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By Jo Best, 23 August 2006 11:15

NEWS

Despite a high profile lift-off, Boeing's in-flight broadband venture has been grounded.

Last week Boeing said it is closing Connexion by Boeing, its six-year project which offered airline passengers access to the internet over satellite links. Now the question is whether Boeing's decision is part of a general retreat from delivering new communications services to passengers.

After all, it had all seemed too promising earlier this year - a number of trials of in-flight mobile and broadband services were underway, BMI among them, and airlines including Air France had committed to a rollout. Regulatory approval for short-haul mobile calls was due this year.

According to Paolo Pescatore, research director at analyst house IDC, a number of elements contributed to the fall of Connexion.

He said: "There was a lot of hype, and expectations around it were quite high. Everyone in the value chain has to work together. I didn't really see it marketed and it's not just up to Boeing to market this. The other question is did they give Connexion enough time?"

Connexion was not the only in-flight provider - the Boeing company had a number of rivals who are still promising they can make in-flight telephony and broadband work.

OnAir, a joint venture between equipment makers Airbus and Sita, was Connexion's main competitor offering both broadband and mobile connectivity.

And despite its rival's demise, OnAir is confident there is still a market out there. But it reckons voice - not data as in the case of Connexion - is that market, and BlackBerrys not laptops will be the traveller's data device of choice.

It still sees a future where every plane comes packing wi-fi and cellular connectivity. A spokesman said: "It will become a business imperative to supply this, like airline meals."

While not all predictions are so glowing, industry analysts still believe the demand is there, although anecdotal evidence suggests take-up has been low, particularly for data connectivity.

Uwe Lambrette, principal analyst at consultancy Booz Allen Hamilton, said the demise of Connexion is no indicator of the overall health of the in-flight telephony market.

Lambrette said: "[Other competitors] work with smaller aircraft and different backhaul systems with smaller equipment. The market isn't dead - they need to address a different proposition."

Further reading…

♦  Leader: Learn to love in-flight mobile
♦ Peter Cochrane's Blog: Flight frustrations

The consultancy predicts that by 2010, 100 million travellers will use mobile telephony whilst airborne.

And airlines at least remain committed to offering broadband. In a statement, Connexion customer Lufthansa told silicon.com: "We are hopeful that the service may continue as now that the service is well established, Lufthansa could not envisage having to stop the provision of satellite communication/in-flight connectivity which customers now expect."

Another customer, Japan Airlines, told silicon.com the company hasn't decided how long the Connexion by Boeing service will remain but said: "We are currently studying the options available to us to see if and how we can continue providing our customers with this valuable service."

In the case of cars, new functionality will often get its first run out in high-end models before gradually being introduced into cheaper vehicles as costs drop and acceptance grows. If the same development path holds true for planes, mobile telephony - and in-flight broadband to a lesser extent - is a shoo-in.

As Booz Allen Hamilton's Lambrette pointed out: "Many executive aircraft already have a system for in-flight mobility. The signs are good for the market."

IDC's Pescatore notes that social factors and pricing will still need to be worked out before mobile telephony can really take off, though. "You need to take into account user behaviour and attitudes and Boeing didn't do that," he said.

As the analysts point out, pricing is likely to be where broadband and mobile connectivity stands or falls. As Boeing proved, paying more than $20 to keep in touch in the air didn't stimulate a market. If equipment costs remain minimal and connectivity can be kept under $10 - or ideally $5 for a flight - then in future all passengers come from the chattering classes.