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Inmarsat has announced that it will deploy a hybrid air-to-ground network for airline passenger connectivity services across Europe.
To establish this service, Inmarsat has ordered a new S-band satellite, Europasat, and will complement this satellite with a fully integrated air-to-ground network across the EU. British Airways has initiated talks with Inmarsat to be its launch customer for this new service.
Inmarsat quotes Kate Thornton, Head of Product and Service at British Airways as saying:
“British Airways is in discussions with Inmarsat about leading Europe in a new era of broadband in the air.”
“Starting with UK domestic routes Inmarsat intends to deploy Europe’s first ground-based 4G broadband network giving our customers the internet access they expect on the ground while in the air.”
During a special conference call and webcast with investors, market analysts and reporters this morning, Rupert Pearce, Inmarsat’s CEO, indicated that Inmarsat is working with “a number of EU airlines,” and that British Airways had reached the advanced discussion phase. He described British Airways as a “thought leader” in the airline industry and said that forward-thinking initiatives like their discussions with Inmarsat on adoption of this air-to-ground service “position them [British Airways] in the vanguard.”
This new Inmarsat network will deliver high speed broadband services alongside Inmarsat’s Global Xpress aviation services, which will extend Inmarsat’s service coverage across the globe.
Inmarsat points to the size and rapid growth of the market for these services in North America as reason for moving forward with the Europasat program and states that connectivity services will have “exceptional” potential for growth worldwide.
The complementary ground network across the EU will be fully integrated with the Europasat satellite. This additional $200m to $250m investment will be staged over six years, according to the progress the company makes with national level license approvals, and in keeping with the volume of customer commitments. Pearce indicated that the ground network may consist of over 300 sites, depending on customer commitment and demand.
“North America has seen rapid take-up of in-flight passenger connectivity services, with installation and usage both growing very quickly.” Pearce said. “The success of the Gogo air-to-ground network has already triggered the building of a second competing network by AT&T, one of the world’s largest telecommunications operators. Independent research predicts that in-flight connectivity services will be a multi-billion dollar revenue sector by 2020.”
Pearce emphasized that Gogo has proven the model of Air-to-Ground services, and its attraction to airlines and passengers alike. Pearce told reporters that Inmarsat would be interested in arrangements for interconnectivity with Gogo on air-to-ground coverage for Inmarsat customer airlines on their flights entering the US. He added “I’d say in passing we’d be open” to similar arrangements with AT&T’s network.
He suggested the possibility of exploring the development of radio systems which could take advantage of either Gogo’s or AT&T’s air-to-ground network; allowing Inmarsat to make arrangements for air-to-ground services for its customer airlines with “either Gogo or AT&T or possibly both.” Pearce indicated that development of such radio systems would be feasible.
“We believe that the same in-flight connectivity opportunity exists in Europe and that, with the support of EU telecoms regulators, Inmarsat can rapidly bring to market unique, high speed aviation passenger connectivity services to meet this market demand on an EU-wide basis,” Pearce said.
Asked how Inmarsat will structure the service offering and pricing, Pearce indicated that Inmarsat will work with individual airlines on structuring the service program which best complements their strategic needs. He did say that Inmarsat would work with its airline customers on these services, contrasting this with the Gogo direct-to-user service and pricing model which “takes the airline out of the equation.”
During the call, Pearce emphasized that Global Express provides highly competitive connectivity rates to its customers and that he expects the Europasat-powered hybrid air-to-ground 4G service to also be highly competitive. Pearce referred to the 4G connection AT&T will deploy for air-to-ground in the US as “aiming to provide superior service quality.”
Pearce described the growth of the in-flight connectivity market as “explosive,” during the call; indicating that Inmarsat expects a 20% compound annual growth rate in the connectivity market.
He told participants in the call that connectivity has evolved from a future concept to a differentiating factor for airlines to a “vital service” in a relatively short period of time.
Inmarsat and Hellas-Sat, a non-competing European satellite operator, have contracted with Thales Alenia Space for the construction of a satellite on a shared basis such that each partner will retain exclusive rights to a separate payload, in order to reduce overall program costs. The Europasat satellite is expected to be delivered for launch at the end of 2016.
With the shared payload agreement, Inmarsat’s costs for the manufacture, launch, insurance and operations of Europasat will be “approximately $200m, half of what it would have cost Inmarsat to deploy an S-band satellite on a stand-alone basis,” Pearce indicated. Most of the projected cost will be incurred over a 3-year period.
Inmarsat will take advantage of its existing authorization to operate integrated satellite/terrestrial communications services in 30MHz of S-band frequencies across Europe, to enable this new network. It has already begun the process of licensing with the 28 EU Member States to ensure a timely deployment.
When asked why Inmarsat had decided to move forward with the hybrid network at this time, after having license to do so since 2009, Pearce indicated that the “customer appetite to be connected,” and “rapid maturation of regulators” to accept the importance of this connectivity application make this an ideal time for deployment.
Pearce told participants of the call that Inmarsat has “strong support” for its applications from many EU telecoms regulators and is confident that the “substantial financial commitment” this program represents with its associated revenue to states and generation of employment will encourage “a consistent EU regulatory foundation” which can result in a quick deployment of the Europasat service. Inmarsat expects Europasat to also support next generation emergency network services for public protection and disaster relief.
Marisa Garcia has worked in aviation since 1994, spending 16 years on the design and manufacturing of cabin interiors and cabin safety equipment. She shares insights gained from this experience on Flight Chic and Tweets as @designerjet.