In-flight broadband flying high?
Despite an annual revenue increase in excess of 1300%, falling connect fees may be cause for concern.
A new report from In-Stat says the in-flight broadband business is at the stage of market development at which it must prove its sustainability through the ability to generate revenues. Wi-Fi deployments within airplanes have jumped from just a handful in 2008 to an anticipated 2,000 by the end of this year, and according to In-Stat, while availability is approaching a critical mass, paid usage generated from in-flight broadband has been extremely low.
"Revenues from in-flight broadband will reach $95 million in 2010, up from just under $7 million in 2009," says Frank Dickson, vice president of research with In-Stat. "However, the fee per connect is expected to deteriorate as lower connect fees are negotiated for roaming and billing partner subscribers."
The following will affect those reveue figures.
- Connect fees are projected to decline 24 percent from 2010 to 2014.
- In-flight broadband connects will exceed 76 million in 2012.
- In an effort to bolster Internet revenues, providers are beginning to explore the opportunity to provide video, direct broadcast satellite and Internet-based video. DBS revenues promise to be more than three times the size of Internet video in 2014.
- Aircell is currently the in-flight braodbadn provider market leader, having established partnerships with several major domestic carriers.
The report from In-Stat, titled Build It and They Will Come? The In-Flight Broadband Market, examines the market for next-generation in-flight entertainment with a focus on in-flight broadband services. The report emphasizes market potential, usage, business models and competitive analysis for the in-flight broadband market. The report segments in-flight entertainment services by access technology (GSM, satellite, air-to-ground) as well as application (voice, video and data).