by Theresa Foley

The two entrepreneurial ventures aimed at bringing Internet services to aircraft are making headway, despite the decline in the airline industry following the events of September 11, 2001, and the recent bankruptcy filings by some of the major U.S. carriers. Boeing’s broadband-to-aircraft service, Connexion, will begin demonstrations on two transatlantic routes operated by Lufthansa and British Airways starting in January, while Tenzing has been conducting trials on Cathay Pacific and will start charging for services on that Pacific carrier’s flights this month.

Tenzing and Connexion differ in the details of what they are offering, with Tenzing providing, at least for the time being, much slower data rates. The services use different architectures on the aircraft and in the sky as well, but both rely on satellites. Their basic idea–to connect aircraft passengers into the global network so they can communicate with laptops or other terminals in flight–is also shared by Inmarsat’s new Swift64 service.

The attack on the United States on 9/11 last year caused both Tenzing and Connexion to reevaluate and adjust their plans. “Everybody in the industry had to refocus,” says Peter Lemme, chief technology officer of the Seattle-based Tenzing. For his company, the hardest impact was on financing, which became much harder to obtain.

Nevertheless, Tenzing landed a powerful ally when it hooked up with Airbus, a shareholder and builder of much of the world’s commercial aircraft.

Tenzing once viewed itself as a “roaming ISP” that would provide Internet services directly to consumers. After 9/11, it decided to offer the service through telephone companies and ISPs since direct consumer sales are so costly to set up, and turned its attention to the general aviation market. Commercial airline passengers would take longer to cultivate, Tenzing decided. But as it looked for ways other than Internet access to apply its technology, Tenzing made a deal with Virgin Atlantic to offer short messaging services this fall on Virgin Atlantic flights. Initially the messages, priced at $2 to $2.50 each, will be composed on the in-flight entertainment equipment and will be one-way, but by January the service will be two-way.

For Connexion, the aftermath of 9/11 meant the loss of a hard-fought deal with three U.S. airlines to set up a global business venture for broadband on aircraft. American, Delta and United backed away from an agreement with Connexion as the airlines cut costs to deal with security changes, fewer passengers and lower revenues. But Ed Laase, Connexion’s director of systems development, says the U.S. government stepped in as a customer with a $112 million contract to The Boeing Co. in January. Today, Connexion services operate on an undisclosed number of aircraft.

Connexion also is making headway with non-U.S. airlines. Besides the German and British airline demos, Japan Airline agreed this summer to skip the demos and go straight to a full-fledged Connexion service on 10 aircraft that will fly between Japan and Europe in 2004, and also calls for a not yet released number of options.

For three months in early 2003, passengers on Lufthansa’s Frankfurt to Washington, DC, and British Airways’ London to New York routes will be able to try out Connexion. The airlines will use the demos to validate their research on passenger use of satellite-Internet services, while Connexion will be able to run its system through its paces as it sets up global infrastructure. The services will use Intelsat and Eutelsat Ku-band satellites.

Lemme says Tenzing has learned much by demonstrating its service on Cathay Pacific’s large international Airbus A340-600s. “We discovered that providing services on airplanes is very demanding. The environment has to be very carefully managed and the user experience has to be developed very carefully,” Lemme adds.

Cathay has committed to outfit its entire fleet with equipment to use Tenzing. In October, Cathay’s passengers will begin paying for the service at a rate of $9.95 per flight and 60 cents per kilobyte retrieved, bringing in Tenzing’s first revenues. Brazilian carrier Varig also has Tenzing equipment on two aircraft for which it is charging for service. Singapore Airlines and Air Canada have completed trials of the service, but as of late August had not agreed to go operational with it.

Tenzing’s next step will involve offering services to aircraft with Inmarsat Swift64 equipment. Swift64 will allow Tenzing’s data rates to rise from the 2.4 kbps available for trials to 64 kbps over circuit- or packet-switched connections.

The airlines may be slow to invest in putting broadband satellite equipment on their planes because no business case has been made for it, Lemme says. Investing in unproven service offerings is high risk, and the airlines do not have discretionary funds now for new technology, he points out.

Laase acknowledges that voice telephony services on aircraft have largely failed because they cost too much, but he says Connexion will be different. “We are increasingly a networked world. Airplanes will be another node on the global information network….It will be a reasonably priced service and it will exceed consumer expectations. People will want to use it.”

The service providers are optimistic that eventually airline passengers will enjoy reliable, easy, affordable Internet access, even though skeptics say the market is nonexistent and the proposal is a very risky investment.

Theresa Foley is Via Satellite’s Senior Contributing Editor