In-flight WiFi battle over Europe takes off

Aircraft cabins have remained one of the few connectivity “black holes’ in Europe as the communications industry has largely failed to tempt passengers to pay for the patchy WiFi services on offer.
That is set to change with the advent of the European Aviation Network (EAN), a purpose-built system for in-flight communications developed by Inmarsat, the London-headquartered satellite operator, which is due to go live in June. The service will deliver broadband speeds that are equivalent, if not faster, than those available in most households over fixed-line services.
Both the satellite and airline industries believe that opening up the aeroplane cabin will create a gold rush of revenue in the next two decades as passengers opt to pay to stay online. A London School of Economics report, commissioned by Inmarsat, predicts in-flight broadband will generate $130bn of total revenue for the entire sector by 2035, with $30bn of that figure boosting the “ancillary revenue” of the airlines.
That revenue could come in the form of upselling broadband access to customers, offering advertisers access to a captive audience or even ecommerce services, whereby airlines and retailers share in the sales made in the cabin.
In-flight broadband has been made available on some long-haul flights and in the US, where 80 per cent of passengers flew on a plane offering in-flight WiFi in 2017, according to Deloitte, the professional services firm.
Yet Europe remains the biggest prize for the satellite companies jostling for position. “With 22,500 flights per day and 500m passengers per year, Europe’s airspace is the busiest in the world,” says CCS Insight, the research company. “WiFi access aboard planes is becoming an expectation among passengers, who want to be able to go online during flights. We believe the EAN will allow airlines to generate additional revenue, potentially billions of dollars, by offering high-quality WiFi services to passengers.”
The broadband battle for the cabin has pitted companies including technology group Panasonic, Gogo, an aviation connectivity specialist, and some of the major satellite companies against each other.
The fight has grown more vicious in recent months with a number of companies battling for a share of the of the market. Viasat, a satellite company that already provides WiFi services for United Airlines and American Airlines, has threatened legal action against some European regulators for allowing Inmarsat to launch the EAN which it argues is a “blatant misuse of spectrum”. It says Inmarsat was handed the licences to offer ground-based mobile phone services but has instead used it for in-flight broadband, which is a breach of the original conditions.
Inmarsat has dismissed the allegations by arguing that its rival had merely delayed a network that, according to chief executive Rupert Pearce, should be “celebrated” as a world first where the “power of satellites and the brutal force of terrestrial networks” are brought together.
The British company has long provided aviation professionals with communications services but faced a problem in extending such a service to consumers because of the sheer volume of data usage around the main European airport hubs, such as London and Frankfurt.
“If everyone logged on at the same time, then using a satellite 36,000 miles away is challenging. So we needed a ground network,” says Frederik van Essen, head of Inmarsat’s aviation strategy.
The company signed a deal with Deutsche Telekom to build a network of 300 base stations across 30 European countries. Nokia was commissioned to design special masts that could maintain a signal to a plane travelling at 1,200km an hour at heights of 10km. Even the antenna on the planes had to be adapted to be able to connect to both the satellite and terrestrial network, with Britain’s Cobham making the new kit and Thales of France carrying out the installation.
The network was demonstrated last week in Barcelona when executives from Deutsche Telekom made a live video call to Manuel Neuer, the German footballer, while he was cruising at 35,000 feet.
IAG, which owns British Airways and Iberia, has signed up to launch on the EAN.
Paul Lee, head of research at Deloitte covering telecoms, media and technology, forecasts that revenue generated by in-flight broadband packages should hit $1bn this year with about one in 10 customers happy to pay to connect. Airlines will have to spend hundreds of thousands of pounds per plane to connect to the advanced satellite networks such as the EAN, so proving that level of demand exists will be paramount for further installations.
Yet concerns about over-capacity in the satellite industry have continued to grow as companies including Elon Musk’s SpaceX and SoftBank-backed OneWeb planning to launch in the coming years and join the race to grab a share of the satellite communications market.
OneWeb has moved to disrupt the EAN and existing services by forming an alliance with Airbus, Delta and mobile companies Sprint and Bharti Airtel to develop standards for satellite-based roaming that could launch as soon as 2020. If successful, such a plan would allow customers to continue using their phones when they get on a plane with no need to log on to a dedicated service.
Greg Wyler, founder of OneWeb, believes that could be disruptive and pass the burden of in-flight connections back on to telecoms companies. “The answer is on the horizon,” he says.
Mathieu Robilliard, an analyst with Barclays, says he believes the satellite industry has revenues of $14bn but has scope to eat into the $3tn telecom sector’s sales. “The challenge is that, in our view, a massive increase in supply will come before demand is there and new entrants are bringing new technologies that can threaten the legacy or more recent platforms from the existing players,” he says.
Inmarsat’s shares crashed to a five-year low last year when it lowered its prediction for the margin on its aviation services to 40 per cent from 48 per cent, with analysts noting that there were only a few additional deals up for grabs to drive growth. The pressure is now on the company and its peers to prove that filling in the airline’s “black hole” will pay off.