogo CTO Anand Chari disputes this claim, telling RGN, “With the satcom antenna, we are driving for two factors – one the efficiency of the RF performance of the antenna, and the second aspect is the aerodynamic drag; the fuel burn obviously matters a lot to the airlines. So 2Ku, as we have demonstrated, has the best spectral efficiency in the industry. It’s a low profile, [and] a little longer than the Boeing radome. That’s all due to the aerodynamic considerations and lower drag. Ease of installation is important when it comes to ARINC 791 – there are two options, six attach points or seven attach points per 791. We’re using six attach points. So that still preserves all the benefit of 791 ease of installation and attach point perspective, while offering superior performance from both a drag and speed perspective. So the fact that it is slightly longer than the Boeing radome, that’s not anything significant.”
Referencing Panasonic’s phased array antenna (which is being built by Boeing Defense), Gogo’s Small said, “It may be linefittable, but we rejected that antenna years ago. It’s a step back from 2Ku; its performance degrades materially above 55 degrees north so you don’t go very far into Canada. So we did not view that as a viable solution. So you may get a linefit [solution] but the antenna is still useless to use [at a certain point].”