Row 44 Eyeing The Skies For Airborne Broadband Connectivity
A small California start-up hopes to succeed where industry giant Boeing Co. failed with its Connexion satellite Internet service for aircraft.
Row 44 will begin testing a high-speed satellite broadband service with a U.S. domestic carrier in the fourth quarter that will provide Internet access and Internet Protocol TV (IPTV) service. Row 44 hopes to roll out the service in early 2008 on 400 to 500 aircraft, and within four years plans to have the service available in 2,000 domestic flights in the United States as well as transatlantic flights, hundreds of European flights and extending into the Middle East.
"Row 44 aims to become the leading service provider for airborne connectivity," said CEO John Guidon. "That includes equipment. We’ve taken the approach to develop and provide that equipment and service."
Row 44 has a supply agreement with Hughes Network Systems, which Guidon values for its diversity of services among more than 100 countries. "Leveraging their experience and infrastructure allows us the highest-quality solution at the lowest cost," Guidon said.
Guidon believes that Row 44 will be able to offer the Ku-band service for about $10 per passenger. "It’s up to the airline [to set its price]," he said. "If we sell on a point- of-sale model, we think the price will be $10, maybe a little more for long flights. We think the airlines will be keen to work with us to reduce the cost for the consumer."
In terms of what the consumer would get, "our product offers true broadband connectivity with data rates up to 81 megabits per second and passengers enjoying high-speed WiFi with Internet browsing and e-mail," Guidon said. "We also plan [eventually] to follow it with live TV service — IPTV — providing 45 megabits for about up to 50 channels," though rollout of TV service will lag Internet connectivity because TV hardware will be installed gradually.
While there is demand for Internet connectivity on aircraft, Row 44 may have trouble competing against some of the larger companies that are trying to fill the gap left by the loss of Connexion, said Tim Farrar, an analyst with TMF Associates and author of "The Market for In-Flight Passenger Communications: Lessons From Connexion," that was released in October. "I don’t know how much [Hughes] has put behind it," he said. "I think it has challenges in terms of getting an audience, in terms of the financial oomph. They have challenges in competing with Inmarsat solutions. Having said that, it appears that a mobile VSAT solution may be appealing to the market."
Row 44 is stressing keeping costs-per-bit down in order to build business cases and models that are "profitable from day one, rather than what happened with Connexion."
Boeing unveiled Connexion in 2001, eventually landing the service on 12 international airlines and charged customers by the hour, with prices starting at $9.95, as well as a flat-rate fee of $26.95 for the entire flight. While more than 1,000 passengers were using the service daily, Connexion did not meet Boeing’s financial expectations and was shut down at the end of 2006. The company is believed to have lost about $1 billion on the satellite broadband venture.
Guidon believes that Row 44 has learned from Boeing’s problems. "Connexion had many engineering issues, and it died mainly due to legacy issues with antennas and modems," he said. "We’ve spent the last three-plus years developing the modem and antenna and what’s required to communicate with a plane in flight."
While the hardware will be small and light — adding less than 150 pounds to the plane — and relatively simple to install, the consumer’s experience will be even simpler: "It will be just like being in a Starbucks with Wi-Fi on the Web, unrestricted and guaranteed to each seat on the plane. … In the early days it will be laptops and PDAs perfectly standard, like in a Starbucks hotspot."
Farrar is not convinced it will be as easy as Guidon believes. "Talk has been bubbling up about how the Internet would be more attractive and less disruptive than mobile phones [on planes]," Farrar said. "I’d expect three or four American airlines conducting trials. There’s a lot to play, if an airline is going to commit. Cost is key. You’d expect an Aircell with its [terrestrial] tower system to have financial advantages over a satellite solution." In terms of least expensive start-up costs, Farrar ranked the options as "Aircell, then Inmarsat, then Ku-band. If you end up with very high levels of usage, the benefits in capacity may outweigh the cost concern, [but] it’s not clear whether we’ll end up in a moderate or high-usage situation."
Farrar was also dubious about Guidon’s projections for the expansion of Row 44′s service by 2011. Rather than 2,000 domestic flights, "my rapid-deployment scenario was for 1,038 planes by end of 2011. My slow deployment scenario was 260," Farrar said. "So [Guidon's estimate] seems pretty optimistic. It’s going to take you a minimum of two to three years to complete installation. That requires several major airlines making fleet-wide commitments within the next 12 months. That’s optimistic. I think it’s much more likely we’d see a selection of trial routes to see how it goes."
Guidon, however, sees Row 44′s potential competition as being at a disadvantage. "We currently don’t believe there will be effective competition," he said. "There are some trying a tower-based service, but that’s narrower and can’t do TV. TV is a primary component. The only announced satellite approach is Panasonic, but their solution is founded on the wrong kind of communication, the wrong antenna and modem. They can’t compete with us in cost. You can’t make money using 10 or 12 megabits. We don’t foresee any competition."
Row 44′s approach will also allow the airlines to use the service for operations, Guidon said. "TV comes over a separate pipe which doesn’t affect the broadband pipe," he said. "Airlines will find it to be useful, because they get their own piece of bandwidth for flight operations and their own quality purposes, and it’s important to realize this is the first satellite connectivity to provide light to high performances on a Boeing 737 or an Airbus A-320. So we’re not talking very big aircraft, but they’ll carry the equipment." A single-aisle airplane could be outfitted over two nights, Guidon said.
Farrar remained a skeptic. "My conclusion has been that in-flight communications has been somewhat overhyped," he said. "The expectations for Airphone and [similar services] have been a disappointment, with the successes being in business jets where people have both the money to pay and the willingness to do it. What’s the end-use device? If it’s streaming onto laptops, I’m not sure it’s worth it. If you’re talking about TV screens like you see in Frontier and JetBlue, there might be interest, but given the cost there might not be that much more than what DirecTV is offering. It’s valued by airlines, but the airlines want to use it to make a profit, not subsidize it. Would IPTV be a value added, or a separate revenue stream?"