Panasonic Avionics, Thales InFlyt Experience are investing in new satellites, but cautious about market take-up
Todd Hill, senior director for global satellite capacity planning, Panasonic Avionics Corp. Space Intel Report photo
PARIS — Two major in-flight-connectivity providers, Panasonic Avionics and Thales InFlyt Experience, are making major investments in satellite throughput but were cautious about whether trans-oceanic passengers will see free service anytime soon.
The problem, they said, has not changed: If passengers don’t demonstrate a willingness to pay and third-party sponsorships are not yet widespread, the airlines will not invest in the necessary hardware and will not stimulate satellite fleet operators to offer massive new bandwidth.
Electronically steered, phased-array antennas? Still too expensive, especially with jet-fuel prices at today’s modest levels.
“They keep getting closer to us in the air transport market, but they’re not quite there yet,” said Todd Hill, Panasonic’s senior director for global satellite capacity planning. “Instead of $1 million, now they’re a couple of hundred thousand dollars in the aero market. It needs to be $100,000.”
Given their lower drag, flat-panel antennas should be a natural for for commercial aero market. But their cost has kept them on the sidelines.
“If [fuel] pries go up in the next 5-10 ears, ou are going to see a much stronger push for ESAs [electronically steered antennas], and the business case will switch,” Hill said here Sept. 9 during Euroconsult’s World Satellite Business Week. “But right now, with prices low, you can’t beat the mechanically steered systems.”
Gustavo Nader, head of IFEC strategy, Thales InFlyt Experience. Credit: SES
Gustavo Nader, head of IFEC strategy at Thales InFlyt, said it’s already complicated for airlines to chart a profitable business model in introducing connectivity. “Bringing in another element that negatively affects the economics,” he said, will not be acceptable.
Panasonic XTS: one ordered, two more on the way
Panasonic Avionics has about 8 GHz of capacity leased on satellites around the world. After what looked like a period of hesitation as many connectivity providers invested heavily and lost money, Panasonic is pursuing its XTS of satellite payloads for higher throughput.
The first of these payloads is Hong Kong-based APT Satellite Holdings’s Apstar-6D, to be launched over Asia in 2020. Hill said Panasonic is “actively working on another two, one over the Americas and one over Europe and Africa. We’re not quite ready to announce that — hopefully by the end of the year.”
Competitor Gogo Inc. has also signed up for capacity on Apstar-6D, apparently riding on the tailored payload designed with Panasonic input.
Panasonic has an agreement with London-based Inmarsat to lease Inmarsat Global Xpress Ka-band capacity, available worldwide if in limited supply, and this will serve as a backup for the primmer XTS service in the event of a satellite failure: http://bit.ly/2mqsB6J
Thales InFlyt is an anchor tenant for fleet operator SES’s SES-17 satellite, to be launched over the Americas next year. Thales is the service provider to the regional JetBlue passenger Wi-Fi, which is free and uses Viasat Inc. Ka-band capacity.
Once SES-17 is launched, Thales will have additional SES capacity to provide backup.
But here too, while in-orbit backup would appear indispensable for a high-quality service, airlines will limit investment in it until the business model is proven.
“People want fast service and people want a low-cost service,” Hill said, adding that Panasonic has first-hand experience with scrambling to replace capacity after a satellite failure.
“In our relatively short period of time we have been involved in three in-orbit failures and two launch failures,” Hill said. “The resiliency of Ku-band was a big selling point for us.
“The [Intelsat IS-29e satellite] died a few months ago. On our primary network, which is automated, the switchover was seamless. People did not really even see a degradation of service. But on our older network, which is more manual, they definitely felt the impact. The question is: Will people pay for the difference?”
Passenger take-up rates have still not reached a point to where more airlines can justify a substantial new investment in connectivity. And take-up is unlikely to improve until the service is better, an endless loop of frustration for passengers and airlines.
“Take-up rate has been low in part because the quality of the service is not what it needs to be,” Nader said. “As passengers realize the experience fan be better, increased take-up will happen. We’re beginning to see that with both free and fully monetizable models, including subsidization with partnerships. That’s what required for this industry to develop.”
For now, airline hesitation continues. Hill said Panasonic’s oldest satellite-Wi-Fi service has been flying for nine years.
“Imagine trying to use your nine-year-old cell phone. The real key is investing in the network and getting the price down so people can afford it. I am aware of five or six airlines that offer free service, but the are all regional carriers.”
Satellite capacity shortage ahead?
Market studies show what looks like an overcapacity of high-throughput satellite capacity worldwide, but Hill said he worried about a shortage given the lack of investment in geostationary-orbit satellites.
“With all the LEO [broadband] constellations, people have frozen their investments,” Hill said. “Traditional GEOs are now [ordered] at less than half the traditional rate. Getting to the next round of capacity building is a challenge. Who is going to invest in it?
“There seems to be a growing shortage of capacity for the early 2020s as existing GEO satellites run out and all the new promised stuff isn’t quite operational iyet. It seems like it is going to be a very tight time in the next half-decade.”