John Guidon, CEO and co-founder of Row 44, has written a short op-ed arguing the case for airlines to install a high-bandwidth solution for in-flight connectivity - even if that bandwidth is more than their current model requires.
John’s argument is that the growing demand for bandwidth-hungry services (live international TV, terrestrial-speed web browsing, downloadable audio and graphic-intensive games) will seriously strain many of the current low-bandwidth offerings within a couple of years.
Row 44, which offers in-flight connectivity over a satellite link, is currently being tested by Alaska Airlines and Southwest Airlines.
Here is John in his own words:
The case for high-bandwidth, future-ready in-flight broadband
By John Guidon
We are past the point of airlines deciding whether or not to install passenger connectivity services on their fleets. Passenger demand and airline revenue potential have made in-flight broadband a must-have offering for airlines around the world.
A key decision now facing many airlines is whether to install a low-bandwidth, limited-service solution–supporting mobile phone usage only, for example–or a true broadband system capable of delivering high-speed Internet, TV and other broadband services.
We argue, from an admittedly subjective perch, that installing a full in-flight-broadband solution is the smart play for airlines–because it will deliver a faster return on investment at far lower risk of future obsolescence than a low-bandwidth offering.
Low bandwidth equals lower profit and higher risk
Let’s compare a few differences in the business models of the low-bandwidth, limited-service providers with full-broadband solutions like Row 44′s.
One limited-service provider’s website proclaims the service will provide “full voice and SMS services from launch date.” That’s terrific–but it means that after installing the system, your aircraft will have just one revenue source for the plane: mobile phone service.
This raises several questions:
1. What happens if some countries along your airline’s routes outlaw mobile phone calls in-flight?
Assuming the law allows the passenger to even turn on their mobile phone, you will forfeit the voice portion of the revenue generated from this service, having to rely only on SMS text messaging. Keep in mind that passengers may generate more revenue for your airline through voice calls than by SMS texting.
2. What happens when your passengers demand bandwidth-hungry services like web browsing and live international television?
You will eventually be pressed by passengers to provide a broadband solution; it is only a matter of time. The question is: If installing true broadband service is inevitable in the next three years or so, why risk incurring the lost opportunity costs associated with lower-bandwidth services, and generating passenger frustration and disloyalty–as well as all the associated switching costs resulting from the inevitable upgrade to true broadband?
3. What happens when revenue-generating or cost-cutting applications become available, but you don’t have the bandwidth to take advantage of them?
You will forego those opportunities, and possibly even lose passengers to your broadband-equipped competitors.
Outfitting your fleet with a low-bandwidth, limited-service offering is a higher-risk, counterproductive strategy that will ultimately cost your airline far more–a cost of time, money, competitive advantage, and possibly even passenger loyalty.
Satellite-based in-flight-broadband provider Row 44, by contrast, has developed a true broadband experience for the passenger and crew–a wireless hotspot in the sky.
Unlike the limited-bandwidth systems, which promise “full voice and SMS services from launch date,” Row 44′s system delivers–also from launch date–revenue-generating services including high-speed web browsing, live international television, personal and corporate email, stored video and audio with live updates, online shopping services supported by real-time credit card authorizations, full mobile phone usage (where permitted), and a host of cost-reducing airline operations services for cockpit and crew.
The Row 44 system is simply the most expandable and future-proof in-flight-broadband system available–and a system whose one-time setup costs pay for themselves within a short time frame, and generate a substantial ROI for years to come.
In a 2008 MultiMedia Intelligence report, analyst Amy Cravens notes that limited-service offerings from “AeroMobile and OnAir are betting that voice will be the winning service offering, making voice communications the foundation of their offering.”
Can you afford to make that same bet?