AT&T Mobility (NYSE: T) said it will use LTE technology and some of its spectrum to offer in-flight Wi-Fi services starting in late 2015. The action directly challenges current in-flight connectivity players like Gogo, Row 44, Inmarsat and others.
"We are building on AT&T's significant strengths to develop in-flight connectivity technology unlike any other that exists today, based on 4G LTE standards," said John Stankey, chief strategy officer at AT&T. "We believe this will enable airlines and passengers to benefit from reliable high speeds and a better experience. We expect this service to transform connectivity in the aviation industry."
However, many of the details of AT&T's service remain unclear, including what kinds of speeds it will support, what spectrum it will use to power the offering, and what in-flight connections will cost.
Nonetheless, AT&T's entry into the field clearly is noteworthy--Gogo's stock was down more than 22 percent this morning following AT&T's announcement last night. Other in-flight Wi-Fi players include Row 44 and Inmarsat.
AT&T said it will partner with aerospace company Honeywell to install the required hardware onto airplanes to support the service. Honeywell said the service could generate as much as $1 billion in revenue over the next decade, Reuters reported, though AT&T declined to provide its own revenue estimates.
AT&T said it will build "an innovative air-to-ground network in the continental United States" to power the service, likely with its portfolio of existing towers. For planes that fly beyond the reach of AT&T's U.S. network, the companies promised to partner with an as-yet-unnamed satellite provider. AT&T said the system will "provide fast speeds and efficient utilization of spectrum already owned by AT&T," and did not provide details. BTIG analyst Walter Piecyk noted that AT&T said it's considering using the WCS spectrum it bought from Nextwave for the in-flight service, but hasn't decided on that yet. AT&T would need FCC and FAA approval for an in-flight connection service.
As for Gogo, the company argued that AT&T's entry into the market doesn't represent a threat. "We're very comfortable," Gogo CEO Michael Small told the Wall Street Journal. "Our technology portfolio is extensive and will compete with anybody's." Small said Gogo has 10-year contracts with many of the nation's existing airline companies, including Delta Air Lines, American Airlines and Virgin America, and those contracts won't come up for renewal until 2018 at the earliest. In the meantime, Gogo is working to improve and speed up its service.
In-flight Internet is the latest new market for AT&T, which in the past year has also entered the home automation market through its Digital Life brand.
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