AT&T now plans to launch a high-speed 4G Long Term Evolution in-flight connectivity service for airlines, as early as the later part of 2015, supporting in-flight Wi-Fi and onboard entertainment, using its existing 4G LTE mobile network.
Separately, the Federal Communications Commission is considering secondary licensing of satellite spectrum for air-to-ground backhaul in about 500 MHz of existing spectrum, enough to support two suppliers with 250 MHz of total backhaul bandwidth.
At the moment, there are two ways in-flight Wi-Fi is offered to U.S. airline passengers. One approach uses satellite-to-plane backhaul, while the other uses ground-based cell towers.
At least up to this point, that has meant rather limited bandwidth, either because of limited satellite capacity, or a relatively small number of ground-based cell towers.
What is new about the AT&T proposal is the use of the LTE air interface for backhaul, and the potentially massive increase in number of ground-based cell towers that could support air-to-ground communications.
One of the current leaders in air-to-ground services, Gogo, uses only about 180 cell towers, for example. AT&T uses nearly 10,000 tower sites. That provides AT&T with significant potential advantages in backhaul.
What also is financially significant is that AT&T plans to build a new air-to-ground network in the continental United States, based on global 4G LTE standards, without “material” additional capital expenditures.
In other words, AT&T expects to create the new air-to-ground network without any changes to the company’s previously-announced financial guidance. That suggests AT&T believes the expected incremental network cost and operating expenses will be quite slight.
That new service comes within a context of growing perceived demand for in-flight Wi-Fi access and likely new entrants beyond Gogo, Panasonic Avionics, Row 44, ViaSat and OnAir, with at least two additional expected competitors, should the Federal Communications Commission eventually allow secondary licensing of 14-GHz spectrum to provide such a service.
AT&T might have lots of reasons for believing it has an edge. Today, Gogo only has 3 MHz of backhaul bandwidth to work with, and uses 3G (EV-DO) air interfaces.
All potential users on an aircraft have to share the bandwidth. AT&T, arguably can devote quite a lot more bandwidth than that.
At least one additional factor could be at work. The FCC is considering licensing, on a secondary basis, about 500 MHz of spectrum that could be used to provide backhaul for air-to-ground communications.
The plan to use existing satellite frequencies first surfaced in 2011, when Qualcomm asked for permission to use the band for aircraft communications from about 150 ground stations within the United States, enabling on-board Internet access.
But, both developments--the possible new use of existing satellite spectrum, and AT&T’s repurposing of existing LTE spectrum and network, illustrate how competitive a niche market is about to become.
The global market for in-flight Wi-Fi only measures in the hundreds of millions of dollars worth of annual revenue, though some predict revenue could grow to $1.5 billion to $2 billion worth of annual revenue in the near term (by 2018, perhaps).
That is an awful small amount to be gained, on a global basis. But AT&T obviously has concluded that the incremental cost of operating such a business, as part of its 4G Long Term Evolution network, is small, in comparison to the strategic advantages.
Actual revenue earned by AT&T from its public hotspot network likewise is not so large, in gross revenue terms. But the public Wi-Fi network has been an important amenity for AT&T mobile and fixed Internet access customers. An extension of that value to airplane venues likely is deemed important, even if the gross revenue upside is relatively slight.
Edited by Maurice Nagle