Panasonic Considers Stepping In as Connexion Shuts Down

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  Space News Business

Panasonic Considers Stepping In as Connexion Shuts Down

By PETER B. de SELDING
Space News Staff Writer
posted: 14 November 2006
03:43 pm ET


PARIS — Panasonic Avionics Corp. will decide by mid-December whether to continue a satellite-delivered Internet service to commercial airline passengers, a decision that will depend on whether the company can secure commitments to outfit 500 aircraft, Panasonic Avionics spokesman David Bruner said Nov. 6.

Bothell, Wash.-based Panasonic Avionics has been considering stepping up as a possible successor to Boeing’s abandoned Connexion by Boeing in-flight broadband service, which will cease operations in January with the cancellation of Boeing’s satellite-lease contracts, mainly with SES Global of Luxembourg.

SES Global Chairman Romain Bausch said Nov. 6 that the company continues to discuss a Connexion-type service with Panasonic and several commercial airlines, but that no agreement has been reached.

Chicago-based Boeing announced in August that it is abandoning Connexion, concluding that the service was not near profitability even after Boeing’s estimated $1 billion investment in it over the past six years.

Panasonic, the Australian telecommunications company Telstra and Quantas Airways have been studying strategies to provide an in-flight passenger e-mail service. Germany’s Lufthansa, an early Connexion customer, also is hunting for ways to continue the service, Lufthansa officials have said.

“We do expect to determine the feasibility of providing new Ku-band service for airlines over the next 45 days,” Bruner said of the Panasonic effort. “We expect to receive commitments for over 500 aircraft, hopefully laying the base for a successful new service.”

Panasonic is one of a half-dozen companies also planning to introduce short-messaging-service and cell-phone capability aboard airliners in 2007 using L-band transmissions from London-based Inmarsat. The additional broadband service using Ku-band would permit high-speed access of the sort that Connexion provides.

Panasonic announced in April that it had designed an antenna to be fitted outside an aircraft to provide broadband links. The company said its hardware is smaller and lighter-weight than the heavier, more cumbersome Connexion antenna, which some industry officials have said contributed to the service’s downfall.

The service’s unique revenue source — charging passengers per flight leg — also was cited by industry officials as a reason for Connexion’s failure. Some industry officials also have pointed to the airlines’ lack of marketing of the service, an allegation that Lufthansa has denied.

ViaSat Inc. of Carlsbad, Calif., which supplied hardware for Connexion, continues to believe that a mobile-broadband service aboard commercial aircraft using satellite Ku-band links can be a viable business.

ViaSat Chief Executive Mark Dankberg said Nov. 2 that the company is among those looking for ways to pursue the business. ViaSat supplies hardware for a business-jet broadband service.

Dankberg said a Connexion replacement for commercial aircraft would need to consider expanding its revenue sources to include on board mobile-telephone access and entertainment to laptops or other portable devices.

“If we can find a situation where a services entity can make all that happen then we may participate in that,” Dankberg said during a Nov. 2 conference call with financial analysts.

Boeing’s Connexion service is leasing capacity on three SES Global-owned satellites for coverage over the Atlantic and Pacific oceans. Boeing has agreed to pay SES Global about $70 million in penalties for early termination of the SES Global satellite leases on two of these satellites.

A minimal Connexion service on one of the satellites covering the Atlantic Ocean region will be maintained for U.S. government use.

Bausch said that whatever combination of Connexion hardware suppliers, airlines or others is assembled to keep the service operational will have to make a decision this year or SES Global will seek to sell the satellite capacity to other customers.

“[T]he moving pieces have to come together prior to year’s end,” he said during the conference call. “We are in discussions with Panasonic, but there are other possible initiatives.”