August 2010 Archives

Q: The role of the Content Service Provider (CSP) seems to be evolving--with many CSPs attempting to enter post-production, and at least one post-production provider entering content services. What is the most marked difference in the role of the CSP today versus ten years ago?

A: Ten years ago, CSPs focused mostly on content licensing, but have migrated today into a taxonomy of services, many involving technical services. That is probably the biggest change in the last ten years. This might not have been the case had post-production providers moved more aggressively into content integration services, but their caution emboldened CSPs to broaden their footprint. Going back a bit beyond ten years, the migration of the CSP from simply providing a content licensing service to a role of actually buying and reselling content was a significant change from CSPs' original role. Airlines might move with caution to ensure that their desire for a single point of contact doesn't push their CSP outside its domain expertise.

Q) How have the relationships between studios, post-production facilities and Content Service Providers (CSPs) changed over the years? How would you characterize these relations now? What needs to be altered in your opinion?

A: In recent years, many CSPs began to attempt to aggregate buying power in order to leverage lower licensing fees. This was often accomplished through mergers and consolidation. The use of such leverage introduced an adversarial component into many of these relationships. Airlines frequently realized little benefit from the lower fees, with much of the difference being taken by the CSPs as profit.

The industry does not benefit when one party to the supply chain focuses more on devaluing someone else's product versus adding value to the process. But by not aggressively moving into content integration, post-production providers left the door open to CSPs to begin to encroach on services such as encoding, which has become simpler in many respects than it was when IFE first moved into digital.

Q: Is the licensing easier/harder today than in the past? Why/why not?

A: The introduction of alternate delivery methods and technologies has complicated the licensing process. This has often resulted in misunderstandings, such as a provider of home satellite services mistakenly believing that its rights included IFE when they did not, or an airline mistakenly believing that by paying for encoding they owned the digital file and could resell it. A number of such misunderstandings have occurred, and more are likely as we enter IPTV and the potential for content delivery via the providers of connectivity services. They happen when people who may lack knowledge of intellectual property business law make broad assumptions.

Q: What do you think of Content Service Provisioning and loading services that give carriers a single point of contact for all content deliverables (Spafax' latest deal with Air Canada comes to mind?) What specific companies are most forward-thinking in terms of streamlining the content provisioning process?
 
A: It is understandable for an airline to want to have a single point of contact. But that only works when the single point of contact has domain expertise in all of the disciplines involved. Asking a service provider who originated in licensing to cultivate technological expertise, or asking a service provider who originated in integration to understand business issues is challenging, and may result in different levels of success.

As a consultant I have been contracted by airlines to evaluate the relative strengths of CSPs across several disciplines. If you evaluate ten CSPs across ten disciplines on a scale of one to ten, it is very unlikely that you will find a single service provider with tens across the board.

Q: Some of the biggest changes are rooted in technology--changes in the MPEG-4 settings (addressed in a recent issue of AVION), the need to codify high-definition standards, and the need to address 3D. What are the challenges?]

A: Technology is changing rapidly, and airlines want to keep pace with what consumers enjoy at home. But many of the technologies being enjoyed in the home are tied to bigger and bigger screens. The Digital Content Management Working Group (DCMWG) that I have chaired for nearly ten years is attempting to determine at what screen size and at what resolution the increased definition actually discernable by a viewer. While it may be that airlines simply want to be able to use the term HD to describe their systems, it is of questionable value on many IFE screens.

Your favorite--3D--presents a lot of issues. First, the required screen size and distance from the screen almost surely limits it to premium cabins. Second, there are issues with 3D causing dizziness and nausea. Third, there are increased hardware costs, the cost of providing glasses, and the potential for higher licensing costs. On top of all that, there are doubts about how many and what kind of movies will be released in 3D.

Q: Passengers are increasingly connected at all times, including during flight. Does connectivity threaten studios' IFE revenues? What about embedded IFE system makers? Isn't connectivity key to ensuring embedded IFE's longevity versus instigating its downfall?

A: If you are asking whether IFE and C should be--or will be--an integrated product, I would agree.

But you have to consider which delivery platform is the most appropriate for the specific content being delivered. Satellite delivery of content has been dubbed "live TV." But in fact, it is the delivery path which is live, almost never the content. Live delivery of prerecorded content is, as a rule, more expensive than caching prerecorded content for re-diffusion. If passengers continue to show a preference for new movies in IFE, it won't matter which delivery platform is used for presentation. If passengers begin to demonstrate a preference for spending time inflight involved in social networking, email communications and web surfing, this may compete with traditional IFE content.

But new technologies and new forms of content rarely result in elimination of the content delivered via the prior technology--they just change it a little.

If Ka-band-based in-flight connectivity "was coming in 2018 or 2020, we'd be having a different conversation but we are close enough to the same timeframe [as Ku] that, if you're an airline, you might ask yourself: 'Is it right to move forward with a short-term Ku solution or is it better to wait a little bit longer and have a much longer-term and more economically viable offering than Ku can offer?'"

Also of note, however, is the fact that Ku is nearly saturated in some areas, while Inmarsat's Ka service, dubbed Global Xpress (nice name), will offer far more available capacity (even after factoring in Boeing's 10%).

During my interview with Dunleavy, he pointed out that Panasonic "has been talking about Ku for five years and nothing has happened and the reason that nothing has happened is not technical, it's the economics and delivering a package that enough passengers will use to make it economically viable".

Sure Ku can deliver in certain parts of the world, "certainly transatlantic and potentially other markets", notes Dunleavy, but it can't do it for all routes. There lies a big ole Ku gap over the Southern Indian Ocean, for example, and in other spots. Alright, that alone might not be a huge deal.

We know that Lufthansa is gearing up to reignite Connexion via its Panasonic collaboration, and to offer Panasonic's Ku-band Internet service eXConnect on aircraft not fitted with Connexion's MELCO antenna (which I understand is a masterful work of engineering, despite it's clunky size).

However, I do wonder if Panasonic isn't going to take a step back in light of Inmarsat's announcement, and consider bringing Ka to the Lufthansa aircraft not yet fitted with Connexion. Well, maybe not. Their timeframe for equipage falls a couple years ahead of Inmarsat's Ka network launch.

But how about Cathay, its subsidiary Dragonair, Turkish Airlines and the other as yet unannounced new eXConnect customers? Should they equip their most highly-traveled long-haul routes with Ku now, and look to Ka for the rest of their fleets?

I'm talking to you too Virgin America, specifically Richard Branson, who recently claimed the carrier is going to over live television by the 2014 World Cup (um, if that is truly the case, you'll need more than the Inmarsat SwiftBroadband-based mobile connectivity solution you've signed for Richard...of course, maybe you can do like Emirates did this year and simply show taped versions of the games!?!).

Aerosat recently pointed out that, from an antenna standpoint, the upgrade from Ku to Ka isn't too terribly difficult. And in fact Aerosat is working on doing that right now (no doubt Inmarsat's news has prompted EMS and others to consider the same).

But I wonder how the airframers feel about the latest buzz around Ka. I mean, let's be real. Boeing is only just starting to wrap its head around Inmarsat's SwiftBroadband after spending a few years in the connectivity closet following Connexion's demise. And Airbus only recently gave Panasonic the green-light to offer its Ku-band-based solution on the A350.

Last year Airbus warned the industry that a potential dot-com-like bubble could form if airlines continue to pursue higher-bandwidth airborne Internet solutions instead of taking advantage of the connectivity hardware that comes line-fit on all its new aircraft.

"There may be one or two passengers that want to download streaming media through the aircraft's Internet connection, but we believe that the majority of passengers would be very content if they could use SMS, access their BlackBerry and use webmail during their journey," said Airbus Operations vice-president cabin design office, Jonathan Norris at the time.

But a lot can change in a year. I know my needs as a journalist to stay fully connected have most certainly changed in the last year (I always keep my iPhone by my bed and check it just before lights out...hey, it has an alarm clock too! I don't need therapy yet, right?)

When all else fails, and I find myself jibber-jabbering like this, I turn to an in-flight entertainment and connectivity expert, in this case Michael Planey. So Michael, should carriers hold off on Ku and jump on the Ka bandwagon just yet?

Says Planey:

"I don't think that the economics of Ka band have been proven to everyone and that's one of the important questions that everyone has to ask themselves. Inmarsat has announced a $1.2 billion infrastructure investment, not to mention the ongoing operational costs that go with that. Amortizing that kind of investment over a short term doesn't seem to me to make sense. Obviously Inmarsat has many areas of operations to apply Ka technology to. It's not just for airline passenger Wi-Fi service, but if I read their release correctly, it said they're anticipating $500 million in annual revenue [five years after launch] and that seems to me an awfully aggressive projection and they certainly released absolutely no data to back that up. It's simply a number they throw out there and people like you and me can talk about it. Nobody has released anything to support that kind of volume of revenue generation in any of the satellite bands of services thus far."

"We're not chasing bandwidth in this regard. I don't think that's what is holding people back and causing them to wait for Ka band. I think that the problem is still that the market driven financial performance [of current connectivity solutions] haven't met the original expectations and may not for some time. And because of that, we're just waiting to see. 

"This is very similar to Microsoft releasing vapourware for all of those years in the late 1990s when they were years between updates of their operating system. But they would release some [news] about what was coming in the next generation, which served from keeping people from moving from one platform to another. I think we're seeing quite a bit of that in the Wi-Fi wars over the last couple of years. ViaSat is the prime example in my mind of [a firm] continually talking about a product that has not seen the light of day. I know that Inmarsat is going to launch their satellites, but I don't know that they are going to have a commercially viable service in a timeframe that airlines who want connectivity can afford to wait on."

"We are in the process [of installing] and it's been slower than I would like. On the other hand, as you know, the take rate among customers on this product has been slow to take off so I don't think we're missing out on anything yet."

"We are continually looking at our Choice Seats program and making adjustments as to how many Choice Seats are available for sale on a flight as well as their location. In the case of the 767, although that particular row doesn't recline, its proximity to the exit and Zone 1 boarding priority make it a product our customers are willing to pay for to enjoy, so we sell it as a Choice Seat. This is especially true for customers traveling between PHL and CLT - a trip that we operate several times each day using 767 equipment."

"In no small part, it is this blizzard of motions that makes American patent litigation the slowest and the most expensive on the planet. Tragically, this causes other countries to deride our American jury system, when the reality is that it is the parties who seek to swamp the courts with efforts to avoid a jury."

Some carriers burst onto the in-flight entertainment scene like giant supernovas. They extol the virtues of a new system or gizmo - and perhaps even briefly outshine other products - only to let the technology languish and ultimately fade out of the limelight. Emirates is not one of these airlines. It introduced the world's first seatback in-flight entertainment screens in 1992, and has not stopped innovating since then.

Today Emirates' signature "ICE" (information, communication, entertainment) platform, powered by Panasonic Avionics' eX2 system, stands out as one of the most cutting-edge in-flight entertainment and connectivity systems in the world.

In addition to offering near endless entertainment choices, ICE uses Inmarsat L-band satellite-based connectivity and a standard ACARS datalink to provide passengers with news and sports updates in-flight.

Passengers also have access to seat-back dial-up e-mail and SMS communications, as well as satcom telephony.

If Emirates only offered ICE, its passengers would still rank among the most entertained and connected travellers in the skies. But Emirates has also been a pioneer for in-flight mobile connectivity. It is in the process of fitting its current operating fleet with Panasonic partner AeroMobile's L-band solution, which will enable passengers to use their mobiles to send and receive voice calls and text messages. GPRS e-mail service will also soon be supported.

By the middle of February this year, AeroMobile clocked up its 100,000th user. The vast majority of this was Emirates. The Middle East carrier also recently inked a deal to offer Airbus/SITA joint venture OnAir's mobile connectivity solution on new-delivery Airbus A380s to ensure mobile service is offered fleet-wide as quickly as possible.

In short, when it comes to technology, Emirates does nothing in half measures. "At Emirates, it is very much the culture to embrace technology wherever it makes good sense. We don't tend to wait for someone else to assess it. We assess and get moving," says Emirates vice president corporate communications, product, publishing digital and events Patrick Brannelly, who joined Emirates in 1992 when the carrier was first to putting monitors at every seat.

"That all seems so normal now, but it was absolutely earthshaking in those days. It was seen as very advanced technology. In reality it was complicated, but it wasn't just about technology. It was about the product. The passenger saw it as a better way to fly. And over the years we've added to that. We try to keep the product new, fresh and exiting all the time."

To support that vision, Emirates will ultimately need to look into bringing high-speed connectivity on board its aircraft. "People are doing everything on iPhones, iPads [and the like]. More and more of that mobile connectivity will be demanded in the future and they'll expect to be connected all the time. That's obviously the end game. How you technically achieve that on aircraft in the interim period is the big challenge for airlines. We obviously look very closely at that," says Brannelly.

He doesn't believe that connectivity poses a threat to its IFE system. Instead, the carrier sees huge potential in leveraging ICE to connect on a more personal level with passengers.

"We don't see [ICE] as embedded IFE. These systems aren't just [about] entertainment. They're so much more. They are the portals through which we communicate with our customer, and through which they communicate with the world. As we go forward in the future, we'll be doing more and more with those systems. Some of that really good stuff in the future is about making that person's life easier."

Mary Kirby

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The broadband Internet services appeared finally to penetrate into the commercial aircraft passenger market when the Boeing service suddenly ended.  The Ku-band FSS satellite system is receiving a second life owing to the effort by Panasonic, Row 44, and others.  The new MSS L-band system by Inmarsat boasts a global coverage but with limited bandwidth and the future FSS Ka-band systems by ViaSat promise greater bandwidth but with limited coverage. In the meantime, the Aircell terrestrial system is making strong inroads in the continental U.S.  Clearly the industry is advancing with incompatible partial solutions: domestic/international, terrestrial/satellite, MSS/FSS, or other, yet our goal is to provide long term, ubiquitous Internet bandwidth.  Our topic thus includes the business outlook, coverage, bandwidth technology, regulatory issues, and more.  Is it time to pursue paths toward system convergence?  We challenge this panel, "Is there a holy grail?"