In a widely anticipated move, Boeing today officially said it would phase out its Connexion in-flight wireless service by the end of the year. The move marks the final blow for a much-hyped six-year program for Internet access on board airliners that was beleaguered from the start.
Boeing said it will take a charge of $320 million to write off the in-flight WiFi effort. Industry analysts believe that the Chicago-based aviation giant invested as much as $1 billion to develop Connexion, which at its onset, in 2000, was seen as a major revenue-generator for the airlines and for Boeing. Predictions of eventual revenues from on-board Internet service ranged as high as $25 billion a year.
While international carriers such as Lufthansa, Japan Airlines, Korean Air, and Singapore Airlines signed deals to offer their passengers the service, the big U.S. carriers, which have struggled to avoid (or recover from) bankruptcy since the terrorist attacks of Sept. 11, 2001, declined to participate.
Original Connexion development partners American Airlines, United Airlines, and Delta Air Lines, pulled out of the project within months of 9/11.
"Over the last six years, we have invested substantial time, resources, and technology in Connexion by Boeing," Boeing chairman and CEO Jim McNerney said today. "Regrettably, the market for this service has not materialized as had been expected."
Price has been seen as a major factor in limiting the appeal of the service. At a time when WiFi access in many airport terminals is free, Connexion cost $10 for the first hour or $27 for 24 hours. Connexion now joins seat-back telephones in the annals of vaunted telecommunications services that have failed to catch on aloft.
At the same time, ground-to-air wireless services may be poised to succeed where the satellite-based Connexion could not: In a recent spectrum auction by the Federal Communications Commission (FCC) , a subsidiary of startup carrier JetBlue called LiveTV LLC purchased a slice of spectrum in the 1MHz frequency band that can be used to offer ground-based connectivity to airliners. (See JetBlue, AirCell Win Some Airtime.)
Do you think that a cheaper price can generate the kind of money needed for this type of access? Satellite use is expensive, and so is setting up a ground-to-air link for this upcoming service.
Either way, in my opinion this has no relationship to larger scale Wi-Fi Internet access. Many things about Connexion are different.
And I actually disagree; this will clear the way for a real provider to step in. Boeing is not a wireless co. I think ground-to-air, at a reasonable price (way below 10 bucks / hr) can succeed -- Lufthansa, for instance, is determined to keep offering it. Just give it another year or two.
Given the Boeing's backing, if this can't be be done, it's really bad news for others who are working (hard) to make WiFi based internet access easy and afforable (or free)!
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