Who's Doing All the Work So You Can Use Your Phone on a Plane?

Right now, the retrofit alone can cost as much as 2% of the aircraft's value.

On March 3 this year, the Civil Aviation Administration of China (CAAC) announced the latest progress on in-flight internet access — 12 airlines now have 300 aircraft connected between them, about 8.5% of the country's 3,638 civil transport aircraft.

That comes nearly six years after the head of the CAAC demonstrated sending an email on the first commercial flight with internet-connected Wi-Fi.

Under an earlier plan, 60% of China's entire civil aviation fleet must have in-flight internet capability by the end of 2022. Not counting newly added aircraft, at least 600 planes a year would have to get connected from here on to hit that target.

Putting Wi-Fi on planes is slow. It's slow everywhere in the world.

By 2018, only 43% of global available seat miles (ASM, an industry standard calculated from seat count and flight distance, which means the number of Wi-Fi-equipped planes is smaller still) sat within Wi-Fi coverage.

The United States, with the world's most developed civil aviation industry, now has 86% coverage — after nearly 20 years of trying.

In 2000, Boeing launched a service called Connexion, which let passengers get online in the air over an ethernet cable or Wi-Fi, for $9.95 an hour.

But smartphones and social networks didn't exist yet. Instant messaging still had an "offline" status. People lived offline, simpler lives, and could still do without the internet.

On December 31, 2006, Boeing shut down Connexion. Ten days later, Apple unveiled the first iPhone. Connexion died just before dawn.

In 2013, the US Federal Aviation Administration (FAA) allowed phone use on planes. The FAA has long been treated as the benchmark for civil aviation regulation — at least until the 737 MAX crashes — and its decisions shape the rules worldwide. China allowed phone use on planes starting in 2017.

Once you could use a phone, getting online became a real need. Meeting it was another matter.

Except over the poles, getting a plane online is no longer a technical problem

When you switch on your phone aboard a plane fitted with satellite Wi-Fi, this is roughly how the data travels.

The signal goes from your phone to a wireless access point at the back of the cabin (much like the access point at home), then to an onboard server at the front of the cabin, then through a satellite control unit to the antenna on top of the plane, from which it is beamed up to a geostationary satellite above the equator, relayed down to one of countless ground stations around the world, and finally into the Wi-Fi operator's data center.

One router, one account, and you're online at home. But decades of building ground networks still aren't enough to meet the need to get online in the air, because a plane moving at high speed needs entirely different technology to hold a signal steady.

In-flight Wi-Fi today runs on one of two communication technologies: air-to-ground (ATG), or satellite network (Ku-band).

Air-to-ground systems take their signal from ground base stations. As a plane enters different airspace, it connects automatically to the nearest tower. Satellite network technology instead links to satellites in geostationary orbit.

On construction costs, the air-to-ground approach means rebuilding existing ground base stations. Transmitters on stations built for ordinary ground communication point sideways, to spread the signal as wide as possible. Covering flight routes means aiming that transmitter up toward 10,000 meters, and that means overhauling the stations completely.

China's terrain is complicated, ground stations are hard to build in some places, and choosing the sites takes a long time — all of which has held back air-to-ground technology at home. Satellite communication needs no ground stations, and existing satellites can be leased, so the barrier to entry is a little lower.

A satellite covers an enormous area. In theory one satellite could cover all of China, and three would cover the globe. But our geostationary satellites can only sit above the equator, so they can't reach the polar regions.

Getting a plane onto Wi-Fi costs about 2% of the plane's price in retrofitting

Large airliners like the Boeing 777 and 787 cruise at up to 900 km/h (about Mach 0.85), and the satellite is often more than a thousand kilometers away. That makes getting online far harder than a phone reaching a cell tower.

If you have ever installed old-fashioned satellite TV at home, you know it takes an antenna on the roof, aimed at a satellite 22,000 miles up in geostationary orbit. As the earth turns, the satellite holds its position relative to the ground, and your house doesn't move either, so you aim the antenna once and never touch it again.

That is exactly where getting a plane online gets hard. The plane is moving fast at every moment, so its antenna has to keep turning itself to match, in order to stay pointed at the satellite.

That is how satellite-based in-flight Wi-Fi works. Air-to-ground Wi-Fi works much the same way, except the antenna's target shifts from a satellite to one of countless ground stations.

Two problems follow: mounting the antenna on top of the plane, and keeping its direction updated as the plane moves.

Planes that offer Wi-Fi look unmistakable: there is a "hump" on the fuselage. The antenna sits inside it. To keep the antenna from being damaged or adding drag in high-speed flight, engineers covered it with a shell. This radome is usually designed aerodynamically, to cover and protect the satellite communication antenna.

Boeing's newest model, the 787, went into production in 2003, when the market had no clear demand for Wi-Fi, so the plane has no Wi-Fi antenna.

Other new models such as the 737 MAX and 777X are updates of existing airframes, and none of them made room for a Wi-Fi antenna either. So getting a plane online means bolting something extra onto an airframe that never considered being connected.

For the antenna inside the radome to know its position and angle at all times, another piece of equipment is needed, called KANDU — short for "Ku/Ka Aircraft Network Data Unit." It ties into the plane's navigation system, tracking the plane's position to steer the antenna. KANDU also has to make sure each adjustment connects to the right satellite, since one communication satellite usually covers only a single region, which means a longer flight has to hand off between two or three of them.

That is only part of the onboard Wi-Fi equipment. There is also the cabin server and the in-cabin network gear. The cabin server opens and closes the link between the antenna and the cabin's wireless network; the in-cabin gear — wireless access points, RF converters and the like — is what creates the Wi-Fi network passengers see.

Fixing this whole set of equipment to a plane means rewiring the aircraft. It is a major job.

Duan Shiping, CEO of the in-flight Wi-Fi supplier Feitian Lianhe, estimates that a set of onboard Wi-Fi hardware costs roughly 3-4 million yuan on the market. Add the retrofit work, airworthiness certification, software platforms, operations and maintenance, and technical support spread over time, and the initial outlay comes to about 7-8 million yuan.

By that math, a narrow-body plane such as the 737 has a list price of around 300-500 million yuan, so a set of onboard Wi-Fi equipment costs roughly 1% of the plane — and with retrofit, software and operations added in, 2%.

A plane's body and load-bearing capacity are precisely engineered, so any change to its shape has to answer to both safety and cost. Beyond buying the hardware, airlines also carry the fuel the equipment burns.

The hump is the crux. Its shape adds drag, and early equipment was heavy, adding weight and fuel cost.

The hardware has to get smaller and lighter, and suppliers have improved over the past couple of years. GOGO, the Wi-Fi supplier to American Airlines, Delta, Air Canada and others, says its 2Ku system takes only 8 hours to install, that the external antenna is about the length of an adult's forearm, and that the whole system weighs under 125 pounds (about 56 kg) — two large suitcases — so it has "almost no impact on aircraft performance or fuel consumption."

The bigger expense is using it, much like the data charges when your phone connects to 4G.

That depends on which communication technology the airline picks. Data over Ku-band satellites costs far more than over ground stations, and leasing a satellite frequency band can run to $5 million a year. Some flights that use ground stations — Japan Airlines' domestic flights within Japan, for instance — get costs low enough to let passengers online for free.

This week, Honeywell announced an agreement with Yuehang Tianyi to bring domestic airlines a high-speed onboard satellite internet service faster than Ku-band, possibly as early as this year. The company says it can connect through Ka-band satellites run by China Satcom and Inmarsat, with maximum download speeds of 120Mbps.

Ka and Ku are similar technologies, but Ka-band satellites are faster. Duan Shiping says planes using Ku-band communication often manage under 10Mbps in real flight, sometimes less, while Ka-band systems can top 71Mbps at their fastest — seven times better.

What is known for now is that launching a high-throughput Ka satellite costs somewhat more than a high-throughput Ku one — roughly one to two times more.

In mature markets, dedicated operators run in-flight Wi-Fi. It hasn't solved the cost problem either

Well before the ban on electronic devices was relaxed, US airlines had started trying to install Wi-Fi.

In 2008, GOGO launched the first in-flight Wi-Fi service on Virgin America planes. The speed was 3Mbps, enough for a handful of laptops, with video barred.

Over the following years, several US airlines including United and Delta switched on in-flight Wi-Fi, so "Wi-Fi on" was written into policy as a default permission to use phones.

The day the statement came out, Delta and JetBlue announced they would let passengers use phones in flight. JetBlue spokesperson Jennifer Dervin said immediately that they planned to install a high-capacity Wi-Fi system by the end of the year.

That same year, JetBlue teamed up with the wireless satellite company ViaSat to give passengers service "close to what you get at home," a project they called "Fly-Fi." It reached 12-15Mbps at the time, priced at $9 an hour. Around the same period, Delta, United and others worked with the in-flight Wi-Fi provider Gogo to sell data packages and monthly passes.

Loosening the rules on electronic devices produced dedicated in-flight Wi-Fi operators, and GOGO was the earliest.

In 2008, Aircell — later renamed GOGO Business Aviation — launched the GoGo service, offering airlines a complete end-to-end solution. It won airworthiness certification from the US Federal Aviation Administration (FAA) and the European Aviation Safety Agency (EASA), which let it retrofit aircraft and install equipment on Boeing and Airbus planes.

On the business model, GOGO chose to install equipment for airlines cheaply and share the revenue with them. Aircell's website said its hardware sold for just $100,000, far below the $300,000-400,000 other companies charged.

Users could buy data packages on GOGO's site, or take out a monthly or annual pass. A 60MB monthly pass cost $395; a 250MB monthly pass cost $1,195.

The US big three — United, American and Delta — plus Virgin America, Air Canada and others all took this arrangement with GOGO, and a single GOGO monthly pass worked across several airlines.

Southwest, Lufthansa, Emirates and others also used GOGO's service but chose not to share later revenue with it.

The logic is that if most international airlines use the same operator, it becomes easier to sign up frequent flyers for monthly and annual memberships — especially business travelers, who fly a lot, can expense the bill, and are the biggest spenders in aviation.

Other companies that, like GOGO, handle the whole chain from hardware to retrofit to signal service include Global Eagle Entertainment (GEE), ViaSat, Honeywell and Panasonic, each with its own way of making money. GEE generally doesn't share "Wi-Fi membership revenue" with airlines, but it does sell ad space through in-flight Wi-Fi.

Both GOGO and GEE are still losing money. In the fourth quarter of 2018, GoGo posted a net loss of $59.7 million; GEE's third-quarter net loss was $43.23 million. Figures GOGO has published show that moving data on a plane costs about 20 cents per megabyte, or roughly $200 per gigabyte — streaming a single song can burn more than a dollar of it, so to keep costs down the bandwidth handed to passengers is bound to stay thin.

China is different. Here, any business tied to network operations is regulated, so you won't find GOGO's service.

China Eastern and China Southern, which have the most Wi-Fi-equipped planes, both chose the American company Panasonic Avionics as their satellite access equipment supplier. Other suppliers licensed to operate in China include Thales, Honeywell and GEE.

In the Chinese market, these communication providers all have to lease satellite frequency bands from satellite operators. China Telecom was the first of the three major basic telecom operators to hold a satellite communication license; China Unicom and China Telecom then obtained theirs in 2017. China Satcom, which had mainly sold satellite spatial-resource services, and China Transport Communications Information Group Co., Ltd. (MCN) also obtained basic operator licenses. In April 2017, China Unicom joined AirMedia Online and Haite Kairong to set up a joint venture, Unicom AirMedia, dedicated to in-flight Wi-Fi.

But the bandwidth domestic operators can offer is very limited. In 2017, Unicom AirMedia deputy general manager Zhou Hong said that to meet the conditions for trial operation, only the most basic link bandwidth had been opened: a download speed of 150KB/s, far below a single phone on 3G, shared by the whole plane. That same year, GOGO said its 2Ku service reached bandwidth of up to 70Mbps.

Beyond the technical limits, domestic airlines share another problem: none of them can charge for Wi-Fi. Lin Zhijie says that isn't only because they're still in a promotional phase, but also because the Ministry of Industry and Information Technology hasn't issued telecom operating licenses to airlines, so no airline is yet qualified to sell Wi-Fi.

Zhang Chi, deputy general manager of China Eastern E-commerce Co., which runs the airline's air-to-ground connectivity business, told Carnoc that installing in-flight Wi-Fi is very expensive and China Eastern may charge something in future, on the grounds that bandwidth is limited and free Wi-Fi with too many users makes for a bad experience.

All this trouble, and it still has to happen — mainly because you can't put your phone down

Planes have needed radio contact with the ground since aviation began. Passengers staying in touch with the outside world came much later. It started with card-swipe satellite phones, until mobile phones arrived.

In 1991, the FAA began the American tradition of barring airline passengers from using phones. For the next two decades and more, every takeoff and landing came with announcements and repeated warnings from flight attendants not to turn your phone on.

Do electronic communication devices actually affect a flight? The argument started back in the telephone era. The FAA and the Radio Technical Commission for Aeronautics (RTCA) took the lead, gathering experts from every side for research that ran half a century.

Meanwhile, telecom carriers started fitting fixed phones to the backs of airplane seats. In 1984, Airfone, a subsidiary of the US telecom giant Verizon, put phones on Delta planes, and the first public air-to-ground phone system in the US was born.

For a long time these phones, which ran on a special radio frequency, could only place calls, not receive them, and the connection dropped often. What didn't match was the price: $3.99 to start a call, plus $4.99 a minute.

Before the safety question about phones was settled, the Wi-Fi era arrived. In 2004, the executive in charge of Airfone's business told The New York Times that only two or three people used the service per flight — the need to reach the ground from the air was weaker than expected. In 2006, Airfone's parent Verizon announced it would end phone service on all commercial flights; its rival Air One had already gone out of business four years earlier.

As the phone declined, in-flight Wi-Fi rose. In 2013, Airfone was bought by GOGO. The same year, the US relaxed its restrictions on using electronic devices on planes.

Study after study has shown that the danger phones pose to flight safety is only theoretical. In 2012, the FAA set up an expert panel to assess the effect of passenger electronics on flight safety. It found that most airliners can shrug off radio interference without disturbing communication between pilots and the ground, so the ban was eased.

Wi-Fi's most direct benefit to an airliner is that it makes the flight more appealing, which shapes what passengers buy — especially on long-haul routes, where a flight that lets you work, stay in touch, or kill time online is always more attractive.

A 2018 Inmarsat report found that two-thirds of users (67%) would rebook their flight if they learned another plane offered better Wi-Fi.

The spread of in-flight Wi-Fi has sharpened competition between airlines, because attracting passengers now costs more. The spending doesn't stop at the purchase and the retrofit; once Wi-Fi is installed, every passenger who uses it adds to the bill.

On the page of China Eastern's website where passengers queue to apply for Wi-Fi access, the airline says the in-flight Wi-Fi it now provides free is worth 258 yuan. GoGo's published figures show that moving data on a plane costs about 20 cents per megabyte, or roughly $200 per gigabyte.

But airlines have found a sweetener elsewhere: in-flight Wi-Fi gives them a reason to tear out the "little TVs" behind the seats.

Over the past few decades, airlines have poured huge sums into in-flight entertainment (IFE) systems. IFE comes in two forms, and you have probably seen both — the small screen at every seat, known as a full-cabin AVOD system, usually on twin-aisle wide-body jets, and the small screens hanging from the ceiling, usually on single-aisle narrow-body jets.

The three giants of the global IFE market are Panasonic Avionics, Thales and Collins Aerospace. Airlines pay for IFE equipment and content licenses, and also hire IFE avionics suppliers or third parties to transcode video and load the content onto the hardware — usually on a monthly cycle, with each transcoding job costing tens of thousands of yuan in service fees.

By the estimate of Dan McKone, a managing director at L.E.K. Consulting, installing and maintaining each seatback screen costs more than $10,000, and the screens add weight, which adds fuel.

All that spending buys passengers free entertainment in the air, which in turn shapes their ticket decisions. But the little TVs themselves have brought airlines no direct return.

In-flight Wi-Fi makes it possible to do away with the entertainment hardware. In 2018, The New York Times reported that American Airlines and United had already begun stripping out seatback screens in a planned way. Henry Harteveldt, co-founder of Atmosphere Research Group, noted that every American owns at least one mobile device, and once those devices connect smoothly to in-flight Wi-Fi, the expensive, heavy little TVs stop looking necessary.

A plane with the seatback screens gone saves the hardware and repair costs and also gets lighter, which saves fuel.

Dave Davis, former CEO of GEE, thinks first class may keep some seatback entertainment in future, but economy screens will likely be cleared out over time.

Wi-Fi looks like the cheaper choice: passengers open the onboard media library on their own phones and laptops, with no TV needed at all. And the steep Wi-Fi charges are revenue.

But most airlines that charge for Wi-Fi still face an awkward gap between what the service is worth and what it costs, which leaves in-flight Wi-Fi spending more than it earns.

A 2018 Wall Street Journal report said passengers on US flights spend an average of $28 for a full day of Wi-Fi. Valor Consultancy, an aviation and maritime consultancy, says fewer than 10% of passengers pay for Wi-Fi on most flights. On flights where it is free, usage jumps to around 40%.

GOGO, which runs more than half the world's in-flight Wi-Fi networks, has never made a profit. Its stock fell 72% in 2018 and now trades under $5 a share. Last year, GOGO announced plans to cut costs by 20% by the end of 2020.

"Nobody makes money providing Wi-Fi service," said Valor co-founder Daniel Welch.

Costs have to come down.

JetBlue, the first low-cost carrier in the world to offer free Wi-Fi across its whole fleet, started looking for new business models earlier than most.

In 2017 it announced free Wi-Fi at speeds up to 20Mbps and signed a deal with Amazon covering streaming and shopping traffic. In 2018, Marty St. George, JetBlue's executive vice president of commercial and planning, said that on a flight with roughly 150 seats, about 160 devices log onto the in-flight Wi-Fi. The company didn't disclose revenue figures.

Chinese airlines, which can't charge, have taken a similar route. "In-flight e-commerce" is now a fairly common model at home. Air China's internet-access page carries two shopping platforms, "JD.com In-Flight Shopping" and "Phoenix Miles Mall" (Air China's own e-commerce platform). Some carriers are also considering add-ons like hotel booking and car rental.

At the same time, some airlines that charge for Wi-Fi work with third parties to offer a kind of "free service." In 2012, for instance, Delta partnered with Amazon to let its passengers use Wi-Fi free to reach Amazon.com and shop. But you had to stay on Amazon's pages; leaving the shopping page to send an email still cost $10-15.

A CAPSE report shows that once passengers have in-flight Wi-Fi, 85% turn first to instant messaging, followed by email at 55%. Getting things arranged before landing matters too: checking destination information and booking cars and hotels account for large shares as well, 48% and 42% respectively.

The share of passengers who browse news over in-flight Wi-Fi is 47%, and 45% use it for audio and video entertainment. Interest in online games, shopping and stock-trading apps in the air is weaker, at 21%, 11% and 10% — which probably says something about the prospects of shopping-subsidized networks.

Meanwhile, 16% of passengers say they would happily watch ads to get free in-flight data. Thirty percent would watch a 5-minute ad for an hour of in-flight Wi-Fi, and 13% would sit through as much as 10 minutes of ads for the data.

Given that this is a survey, people tend to pick the answer that looks more respectable. In practice they would put up with longer ads. Whether that time is really worth that much is another question.

Graphics: Feng Xiuxia

Cover image/Visualhunt