SmartSky raises $170 million for terrestrial in-flight connectivity network

by

WASHINGTON — SmartSky Networks, a startup building cellular towers for in-flight connectivity — a market coveted and dominated by satellite operators — says it is fully funded to build out ground-based network thanks to a new $170 million Series B funding round.

Combined with a $66.7 million funding round last month and $12.1 million raised in 2015, the Charlotte, North Carolina-based SmartSky Networks has amassed roughly a quarter billion dollars to build and deploy a network of 250 towers for air-to-ground, or ATG, connectivity to planes flying over the continental United States.

“We are pleased to have accomplished the threshold technical and business milestones needed to close on this major capital formation step,” SmartSky Networks Chairman and CEO Haynes Griffin said in a March 30 statement. “As a result, we are moving rapidly with the deployment of our coast-to-coast national network to bring users fast, seamless connectivity in the air.”

Currently, all major in-flight connectivity providers rely heavily on satellite communications to connect planes. Two companies, Chicago-based Gogo and satellite operator Inmarsat in London, have also invested in ATG — Gogo started with ATG before expanding to a hybrid system with satellites, and Inmarsat is adding now supplementing its satellite network with towers. U.S. telco AT&T also initiated an ATG program in the U.S. in 2014, but scrapped it the same year.

SmartSky is now months away from activating the second ATG network in the world (Inmarsat’s is still under construction), and claims it will have equally fast 4G-level uplink and downlink speeds thanks to the ground based towers and their roughly 20,000 spot beams blanketing the sky.

In an interview earlier this year, SmartSky President Ryan Stone said he views the company’s ATG network as complementary to satellite connectivity. Also, the bulk of SmartSky’s early focus is on business aviation aircraft, which are typically smaller customers than the commercial airlines the satellite industry has aggressively pursued.

In a follow up interview, Stone said SmartSky’s initial customers will come from the business aviation market, but the company is also planning to address the commercial aviation market later.

“We’ve long maintained that the airlines would be our second focus area, and designed our business plan to accommodate the more centralized decision making and associated long decision timeframes,” he said. “I should point out that one of the distinctive advantages of our beamforming technology is it makes the network highly scalable, unlike earlier airborne networks; adding airlines won’t detract from the experience on business aircraft, and vice versa.”

Those first commercial aviation customers are likely to be regional aircraft, he said, claiming that SmartSky’s network will make it “much easier for an airline to make the connected-aircraft business case work on those models, despite the shorter routes and lower passenger counts.”

SmartSky is also courting government agencies that Stone said are interested in the company’s ability to send multiple live video streams off an airborne platform, the cybersecurity advantage of having narrower spot beams (which reduce the physical access reach of potential hackers), and the company’s encryption capabilities. But given government customers’ historically long lead times, Stone said he is not expecting much visible adoption “until a couple of years down the road.”

Griffin said SmartSky has a significant number of aero customers on an early bird waiting list for when SmartSky turns on its network later this year. He said SmartSky is pursuing Supplemental Type Certifications (STC), the regulatory licenses granted by the FAA, that are required for antenna installations on customer aircraft types.

“We expect Early Bird customer installs of our patented technology to commence next quarter, immediately following completion of the first few STCs,” he said.