What Is the Future of Airline Connectivity Post-Connexion?

Farrar estimates that Connexion's costs were in the neighborhood of $150 million a year, with revenues limited to about $150,000 per aircraft per year assuming 10 users per flight, or about 5% of the 200 or so passengers on a typical long-haul flight. Assuming those numbers are realistic, Connexion would have been losing well over $100 million a year.

Though it is heavily dependent on Ku-band satellites, Panasonic says its system is designed using the most current "broadband spread-spectrum technologies for modems," meaning it can get more bandwidth from a single transponder than Connexion could. Bruner says the new technology allows the company to buy capacity from satellite providers in "smaller steps" rather than "large chunks." The system also is set up to "blend" Ku-band and L-band services where each makes sense. Theantennas and equipment are lighter, making for less drag and better payload, he says.

Cost structuring is different as well. Bruner points out that CBB was the service provider and paid the "majority of the cost of the equipment" onboard. "In our case, we provide the equipment to the airline and the airline provides the service to the customer. All decisions are under the airline's control." Capital acquisition and operatingcosts are significantly less than CBB's, he adds.

Missing Links In terms of the passenger experience, Bruner says Panasonic is filling in the "missing pieces" in CBB's business plan. They include expanding the broadband experience to encompass "interesting capabilities" with its IFE equipment, a feature he says brought the company into the broadband arena in the first place. Those capabilities might include a "Web cafe" type of environment using IFE, says Adepoju, where "everyone can surf " and entertainment features "come alive." Panasonic's and others' IFEs already allow passengers to use webchat and webmail.

Mobile phones and handhelds also fell through a hole in Boeing's service offerings--deliberately. Two years ago, Connexion officials told ATW that voice connectivity was "a nice incremental offering" but that the company didn't see "a large volume of use of voice in the cabin long-term."

In hindsight, that position appears too limiting. "Those things expand enough the usage of the system to make a difference," says Bruner. Adepoju says that while some 80% of passengers have either cellphones or Blackberries in hand, those traveling with laptops are far fewer. "Leisure travelers were not catered to [with Connexion]. Even business travelers--only 50% have a laptop with them when traveling." Panasonic already allows passengers to send instant messages through its IFEs, and as of last September agreed to incorporate AeroMobile's inflight mobile communications technologies.

However, Boeing's original concern with cellphones--the social andprivacy aspects--remains a substantial unknown. "It's very, very difficult to implement due to social issues. If the social factors are not managed correctly, it will be a mess," says Adepoju.

A related issue is security. Recently, the discovery of an unidentified mobile phone in the cabin was enough to cause a British Airwaystransatlantic flight to do a 180 and return to London Heathrow out of concern it might presage a bomb onboard. Only a week later, a Northwest Airlines DC-10 similarly returned to Amsterdam after several passengers were observed passing mobile phones back and forth. The passengers were detained and questioned and all subsequently were released.

Ironically, Farrar, who believes demand for inflight phone use hasbeen overestimated significantly, also reasons that the social and security issues are being overblown. He tells this magazine that mobile use will be modest enough that these will not become significant factors in restricting usage in the cabin.

AeiroMobile and OnAir also are convinced the hurdles can be overcome. Rainer Koll, VP of Thales' commercial aerospace business unit, says airlines are considering creating "quiet zones" in cabins or "quiet times" when only text messaging will be allowed. Thales is providing the components of the OnAir system, including the picocell that automatically adjusts the power to GSM and GPRS devices onboard, minimizing potential interference with aircraft systems and giving the crew control over when and how the system operates. Koll says the product will be turnkey and will cost about $100,000 including installation.