Inflight Wi-Fi sells, but who's buying?

08 Feb 2012

It’s 2012, and there’s still no Internet access on airplanes.

Or rather, there is, but hardly anyone is using it. According to Network World – citing an analyst from In-Stat – 7% of airline passengers in the US used inflight Wi-Fi last year. That’s better than the 4% figure from 2010, but it’s still low, even when allowing for the metric that just 16% of commercial airplanes in North America are fitted for Wi-Fi.

Those numbers are all the more striking when remembering that various companies have been trying to make in-flight Wi-Fi a reality for over ten years, as well as inflight 3G, be it for Net access, SMS or voice calls. The technology has been available for ages, and looking strictly at the equipment and connectivity side of things, the numbers all point up over the next four years.

For example, In-Stat says revenues from in-flight Wi-Fi will reach $1.5 billion in 2015 (from $155 million last year). Satellite research firm NSR is projecting growth of aeronautical broadband Ku-band units (which provide the backhaul for inflight broadband connections) all the way to 2020.

But if the take-up figures are any indication, the barriers to inflight Wi-Fi remain more or less the same: mainly the cost of installing it (which, at a reported $100,000 per plane, is painful for airlines struggling to stay profitable) and the cost of using it (Gogo Unlimited, formerly Aircell, charges between $5.00 and $8.00 per flight for mobile device connectivity and up to $13.00 for laptops depending on flight length, with an unlimited prepaid option at around $40.00 a month). Throw in the lack of power outlets to compensate for battery drainage, and possible congestion issues slowing down throughput, and you start to see why inflight Wi-Fi still has a way to go.

I suspect the retail side is a bigger barrier than proponents may be letting on. The inflight-Wi-Fi business model has always maintained that people are willing to pay for connectivity, and while that may be true, that model is based on certain assumptions regarding how much will people will pay, what they expect for that amount, and what limitations and inconveniences they will accept as a trade-off.

The big question now is to what degree those assumptions still hold water at a time when customer expectations are not only in flux, but also becoming the centerpiece for the mobile data business case.

In the wake of smartphones, tablets, Kindles and apps culture, where content is moving to the cloud and mobile operators are talking about QoS and the importance of the customer experience, inflight broadband services will be held to the same standards as everyone else. And anything that makes internet access harder and costlier instead of cheaper and easier isn’t going to find a big market.

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