Apparently travelers aren’t the only ones fed up with slow to non-existent in-flight Wi-Fi. In regulatory filings, American Airlines takes provider Gogo to task, essentially telling the company it needs to improve the service or the airline will take its business to competitor ViaSat.
From Gogo’s EVP and CFO Norman Smagley: “By way of background, given the rapid pace of technological development in our industry, our airline customers expect to be able to take advantage of advances in technology and we understand and support that. Our contract with American contains a provision that addresses this expectation. Under the provision, if certain conditions are satisfied, including if a competitor offers connectivity services that materially improve on the Gogo early generation air-to-ground system that American has chosen to use on certain fleets, American can notify us. If American gives the notice required by the contract, we have the opportunity to submit a competing proposal – for any technology in our portfolio. If we decline to submit a proposal, or if American reasonably determines that our proposal is less favorable than the competitor’s, American may elect to terminate the contract with respect to the aircraft that are the subject of the notice.”
Gogo’s air-to-ground system is exactly what it sounds like. Devices on the plane connect to towers and hand-off between cells. By way of an upgrade for American, Gogo is looking to deploy its 2Ku satellite-based service on approximately 200 planes.
Gogo last year received approval from the Federal Aviation Administration to commercially use upgraded Wi-Fi equipment, although widespread commercial rollouts are slated for 2016. The new 2Ku Gogo hardware uses two low-profile satellite antennas to deliver Wi-Fi speeds of more than 70 megabits per second. The 2Ku antenna is designed to improve spectral efficiency to produce more usable bandwidth and Gogo calls it “the most TV friendly solution in the market.”
California-based ViaSat has been pegged as American’s likely alternative; the company provides satellite-based service in the Ka band. According to the company, “The big difference is a network that allocates a high-speed connection to each passenger, rather than an aggregate ‘bucket’ of data to the plane that leaves passengers contending for low-speed, dial-up like service. With speeds eight- to 10-times faster than alternate services, passengers can work, shop and stream like they never left the ground.”
As Bloomberg points out, after news American could switch service providers, Gogo stock took a 43% dive, reaching a low of $7.90 per share and ending Feb. 15 at $9.39 per share.
