Wi-Fi Falls from the Sky

By Eric Griffith

June 26, 2006

Boeing may be selling — or shutting down — its money-losing Connexion Wi-Fi service for planes. Luckily, new options await takeoff.

Some have called the ability to surf the Internet on a wireless network while trapped inside a airplane for hours at a time the holy grail for business travelers.

Boeing, the company behind the Connexion service that provides just that on several foreign carriers, is calling it something else.

The Wall Street Journal and others report that after investing $1 billion in building the service after six years (it went live years late; the first flight with Connexion service took place in May 2004), Connexion has yet to make money. Boeing is talking to satellite operators and other potential buyers.

It's possible that if they can't sell it, the service will simply be shut down.

Connexion by Boeing is currently running on long-haul flights from carriers ANA, Asiana Airlines, Austrian, China Airlines, Etihad, JAL, Korean Air, Lufthansa, Scandinavian Airlines and Singapore Airlines. Several have flights in and out of the United States utilizing the Connexion service. As late as May, the company said the government of Japan would be using Connexion by Boeing in two government-run 747 executive transport craft.

No U.S. airlines have adopted the Connexion service, for reasons ranging from price — most of the domestic airlines face financial troubles, and outfitting a plane with the Wi-Fi and satellite backhaul equipment isn't cheap — to Federal Aviation Administration (FAA) regulations.

This announcement comes in tandem with news from Verizon that it plans to shut down the 21-year-old AirFone service that provides seat-back-mounted phone calling on Continental, Delta and US Airways flights. The company plans to focus on other businesses, such as the EV-DO wireless broadband service it has in major U.S. cities. It will continue to run AirFone for a few thousand corporate and government customers. Selling the entire business is also an option.

The writing was on the wall for AirFone when it dropped out of the Federal Communications Commission auction of spectrum that can be used as backhaul for connections between planes and the ground. The licenses were won by AirCell and LiveTV (owned by JetBlue airlines). To work with the radio bands that went to auction, AirFone would have had to retool equipment before its license to operate the phones expires in 2010 (at which time it would have had to work with AirCell or LiveTV anyway).

That licensed spectrum can also be used as backhaul for Wi-Fi connections inside a plane, giving Connexion competition in the U.S. — which would be tough, since it didn't have any U.S. airlines as customers yet anyway. AirCell says it will target a Wi-Fi service for planes to launch in 2007. (All of this is still subject to approval by the FAA.)

Satellite-backhauled Wi-Fi on planes isn't completely dead, either. OnAir will launch in 2007 (starting with GSM and GPRS cellular service), with backhaul from Inmarsat satellites. The Dutch company is a joint venture in part from Airbus, the arch-rival of Boeing in the airplane-manufacturing industry. Airbus will be the integrator installing the OnAir service, which works on Airbus and Boeing planes.

In an article for the online magazine Slate, Daniel Gross urges Boeing not to sell the Connexion service. "By holding on to Connexion, Boeing could also break the long and repeated cycle whereby the people who lay down the crucial new commercial infrastructure—rails, telegraph lines, fiber-optic cable, warehouses for online grocers—wind up losing their shirts, and the people who buy them at fire-sale prices make out like bandits," he writes. He says it's not a failure as much as "an idea that hasn't really been tried."



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