[Satellite TODAY 04-08-13] The take-up rate of in-flight connectivity services is proving to be lower than expected. Euroconsult recently released the “Prospects for In-Flight Entertainment and Connectivity” report and Wei Li, senior consultant at the French firm told SatelliteTODAY.com that the biggest surprise to come out of this report were the take-up rates. “We were surprised by the current service take rate for equipped planes that is currently as low as 5 to 6 percent. While the evolution of in-flight connectivity will obviously also depend on how the service is offered, and a wide range of possible business models are being contemplated, it may still take years before the business becomes truly profitable for service providers,” he said
Euroconsult’s report forecasts that in 10 year there will be more than 2,700 Ka-band terminals operating in this area. The company also predicts there will be just more than 3,000 Ku-band terminals in operation in this area by 2022. In terms of whether these figures represent a good performance for Ka-band, Li said, “We do see Ka-band growing at faster rates than other technologies, which is partly due to the fact that there are very few Ka-band services available today. Inmarsat is not the only company that will provide Ka-band capacity. A number of regional operators such as Eutelsat and Viasat will also contribute to the takeoff of Ka-band in the aeronautical segment. However, Inmarsat will be a major Ka-band provider for the aero market, and the company is currently devoted to building a strong distribution network for this vertical. Whether our market projections are good news for the likes of Inmarsat is hard to say since the aero market is only one of many vertical market that Inmarsat and other will be addressing.”
The battle between solutions based on Ku-band and Ka-band will be one of the most interesting dynamics to watch as this market unfolds over the next few years. “The decision for airlines and service providers to choose one over the other will not be entirely based on the frequency band, but rather on the performance, efficiency and ultimately the cost of ownership for the various services and solutions proposed. A key driver will be the increasing need for higher bandwidth and system efficiency, and a key to achieving this will be multi-spot-beam, high throughput architectures, regardless of which frequency band. We believe that both Ka and Ku-band will have their place in the in-flight connectivity market, with a clear trend towards spot beams in both frequency bands,” said Li.
Euroconsult expects that over the next 10 years, more than 12,000 commercial and 16,000 business airplanes will provide in-flight connectivity to passengers. With a take-up rate of less than 5 percent, these services generated less than $300 million in revenue from airline passengers last year. The market is expected to grow to $1.3 billion by 2022. The company also predicts that over 29 Gbps of FSS capacity will be used in this market in 2022.
In terms of trends the company is seeing in the overall market. “The market will become more competitive as more networks will become available in the next two to three years. Airlines and passengers will have more choices and the amount of capacity available for the in-flight connectivity will dramatically increase. Satellite bandwidth requirements over oceanic regions will grow fast. The North Atlantic and North Pacific corridors will represent the largest oceanic regions for the aero communications. Although North America should remain the largest market for the next decade, the majority of airlines which will start to adopt the in-flight connectivity are expected to be from emerging regions,” Li said. “In terms of market share for different networks, we estimate that Ku and Ka-band based systems will stand for about half of the installations in the commercial airline sector, while L-band and ATG will share the other half. Besides the space segment, the airborne antenna segment is also expected to experience significant improvements.”