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Gogo views network upgrades as bulwark against in-flight-connectivity newcomers

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WASHINGTON — In-flight connectivity provider Gogo told investors Nov. 3 that emerging aeronautical connectivity providers won’t be able to catch up with its market position, especially once its next generation air-to-ground network is operational in 2018.

Over time, the Chicago, Illinois-based company has gradually increased the throughput of its air-to-ground (ATG) network, which comprises more than 250 towers across North America, from single-digit Mbps to around 10 Mbps. The upgrade, announced in September, aims to put the company’s ground network on par with its satellite network. Among the improvements, tapping into 60MHz of additional, unlicensed spectrum at 2.4GHz is arguably the most significant.

On a conference call with investors, Gogo president and chief executive Michael Small said Gogo’s established infrastructure and customer base will make it tough for other in-flight connectivity providers to steal market share.

“We are feeling great about the competitive landscape,” Small said. “It’s a real risk to put something unproven on your plane. We have 6,500 planes flying on our ATG network and we will only enhance that proven network with the 2.4GHz upgrade to the network. This is dramatically less risky. It’s going to be way lower cost for us to do it, [and] it’s going to be way lower cost for our existing customers who want to upgrade [rather] than to go to a totally new system.”

Small said Gogo has to upgrade its cell sites with new antennas, radio equipment and network equipment, but that the cost per tower would not be high. Adding new antennas and radios to aircraft will also be simpler, he said, thanks to pre-existing servers and wireless access points already installed on customers’ planes.

Along with a rising number of satellite aeronautical connectivity providers, two companies — Inmarsat and SmartSky — are developing new regional ATG networks. Inmarsat’s European Aviation Network is a hybrid ground- and satellite-based connectivity system employing an ATG network spread across the European Union and the S-band half of a jointly owned satellite with coverage over Europe. Inmarsat refers to the S-band half of the “condo-sat” as Europasat, while partner Arabsat calls its half Hellas-sat 3, which carries a 44-transponder Ku-band payload for its subsidiary Hellas Sat of Greece, designed mainly to provide direct-to-home broadcast television services.

Gogo and Inmarsat are already partners in the in-flight connectivity space, having partnered on the use of the London-based operator’s Global Xpress Ka-band satellite system before it was fully launched. Charlotte, North Carolina-based SmartSky, on the other hand, is building a competing ATG network across the contiguous United States using 60MHz of spectrum — essentially Gogo’s backyard. Though not naming SmartSky specifically, Small said it would be very challenging for a new ATG network to establish itself in Gogo’s territory.

“Imagine a new competitor trying to support an ATG network. Even if they claim they might have a possible intention to get to 300 aircraft, it does take thousands of aircraft to support a regional ATG network, and we have them,” he said.

SmartSky’s service relies on unlicensed spectrum and recently FCC-approved spectrum reuse radio technology, while Gogo uses 3MHz of licensed spectrum together with 60MHz of unlicensed spectrum in the 2.4GHz band. Small said with this combination Gogo “can offer a streaming-class ATG experience similar to our global satellite network.”

Gogo CFO Norman Smagley said having a combination of licensed and unlicensed spectrum functions as a backup for ensuring reliable service. With the ATG upgrade, Gogo anticipates providing more than 100 Mbps service with 99.9 percent uptime, something Smagley said would be difficult to match.

“If you’re flying over New York City with a high noise floor on the unlicensed spectrum, there is a reasonable probability that the quality of the connectivity goes dramatically down on the 2.4GHz,” he said. “If you don’t have the backup network that we have to ensure the reliability and the connection, you are running into a potential issue there. We avoid that issue by having licensed spectrum to back up the 2.4GHz.”

North America already saw one major ATG effort collapse in 2014 when established telco AT&T scrapped plans for an aviation-focused ground network. Amid speculation that another U.S. mobile network operator, Verizon, might take a crack at in-flight connectivity as well, Small dismissed the probability as highly unlikely. Verizon recently conducted tests with drones — mainly providing connectivity to them rather than from them — but this was still enough to prompt questions about a play in the in-flight connectivity space. Small’s take is that a network designed for drone connectivity wouldn’t be capable of supporting large scale aircraft connectivity.

“Verizon will not compete with us, at least with the current contemplated solution,” he said. “It’s for drones, which are much lower altitude, [and] much slower speed. A network architecture that works for that will not work for 500-plus-mile-an-hour aircraft at 30,000 feet.”

Gogo is currently rolling out its satellite-enabled 2Ku in-flight connectivity solution, having completed installations on 47 planes across five different airlines. Small said the company remains on track for 75 to 100 installs by the end of the year, and intends to bring more than 500 2Ku aircraft online by the end of 2017. Gogo anticipates ramping up to an annual install rate of about 750 planes in 2018, and to maintain that level in subsequent years. Small said the company has more than 1,500 aircraft backlogged and, having streamlined installations from eight days to three-and-a-half days, is completing about one full installation per day.

Small also elaborated on a recent investment in Phasor Solution’s electronically steered antenna technology, saying the early-stage research-and-development commitment is to future-proof both 2Ku and ATG systems. Functioning without moving parts, the aviation industry is eagerly awaiting cost-effective electronically steered flat-panel solutions to benefit from their higher-throughput capabilities and fuel-saving more aerodynamic form factors. Gogo currently uses an antenna solution from Hawthorne, California-based ThinKom that, while phased array, uses mechanical steering. Small said teaming with Phasor is part of a long-term strategy that could extend the useful life of both Gogo’s satellite and ATG technologies.

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Gogo views network upgrades as bulwark against in-flight-connectivity newcomers

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