AT&T disconnects in-flight wifi plans


It was barely six months ago that AT&T made waves in the in-flight connectivity  marketplace, announcing intentions to offer “a high-speed 4G LTE-based in-flight connectivity service for airlines and passengers in commercial, business and general aviation.” This week, however, that plan was shelved. The carrier is simply walking away after determining that ATG in-flight internet market is too risky as an investment according to the Runway Girl Network which broke the story. As part of that statement AT&T indicated that it would shift the focus of its investment portfolio:

We are focusing our capital on transformative investments, such as international and video.

At the time of the original announcement the expected investment was hundreds of millions of dollars but also did “not expect additional capital expenditures required for this initiative to be material.” Of course, that does not mean that it is money to burn and there is still an expectation of a return on that spend. Ultimately AT&T decided that the potential for such a return was too small.

And yet there are at least four major players in the in-flight internet space today, each angling to attract more customers and fit more planes. Technology surrounding the offerings continues to advance in significant steps and expectations over then next several years are quite high, at least on the technical front. And at least a couple of the companies seem convinced that there is a successful financial plan out there as well.

When the news broke yesterday my initial response was, “Is anyone surprised?” And certainly many are. I’m mostly just trying to decide if I am or not.

This is not the first time that AT&T has made overtures to the in-flight connectivity market and the company does have a reasonable pile of cash to work with. Plus there’s the part where it already owns the spectrum. But it also had roughly zero experience in the in-flight space and, based on the scuttlebutt I’ve heard, managed to do a pretty bad job in terms of who it brought in to help build the business case and make the initial sales calls on the airlines. It is not hard for AT&T to get a meeting at a reasonably high level with a major airline. But if the folks who show up don’t understand STCs or FAA certification requirements that’s going to lose the interest of an airline pretty quickly. It would not be too hard to believe that this deal was doomed from day one based on that effort.

There is also the possibility that the move was designed to put pressure on one of the incumbent vendors in hopes of negotiating a buyout rather than moving forward with a direct implementation. Gogo‘s stock price jumped more than 10% yesterday on news that the potential competitor has bowed out of the market; Global Eagle, the company behind Row44, jumped more than 5%.

Another rather quirky part of the move is the claim that international and video are going to be “transformative” for the company. More profitable, perhaps, but neither of those technologies are particularly new or special in terms of where they are going and growing.

At the end of day this is most certainly good news for Gogo and probably not bad news for consumers. Though I really was interested to see how things would have played out had AT&T really made a go of putting a competing service in the skies. There definitely was potential there had they executed well.

Never miss another post: Sign up for email alerts and get only the content you want direct to your inbox.


Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, LinkedIn and .

2 Comments

  1. Yeah you would think there was potential, especially with the global carriers which could benefit from the scale of AT&T. And on the scale of things how big a risk would an in-flight offering be? I guess you can’t teach an old dog new tricks.

    1. ATT’s play was a terrestrial one, not satellite. It would only worked domestically anyways. And developing the technology is still hundreds of millions invested before they can even start to sign up customers.

Comments are closed.

BoardingArea