AT&T, Honeywell to challenge Gogo's airborne Web business

SEATTLE Tue Apr 29, 2014 4:38am IST

The AT&T logo is pictured by its store in Carlsbad, California, April 22, 2013.  REUTERS/Mike Blake/Files

The AT&T logo is pictured by its store in Carlsbad, California, April 22, 2013.

Credit: Reuters/Mike Blake/Files

Related Topics

Stocks

   

SEATTLE (Reuters) - AT&T Inc and Honeywell International Inc are teaming up to offer high-speed, in-flight Internet in the United States, the companies said on Monday, challenging industry leader Gogo Inc.

GoGo shares fell 14 percent in after-hours trading following the announcement of the new service, expected by late 2015. It will use an AT&T 4G LTE network and Honeywell systems and hardware to supply broadband service to business, commercial and general aviation passengers, as well as to airlines seeking more connectivity onboard planes.

Honeywell said the deal could provide it with $1 billion in revenue over the next decade. AT&T declined to estimate potential revenue from the agreement.

The two companies have signed a letter of intent and expect to sign a formal contract shortly, Honeywell said. Gogo Inc currently provides similar cellular network-based technology, known as air-to-ground, that is in use on about 80 percent of wired commercial aircraft in the United States, including Delta Air Lines and the newly merged American Airlines.

After Gogo shares fell sharply, Chief Executive Mike Small said in an interview: "I think it went the wrong direction." He noted that Gogo pioneered the air-to-ground system over the last 20 years.

"We have a great business and everybody wants in," he said.

GoGo recently announced a satellite-based system that offers connectivity over water and uses a dual antenna capable of providing speeds of up to 70 megabits per second, compared with its current air-to-ground service speed of 9.8 mbps in the U.S. Honeywell said the AT&T system would have greater speed and bandwidth than existing systems, but did not provide approximate data speeds for the 4G system.

AT&T said the airborne WiFi fits its strategy of adding connectivity to a wide range of applications, from cars to automation in homes. The company has about 116 million subscribers in the United States.

The AT&T-Honeywell deal comes as a number of in-flight internet options are being rolled out, many based on Ka band or Ku band satellite spectrum. The systems promise faster speeds and wider application, at lower cost. But they also have made it difficult for airlines to choose among competing technologies, and the cost of equipping a fleet can cost hundreds of millions of dollars.

Better connectivity would allow more communication with pilots and crew members and the plane's diagnostic systems, providing real-time weather tracking, and status reports on aircraft parts. With improved and less costly connectivity, a plane could send more alerts about parts that might be close to failure, enabling ground crews to have spares ready when the aircraft lands.

Greater connectivity also would help in tracking jets, That is a priority as the search continues for Malaysia Airlines flight MH370, which vanished from radar screens on March 8 with 239 people aboard. The wreckage has still not been located.

(Reporting by Alwyn Scott; Editing by Steve Orlofsky and David Gregorio)

FILED UNDER:

Tech Wrap

Reuters Showcase

Stake Sale

Stake Sale

Strong demand for Coal India boosts privatisation drive.  Full Article 

Pharma Deal

Pharma Deal

Sun Pharmaceutical wins U.S. approval to buy Ranbaxy  Full Article 

SpiceJet Bailout

SpiceJet Bailout

SpiceJet board approves up to $243 mln share sale plan  Full Article 

AirAsia Jet Crash

AirAsia Jet Crash

AirAsia captain left seat before jet lost control - sources  Full Article 

India Art Fair

India Art Fair

Art fair turns India's capital into art hub.  Full Article 

Romney Opts Out

Romney Opts Out

Republican Romney opts out of 2016 run for president.  Full Article 

Movie Review

Movie Review

"Rahasya" is an ode to Agatha Christie.  Full Article 

Safety Concerns

Safety Concerns

Aviation leaders seek new safety mandate after deadly 2014.  Full Article 

Movie Review: Hawaizaada

Movie Review: Hawaizaada

Movie Review: Hawaizaada  Full Article | Related Story 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage