Daniel Welch & Summer Staninski
On Friday August 16th 2024, SmartSky Networks announced it had ceased operations with immediate effect, bringing the curtain down on a thirteen year journey in the world of In-Flight Connectivity (IFC).
Armed with 60Mhz of unlicensed spectrum which would be dedicated to IFC and patented beam-forming technology, the company set about its mission to connect thousands of aircraft through a low latency Air-to-Ground (ATG) network in the lucrative North America market.
As is so often the case though, a successful outcome hinged on keeping pace with programme timelines. The immediate task in front of SmartSky was how to chase down domestic rival, Gogo, which had established its own ATG network and was well on the way towards an installed base that currently stands at more than 7,000 aircraft. Gogo would go on to become a major distraction, with lawsuits centred around patents filed in both directions in a protracted dispute lasting many years.
However, it was a quarrel with Wireless Systems Solutions (WSS), a former equipment vendor on SmartSky’s ATG network, and equipment issues that, together, pushed the entire programme’s launch back several times from the original 2016 plan.
The SmartSky hierarchy would have relished a direct battle of the networks with Gogo but, by 2022 when coverage across the continental United States was finally achieved, the threats to ATG that were once verbal rhetoric had come to life, breached the wall and were knocking on the front door. Sticking with the Game of Thrones reference, one might say that Gogo and its ATG network were to SmartSky what House Lannister was to House Stark, a mere agitation compared to the true danger marching resolutely from the Icy North. A danger that has since revealed itself as a revolution of the satellite connectivity industry, Low Earth Orbit (LEO).
As we know, LEO offers low latency, speedy data rates and hardware which is both discrete in design and cost effective. This has led to satellite connectivity becoming a practical option for aircraft once considered too small to be part of the addressable market. Add to these technological ingredients the brand power and deep pockets of players like Starlink and Amazon Kuiper, and you have yourself a formidable opponent.
The commercialisation of Starlink has already seen it successfully infiltrate the commercial aviation sector and it is beginning to make strides in business aviation too. The company reports having a total of 1,000 aircraft under contract across both segments at the time of writing. Availability of OneWeb-ready hardware only amplifies the threat from LEO – the satellite operator has been busy signing both retrofit and line fit deals with an array of commercial partners so that it can hit the ground running. The consequence for ATG has been staggering, with the number of aircraft on Gogo’s network actually falling in Q2 2024 (down to 7,031 from 7,205 at the end of 2023). In the commercial aviation sector alone, approximately 1,000 aircraft will be transitioned from ATG to satcom systems in the coming years as a result of decisions made by Alaska Airlines, American Airlines and Delta Air Lines.
Chart – North American ATG Installed Base – Commercial Aviation
Source: Valour Consultancy IFEC Quarterly Tracker
In fairness, SmartSky had observed the danger and pivoted to focus entirely on the business aviation sector in time for launch – specifically smaller variants with its award-winning LiTE offering. Had SmartSky been able to launch its network on time and as originally planned, it may well have been able to build an installed base and recurring revenue stream large enough to compete. Sadly, the delays were fatal.
What fate lies ahead for other beloved members of the cast?
Starting with Gogo. In 2022, the company announced a team up with Eutelsat OneWeb to offer Gogo Galileo – a LEO Ku-band satcom solution with both discrete Electronically Steered Antennas and competitively priced capacity to address larger and smaller aircraft segments within business aviation. The solution allows Gogo to “upgrade” its existing customer base – giving it something as opposed to nothing. The move also expands its reach beyond both ATG and North America to target those jets that have, for many years, only been able to utilise narrowband satellite solutions.
In the commercial aviation arena, incumbent service providers have jumped to a multi-orbit strategy (Anuvu, Intelsat and Panasonic Avionics), whilst Hughes Network Systems has come down the value chain to go direct to airlines with a LEO-only offering. There has also been a wave of related M&A activity, including Viasat’s acquisition of Inmarsat, Eutelsat’s acquisition of OneWeb, SES’s acquisition of Intelsat, Gilat Satellite Networks’ acquisition of Stellar Blu and Thales’ acquisition of GetSAT.
Ultimately, those with greatest influence on which vendors survive sit at either end of the value chain: Aircraft OEMs and end users (I hesitate to label either the night king). Recent announcements related to line-fit programmes and contract awards, shows preference has shifted toward discrete, futureproof hardware and access (in part at least) to low-latency, low-cost capacity in LEO. With Amazon Kuiper and Telesat Lightspeed likely to increase the LEO options available to aircraft operators in the second half of the decade, the Battle of Winterfell is truly upon us – only this time it’s hard not to see Winter emerging victorious against the Great Houses which is perhaps the ending we all wanted!
Preliminary data for Valour Consultancy’s new report titled The Market for IFC in Business Aviation – 2024 is now available. Click here to find out more.
