Author(s): Raghu Gopal
In-flight Wi-Fi has gone from being a luxury to an expectation. Many airlines now offer this service, including on long-haul flights, with nearly global coverage. On the ground and in the air, people want to be attached to their digital worlds. To date, in-flight connectivity has often been a "better-than-nothing" experience, but despite this, travellers have been willing to pay, sometimes a lot, for Internet access on flights.
Enabling airborne connectivity involves considerable investment. For example, Lufthansa Systems — a subsidiary of the Lufthansa group — said that installing a system could cost hundreds of thousands of dollars, adding complexities as well as weight to the plan. And this isn't a "set it and forget it" process: in-flight Wi-Fi systems are expensive to maintain and bandwidth can also be very costly.
Nonetheless, opportunities have arisen for a variety of companies, from satellite providers such as Viasat and Inmarsat, to connectivity suppliers such as Gogo, Global Eagle and Panasonic Avionics. There are also software specialists like Lufthansa Systems that offer services to other airlines, and telecom operators such as Deutsche Telekom, which made a splash about in-flight connectivity at Mobile World Congress 2018 and is well-advanced in this area (see Mobile World Congress 2018: Operators). In-flight Wi-Fi is really an industry.
Last week, Alphabet's Google announced that it's in talks to acquire Nokia's airplane broadband business. Google is looking to tap into new services and reach more users by providing in-flight high-speed Internet connectivity. Nokia's technology is expected to enable Google to deliver a faster alternative to Wi-Fi on airplanes. Instead of using satellites, Nokia's LTE A2G cellular-based system creates a direct link between an aircraft and the ground, bringing LTE speeds into the cabin.
The move would create a new rival to Gogo, a big player in the field of in-flight Internet services. Google's business model isn't clear, but the company is always exploring methods to spread mobile connectivity, a crucial element of its advertising business, which generates almost 90 percent of the company's revenue.
This isn't the first time that Google has ventured into providing airborne Internet connectivity in hard-to-reach locations. The search giant has been seeking new ways to share wireless spectrum offerings like its Project Loon, which brings connectivity to rural areas using balloons; Project Fi, its "Wi-Fi first" mobile virtual network operator; and its expansive Wi-Fi network for Starbucks coffee shops.
For airlines, there's an opportunity to make incremental revenue by signing up sponsors, like JetBlue did with Amazon, making broadband free for their customers. In-flight Internet has almost become an expectation, with passengers clamouring for this type of service, and it could sway customers to buy tickets from an airline that offers "free" Wi-Fi.
We note that no final decision has been made on the acquisition, and an announcement is expected soon, but we wouldn't be surprised if Google gets this off the ground.
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