While growing demand for Wi-Fi on planes is a major growth opportunity for satellite capability providers, the pandemic has held back its upward climb alongside a decline in air travel.
Nevertheless, the inflight connectivity (IFC) market is preparing for some major lift as air traffic fast approaches pre-pandemic levels.
Based on the International Air Transport Association (IATA), global air traffic — as measured in revenue per passenger kilometer — recently reached 96% of May 2019 levels.
The return of airline passengers comes as IFC providers are also overcoming the technical challenges, cost issues, and capability shortages which were dragging available on the market and the speeds they will provide.
Wi-Fi on planes is now on the verge of speeds comparable on the bottom, in accordance with John Wade, vp of inflight connectivity business at Panasonic Avionics.
One in all the most important IFC providers serving airlines that cover a lot of the world’s flight routes, Panasonic Avionics announced plans in August to lease 50% more capability from geostationary orbit (GEO) to spice up its capabilities by the top of this yr.
Next yr, the corporate plans to herald low-latency services in partnership with OneWeb’s low Earth orbit (LEO) network.
SpaceX’s Starlink, Viasat, Intelsat, Hughes Network Systems, SES, Telesat, Gogo, and Anuvu are also racing to fulfill demand for keeping people connected within the air. Most also operate their very own satellites, contributing to a glut of capability that’s driving down its price.
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The IFC market is an incredible opportunity, however the variety of players in it’s unsustainable, says Wade, who previously worked at Intelsat and Gogo before joining Panasonic Avionics last yr.
spoke with Wade to seek out out why Panasonic Avionics feels now’s the time to go all-in with satellite capability.
Has IFC growth returned to normality after taking successful in the course of the pandemic?
Yes, and greater than normality. I’ve been across the IFC space for over 20 years, and I’ve all the time projected a future where we’d walk onto an airplane and things would just connect, capability could be abundant, and costs would come down. We’re right at that tipping point.
I feel it’s partly been triggered by COVID and changes within the space segment.
What COVID did was it created this virtual world for us. I’ve been at Panasonic for a yr now, and there are still colleagues I even have not met in person, but I feel like I do know them because I’ve been a part of this video world that we live in today.
While we don’t have video yet onboard, I feel it’s only a matter of time before that becomes pervasive. What has grow to be pervasive is the will to remain connected in any respect times — we’re seeing usage going up relentlessly, month after month.
It has been a patchy, intermittent, sometimes frustrating, and usually expensive experience to get Wi-Fi on board an airplane, and that’s all starting to alter.
We’ve previously seen airlines like JetBlue offering free web, they usually got take-up rates of 40%. Now you’ve got major airlines like Delta also offering free Wi-Fi. I’m not aware about Delta’s take-up rates, but I imagine they’re at the least the identical as JetBlue.
And usage goes up since the satellite capability is there to make it a greater experience. It’s also getting easier to attach.
With the introduction of latest satellites bringing massive amounts of capability, measurable terabytes, we’ve got the capability at the associated fee point that basically makes it viable. So I feel we’re initially of this huge hockey stick, which can keep going up relentlessly for the remainder of this decade.
How do lower latency services from OneWeb’s LEO network fit into your plans?
Enterprise-level applications are all moving to the cloud, which suggests they chat backwards and forwards more often, and latency becomes a much bigger issue the more times you go backwards and forwards.
I’ve had the chance to experience LEO performance in comparison with GEO. If you could have the links at the identical speed, say 50 megabits per second, the difference is startling with LEO. It feels way more like a terrestrial experience than we’ve ever had within the satellite industry before. It’s going to be game-changing.
While we’re announcing this big expansion of our GEO network, the breakthrough moment actually happens late next yr once we get the primary of our LEO systems deployed onto aircraft.
It will result in an enormous acceleration of adoption because it would feel pretty close to what’s on the bottom today.
What’s the typical speed on planes now, versus what it would be like once you could have all this extra GEO capability onboard at the top of 2023 after which following OneWeb’s LEO capability a yr after?
Speed is a tough thing to quantify because latency comes into play. To provide you a variety of the dimensions of the network we’ve today, it’s within the tens of gigabits per second. And once we add LEO, it probably goes up near an order of magnitude.
When it comes to speed to the aircraft, that really doesn’t change an excellent deal. Today, we will offer accelerates to 200 megabits per second to a plane. We don’t do that fairly often, but we will. The LEO systems will introduce concerning the same speed. That’s greater than adequate for what passenger demand is today, and we don’t really see a problem with those types of speeds, at the least for the subsequent few years.
How I’d characterize is that we were beginning to congest by way of capability issues in highly regarded areas. What we’re doing by having this capability is bringing relief to that congestion. But with any network, you’re never really done. What’s greater than adequate today won’t be greater than adequate in just a few years, so that you’re always under capability.
How much capability are you specifically bringing to fulfill this demand?
We don’t disclose how much capability we’ve on network, but what I can say is it’s dedicated to aviation, whereas several of our competitors who’ve what they might argue are larger networks share their capability between multiple markets.
What other LEO operators are you working with?
We’re only working with OneWeb. We could be open to working with other non-geostationary satellites sooner or later.
What concerning the regulatory permission needed to offer OneWeb’s LEO services globally?
There’s quite a lot of different regulatory approvals you could have to get. We’ve got it just about globally for GEO because we’ve been operating the GEO network for over 10 years.
We’re working very closely with OneWeb to get the approvals that we’d like for global service. It won’t quite be global, but that’s all as a consequence of geopolitical issues than the rest. OneWeb won’t give you the option to secure landing rights in China or Russia, which is considered one of the explanations that we are going to proceed our GEO network, because we do have overfly rights for each China and Russia.
How is the market responding to Viasat’s Inmarsat acquisition? Each were already big IFC players — do you lease capability from Viasat?
No, we don’t get capability from Viasat in any respect. They use Ka-band spectrum, and we, today at the least, are in Ku-band.
The wedding of those two firms obviously creates a really large satellite entity [though] what everyone suspects will probably be a complete lack of Viasat-3 raises challenges for them. Viasat has talked about looking into repositioning capability or perhaps acquiring capability from elsewhere [following the satellite’s recent antenna failure]. It’s going to cause them some delay of their IFC plans and overall growth plan.
The bit that we differ from them on is that they don’t have a non-geostationary orbit (NGSO) solution. They’re very focused on GEO as being the solution to go.
They’d argue that their capability is what matters. We’d argue otherwise. I recently met with a senior executive from a significant global airline who had just experienced a LEO system. He said before that have, he also thought it was all about capability, and after, it was all about latency.
So, the world is waking as much as the incontrovertible fact that latency is very important and will probably be increasingly essential. While Viasat has a formidable network in GEO, I feel over time we’ll begin to see LEO grow to be predominant. I even have to query, candidly, whether or not they launched into the suitable strategy.
Did issues on ViaSat-3 influence your capability expansion?
It was already underway and we had planned this for some time.
SpaceX also sees a chance to achieve market share with Starlink in LEO. How are you responding to growing competition from them as they ramp up contracts with airlines?
I feel the adoption of LEO by various airlines is an endorsement of the incontrovertible fact that that’s the suitable strategy. We don’t have our system in production yet so it’s harder for us to win deals. But as soon as we catch up with to production, I feel we could have a really competitive solution.
Panasonic has incredible experience within the aviation market. We understand airlines, and we’ve also got a really formidable position within the IFE [inflight entertainment] space. Airlines like that combination of 1 company that may do every part to do with IFE and IFC.
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OneWeb can be partnering with other IFC providers keen to capture the LEO opportunity. Analysts were already saying the market was too crowded before Starlink got here in. Is that this all sustainable?
The market won’t support all those players. You’ve to have momentum and demanding mass to be viable. Aviation is tough and it shouldn’t be for the faint of heart. It’s difficult to place big things onto airplanes. Whenever you put a big radome onto an airplane, you alter the way in which that fuselage flexes. You literally change the way in which the airplane operates.
Wouldn’t this grow to be less of a problem in the long run as antennas get smaller?
Antennas represent the toughest engineering issue to resolve for, but regardless, putting hardware on an aircraft is difficult. It needs skills in aviation, an understanding of the regulatory environment, and logistical know-how and capabilities to support a worldwide aviation operation.
Some people see the potential size of the IFC market and find it very appealing since it looks prefer it’s an underserved market immediately.
I’ve seen firms the dimensions of AT&T are available and leave. They tried to get into this market just a few years ago and backed out after they realized quite how difficult it was.
There’s been much talk concerning the need for consolidation for years, so why hasn’t it happened?
And I feel it’s right. It’s about consolidation on multiple strata:
You’ve got potential consolidation within the inflight entertainment and connectivity space, and also you’re right that hasn’t happened. We’ve just seen some people floundering around versus necessarily being successful.
And then you definately take a look at the satellite space where the brand new entrants really are shaking up the normal players. There have been confirmed rumors about Intelsat and SES also attempting to merge, although that fell apart. Within the satellite space, I feel consolidation of the local players might be an inevitability. I just don’t see how they survive because their market is shifting a lot.
I feel the NGSO players will probably be successful despite people’s criticism of their cashflow needs. I feel Starlink is showing which you can create a billion-dollar business and replenish satellites in a sustainable way.
Within the inflight entertainment and connectivity space, consolidation is less likely since the assets on the market are less attractive by way of their potential profitability. I can say that from experience, having checked out a few of these firms. When doing an M&A [merger or acquisition] transaction, you’re either buying a distressed asset or buying something you see is accretive to your growth goals. I haven’t seen opportunities which were compelling enough to need to act on them.
There was no consolidation deal for Anuvu [formerly Global Eagle Entertainment] after it fell out of business. Lenders rescued it in 2021, they usually then ordered their very own satellites to avoid relying solely on leased capability. Could Panasonic also change its strategy here?
I don’t know if it would ever change. A superb friend gave me an analogy just a few years ago, which I feel is kind of relevant for space. He’d all the time historically bought a automobile, and just a few years ago, he leased a automobile for the primary time. After I asked him why, he said it’s because we’re only just a few years away from autonomous vehicles, and so the worth of his automobile goes to massively depreciate when that next iteration happens.
While I used to be at Gogo, we were often approached about acquiring our own satellite, and we all the time declined because should you take a look at the projected cost curves and the way in which they’re meant to say no over the upcoming years, by the point you bought that thing on orbit, the subsequent generation was already going to be there and drive the prices down and down.
I see the identical thing in nearly every orbit you take a look at. Why acquire an asset that shouldn’t be going to have the suitable cost point by the point it gets into orbit?
I feel you’re all the time higher in a period of high change to lease fairly than own, because you may move so quickly onto the subsequent generation. We’re seeing that in our GEO costs. GEO costs proceed to go down since the capability costs are coming down.
Is there an excessive amount of capability on the market?
I don’t think there’s yet. It’s coming… I can actually see how we will devour the present planned capability. If all of the LEOs stand up there — and I see Telesat just solved their funding issue so that they could be the fourth of the LEOs to stand up there [after Starlink, OneWeb, and Amazon’s Project Kuiper], then we’ve tens of terabits at that time.
Is that going to be enough? My crystal ball looking that far out gets hazy if not cracked, so I can’t tell at what point capability exceeds demand. But for anyone like us, frankly, that’s great news. If there’s excess capability, people sell it cheaply, in order that plays into our future strategy.
COVID has created this increased demand, and we’re responding by acquiring more capability, and we’ll proceed so as to add more capability. Probably in the long run more on the LEO side of things than GEO.
But there’s becoming sufficient capability on the market to deliver the experience that passengers want at the value they’re willing to pay. And that’s the game-changing moment for this industry.