ISG Provider Lens™ Archetype Study – Global

These strategic reports support improved awareness, knowledge, and decision-making regarding IT and business service providers’ capabilities and positioning.

The new ISG Provider Lens™ Archetype studies provide a means to align sets of ISG-identified client requirements with known provider capabilities. which offers a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

IPL-Sample-Study-Provider-Listing

ISG Provider Lens™ Archetype Reports
Each report identifies 4-6 archetypes that represent buyer characteristics and buying requirements for IT or
BPO service lines
  • Reports are globally focused
  • “Archetypes” represent ISG Advisor perception of client buying patterns
  • Archetype reports are not prescriptive, nor rank-based
  • Reports help align buy-side needs with provider-side capabilities to reduce costs for both side
In-Flight-Connectivity

In-flight Connectivity Market Responds to Increasing Bandwidth Demands

Over the last few years, in-flight connectivity (IFC) has been deployed across a significant portion of the global aircraft fleet and has gained traction due to the ever-increasing demand for bandwidth. Exorbitant charges for in-flight Wi-Fi access has been one of the biggest dissatisfactions with long-haul flights and has attracted lot of passenger criticism in the past. An appropriate technology complemented by the right business model can thus, be the raison d’etre for stoking passenger loyalty and showcasing customer experience leadership.

Historically, the satellite operators have sold capacity to the aviation connectivity service provider and the airlines pay for the bandwidth monthly. Satellite-based connectivity is the foundational layer for aeronautical connectivity and for providing capacity to certain land mobile and maritime applications. A type of connection is gaining pace where the very small aperture terminal (VSAT) antenna has an unobstructed view of the sky to allow appropriate line-of-sight (LoS) to the satellite. SmartSky Networks and Gogo have deployed such connections. The service providers leverage their base stations and the physical ground network to host equipment for aeronautical services. The incumbent satellite connectivity service providers often own the new systems that they are launching and using, resulting in a significant capacity coming online from all these providers. Consistently, with the explosion in market participants, market forces emerge that drive down the operating cost.

Some of the market trends that are making the connectivity infrastructure more fluid are highlighted below.

  • Ground networks extended to the skies: A wide range of air-to-ground services are available at present and several companies have been building and commissioning 4G base stations that point towers towards the sky. These are the most-used technologies that provide connectivity to the commercial aircraft fleet globally. The backhaul connection for this kind of communication network is primarily satellite based and currently is highly custom developed. The market is mainly dominated by three players, Gogo, Inmarsat and SmartSky. Some airlines in a few regions are still using technologies for extending the ground network to the air, i.e., the same base stations that are communicating with mobile users on the ground are extended up to aircraft. These systems are mainly prevalent in China and a few other countries. The service providers are usually putting up a dedicated radio network for airplanes consisting of base stations and satellites operating on specific frequency bands.
  • Making the aircraft network easy-to-consume: ISG expects 5G technology to eventually make it to the network onboard the aircraft once more 5G devices are available to passengers. The onboard networks, i.e. the radio access network (RAN), that the passenger connects to in the aircraft have just progressed from 3G to 4G and can be expected to move to 5G in the future. Most of the current industry activities are being directed towards enabling airlines to bring in the necessary equipment to support 5G as flexibly as possible. This can be addressed by developing and using open standard technology to enable plug-and-play deployments that enable equipment interoperability and interchangeability. Thus, when the long tail of 4G has declined, 5G has taken over and the airlines want to bring the enhanced connectivity onboard, they can leverage the flexibility of an open system instead of a proprietary one.
  • Enabling a 5G core across A2G and satellite connectivity, resulting in faster link to the aircraft: IFC vendors such as Panasonic, SITA OnAir, Gogo and others have 5G strategies, but presently they are using only certain features of 5G to deploy a fully enabled system. The systems are still restricted to the terminal that connects to the satellite and ground infrastructure and have not progressed to the local network within the aircraft. Although the modifications provide performance improvement, they do not support the speed and capacity of 5G yet.
  • Open architecture adoption and the rise of non-profit bodies: In the A2G connectivity space, a requirement has recently developed around enhancing the capability of supporting mobile terminals (like airplanes), and there are not many initiatives directed towards establishing the technology standardizations. An IFC standardization gap developed with respect to the flexibility of choosing service providers and equipment. Adoption and deployment of open systems for in-flight connectivity, such as open architecture for backhaul, would give airlines the necessary flexibility to switch service providers and avoid the potential disadvantage of vendor lock-in. The connectivity hardware, software and embedded systems are usually offered as a suite of products and procured from a single provider, leading to vendor dependency. Carriers are consistently deprived of the flexibility to use components, such as the terminal or access point, from different suppliers that better suit the carrier’s business requirements. Non-profit bodies like Seamless Air Alliance, a group of 34 companies, make the in-flight connectivity ecosystem flexible for airlines by enabling them to surgically replace a single piece of the system, thus, making the value chain more modular. The Seamless Air Alliance has written a standard to provide the airlines a choice of components from different suppliers instead of a holistic, proprietary system commissioned by a single vendor. The organization directs its efforts towards defining these open systems and enabling this flexibility for the future. Furthermore, such open industry standards enable service continuity even in case of mishaps such as a component supplier going bankrupt or contract terms becoming too challenging for carriers. The airlines would thus effectively keep pace with technology by upgrading the IFC of their fleet just by upgrading one piece of equipment that feeds into the overall connectivity infrastructure. This would have a cascading effect on the cost-effectiveness for replacing systems on one aircraft or the whole fleet.

The Way Forward

The road ahead is not free of speed bumps for transitioning to the new age of inflight connectivity. While TSPs are gradually introducing advanced onboard solutions, the offerings are mostly customized for the benefit of subscribers and are seldom offered as a standalone package. Furthermore, the infrastructure required to support 5G necessitates a meticulously designed approach, sometimes in the level of the materials used for equipment fabrication.

Some of the key attributes of the changing dynamics of the IFC landscape are presented below.

  • 5G may not be expected very soon: So far we have not witnessed 5G deployments extended up to the air, even in small scale, and the pandemic has pushed adoption further into the future, at least for three to four years. The challenges are mostly due to the different infrastructure that is required to provide services to airborne users and on-ground users. The high speed of airplanes would require putting onboard users on different plans, and the network would need the flexibility to accommodate that requirement. Satellite providers are presently using 5G features for the custom airlinks they have built so aircraft can support 5G. Several market participants operating in this area have been working towards developing new flat panel, electronically steerable antennas for aircraft, integrated with the other necessary 5G features. The antenna, which is visible as a hump that protrudes approximately 14 inches on the top of the plane, comes with its own set of challenges such as creating a significant amount of drag. Seamless Air Alliance states the associated losses can be quantified at approximately $35,000 worth of jet fuel per aircraft per year. This necessitates a more aerodynamic design with a lower profile flat panel antenna.
  • Electronically steerable antenna adoption: While Phasor Antenna Network was the first mover in electronically steerable antennas, it was quickly caught up to and shadowed by the cutting-edge innovations of SatixFy, Gilat Satellite Networks and others. Aerospace mammoths such as Collins Aerospace also are building antennas. However, the financial viability, performance and effective management of the devices are holding them back. Most of the current R&D efforts in the pre-COVID era were directed towards design or nomenclature of the materials that they use and the integration of beamforming ICs. Thus, significant progress in innovation is required to shift the balance in favor of deploying these new antenna structures at scale.
  • New revenue stream propositions for telecom service providers: The evolution of IFC is expected to deliver a new revenue stream for network operators in the form of value-added services. This can have a positive impact on their overall growth by reducing churn and customer acquisition cost, which are the biggest components of their financial model. Deutsche Telekom's complementary service offer is an example. The company provides an hour of free service to its customers, which drives potential and existing subscribers to subscribe, renew or upgrade. Another potential model could be IFC sold as a service in the form of a flight connectivity package, which would enable patching into access points in the aircraft to maintain connectivity while flying. These options, however, are not reasonably priced at present.

So what?

Most of the IFC connectivity providers today charge the passengers for connectivity, against which a royalty is paid to the carrier for providing access to the aircraft. This transactional model will be subjected to a makeover while most of the global carriers are inclined towards a charge-free model for passengers in the near future. The airline would thus need to pay for the equipment and pay the service provider for passenger connectivity. This, in turn, indicates a drift towards a multi-supplier model to normalize the cost and service levels.

The IFC market is witnessing cutthroat competition despite the global economic downturn and could emerge as a fallback revenue revival option for the struggling commercial aviation industry. New in-flight Wi-Fi services driven by top-notch satellite modems that provide connectivity benefits ranging from fast internet to video streaming over handheld devices are expected to gain traction. These technologies are all set to be a showstopper for the COVID-cautious passengers that may not be comfortable in handling seatback monitors with touch displays and handsets. While 5G promises an exponential improvement in onboard customer experience, the associated onerous infrastructure can stonewall swift and profitable airline deployments. Investing in this segment without structuring the right business model while roping in stakeholders such as telecom service providers, satellite communication providers, equipment vendors and system integrators, can be restrictive to the aviation industry’s resurgence.

Associated Insights

About the author

Avimanyu is a Team Lead (Research) in ISG India operations, bringing over 9 years of experience in market research and consulting. At ISG, Avi’s focus is on the disruptive technologies and innovations pertaining to enterprise networks and engineering and R&D practices.