5th Jun 2014 13:50
LONDON (Alliance News) - Inmarsat PLC Thursday said it will build Europe's first high-speed broadband network that can be used by airlines, as it tries to catch up with rivals in the US who are ahead in deploying the technology.
The British satellite company said it is in talks with British Airways, part of International Consolidated Airlines Group PLC, about being the first customer for the new network.
Providing reliable, fast and cheap broadband on aircraft is proving difficult because of the speed that aircraft move, which may also be in a different direction to the satellites delivering the internet connection. Connections are also hampered in areas of high density, like Europe and North America, as aircraft compete for a signal. Network providers are now trying to get round this by using a so-called hybrid system, or air-to-ground network, that combines satellites with ground towers.
The ability to be able to provide broadband that's as reliable and as fast as services available on the ground could be a big advantage to airlines, allowing their profitable business customers to stay connected in the air.
In North America Gogo Inc already operates a widely used air-to-ground network. The success of GoGo's network prompted US communications company AT&T to start building a competing network last April.
Europe so far has lagged behind. However, in January UK telecoms regulator Ofcom opened the door for faster broadband services on aircraft when it authorised the use of "earth station" receivers on moving vehicles, including trains, coaches and planes.
"We believe that the same in-flight connectivity opportunity exists in Europe and that, with the support of EU telecoms regulators, Inmarsat can rapidly bring to market unique, high speed aviation passenger connectivity services to meet this market demand on an EU-wide basis," Inmarsat Chief Executive Rupert Pearce said in a statement.
The company has initially commissioned a new S-band satellite, which it will call Europasat, from French-Italian aerospace company Thales Alenia Space. The satellite is expected to be delivered for launch at the end of 2016.
Inmarsat said it has teamed with Hellas-Sat, a non-competing European satellite operator, to order the satellite, bringing down the costs. Inmarsat said its share of the construction and deployment cost of the satellite will be around USD200 million over three years.
Inmarsat has already begun the licensing process with EU member states and said it has received strong support from many EU telecoms regulators, underpinning confidence that it can secure EU regulation.
Once the company has secured the licences, it can start to deploy the terrestrial half of the network, which can be deployed more quickly than the satellite. It said will invest in a ground network across the EU, costing a further USD200 million to USD250 million over the next six years.
"The question we'll be asking regulators is whether they are comfortable with us deploying the terrestrial services over the terrestrial piece of the network earlier than the satellite goes into service," Pearce told Alliance News. "I think there will be several countries that will be happy with that, others will want to wait for the satellite."
"I think its a realistic prospect that we'll see service beginning in some countries before the satellite is up and operating," Pearce said.
The ground network will handle heavy congestion at low cost, Pearce explained, whereas the satellite will extend coverage to areas where you wouldn't normally build a ground network, and provide back-up if anything happens to the ground network.
"The two networks will be highly complimentary. The thing that makes the European transport market different is the amount of traffic in a very small area of the world. That market and the North American market have very dense groupings of aircraft in very dense traffic routes. They are much better served by hybrid satellite and terrestrial networks working together," Pearce added.
The new network will work in conjunction with Inmarsat's existing Global Xpress satellite network, which provides global coverage.
Kate Thornton, head of product and service at British Airways, said Inmarsat would be start its new network covering UK domestic routes, before a roll-out in Europe.
"British Airways absolutely want to be an anchor tenant, a launch customer for us, and we're absolutely delighted to have a company of that substance," Pearce said. "You can be confident that as this network gets deployed we'll be focused on the needs of our launch customers".
British Airways parent IAG also owns Spain's Iberia and Vueling.
Pearce said that the company is in discussions with a number of other airlines, and there has been strong interest in the new service.
In terms of the timing for the overall deployment of the network, "2016 as a walking around metric is about right," Pearce told Alliance News.
Shares in Inmarsat were trading up 2.2% at 734.50 pence Thursday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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