Wi-fi on airplanes isn't always great.
For the first flight was with American Airlines.
I paid $17 for Internet, and most of the time it didn't work.
The second flight I was with Southwest, I paid $8 for Internet, and it already
pretty much ran the entire time.
Just
took two Delta flights.
The first flight had really good Wi-Fi and it was free.
The second flight, the Wi-Fi was not very good.
It also wasn't free.
It was $9.95.
I just got off a United flight SFO to Newark and the Wi-Fi was okay.
It was pretty good. It worked well, speeds were fine.
I was actually able to watch YouTube, so I just took a flight from Newark to Milwaukee on
United. I paid $8 and the Internet basically didn't work.
I might even reach out to United for a refund because the Internet was just so bad on that
flight.
The demands of in-flight connectivity by the passengers have grown rapidly, way
faster than any of the providers could keep up with.
We are chasing that at home experience in the sky.
We have to coordinate hitting a satellite in space that's 22,000 miles away when the aircraft moving
on at 30,000ft, 500 miles an hour.
So the coordination of those two things is obviously super complex.
American, United and other US airlines have been updating their fleets to provide better Wi-Fi.
Delta has spent over 1 billion on its planes to bring free Wi-Fi to its customers.
None of this is cheap to deliver into the airplanes, and part of it is just general
ancillary revenue.
But part of that is they really do believe that there's a better opportunity to
make passengers happier and hope that they come back.
It's been a disconnected environment for so long.
How can this come up in our homes?
They're getting more connected. Even our bodies are getting more connected with watches.
Cars are being connected. Why can't the airplanes?
Cnbc got an inside look at how Delta is updating over 1200 planes to improve Wi-Fi
and why it's so difficult to get good Wi-Fi at 30,000ft.
Airplane WiFi has been around for decades.
Our breakthrough and I really start there was in the late 90s with a company called Connection
by Boeing. It was an Internet provided by Boeing as an initiative, and we were a technology
provider.
It started with a long time ago with a satellite system that lasted
very short amount of time and then was quickly became too expensive and scuttled.
From there, we went to cellular technology.
That was the original Gogo air to ground product that survived for many, many years.
And it's still in service on some smaller regional jets.
It's really been the past decade that passenger demand for internet on
airplanes and the ability to deliver it has come about.
And so that was, you know, started with the air to ground systems that evolved into the satellite
systems.
The downside with cellular towers is, you know, line of sight.
You can't see it when it's on the ground.
So it doesn't work at the gate.
And as you get out of view of cell towers like over water, over the ocean, just in the remote
areas, it doesn't work at all.
Satellites give you a broader view of the aircraft, less obstructions because it's looking
down at the top of the airplane.
You don't have to worry about any of the line of sight issues.
Because of this, more airlines are switching to satellite based Internet.
It's probably only the last two years or so that there's been enough
capacity available that many airlines could support the
large volume of traffic that's being pushed across the satellite links.
Which isn't to say they haven't all tried, but we're finally getting to the point now where
there's enough satellites in the sky to be able to support that.
Here's how it works.
After passengers board a plane, devices connect to wireless access points, which are connected
to a server or a modem underneath where the passengers sit.
This modem is connected to the antenna on top of the aircraft, which then talks to a satellite
which talks to ground stations to provide the Internet.
You know, each one of those spots has a bottleneck.
And the satellite is really the defining, the defining characteristic of the entire network.
The aircraft technology has gotten a lot better when you're trying to connect with a satellite
22,000 miles away with a signal, the width of a pencil.
The accuracy of those technologies have to be really, really finite.
So the new antennas that we're putting on aircraft now have a huge amount of fidelity for
closing those connections.
The satellite Internet industry was a $7.9 billion market in 2022,
and there are several big players in the space.
Viasat is quickly growing and is about to overtake the top role.
Panasonic Avionics is currently holding that top spot, Inmarsat,
Intelsat and then, of course, SpaceX and StarLink coming on strong as well.
Viasat provides satellite Internet service for homes, defense, communications and airlines.
Picking the right provider is a really expensive gamble in a lot of ways for
the airlines. They have to look at what services are available today, what capacity is available
today, and then also figure out where the system is going to be in two, three, five, maybe
even ten years, depending on what that contract looks like.
Engine's full power and lift off of ViaSat three.
Go, ViaSat.
Go, Falcon. Heavy.
Viasat recently launched the first satellite of three to expand its global coverage.
These satellites orbit the Earth from space.
One satellite can support coverage for an entire continent.
And one of the features of that satellite.
The new satellite is expanded coverage.
So right now, our coverage for ViaSat is within, say, the continental United States, Mexico,
Caribbean and in parts of Brazil and in the North Atlantic and Canada over to Europe.
But if you were to, say, fly from LA to Hawaii, all of a sudden you would cut out because our
satellites weren't covering Hawaii.
Well, this new satellite will.
And so often when it doesn't work, it's because of it's not because of some other technical issue.
It's because likely we just don't have the satellite coverage up yet in which we're quickly
expanding.
Demand for Wi-Fi has grown tremendously over the past ten years due to the growth of smartphones
and users expecting access to the Internet to be available everywhere, like airplanes
making capacity and bandwidth increasingly important.
The newest satellite, ViaSat-3, has speeds of up to one terabytes per second,
compared to 260GB per second in ViaSat two.
Busy airports like Atlanta, Dallas O'Hare, the New York area.
You get a lot of planes on the ground at one time or in the in the near airspace.
So you have a high concentration of aircraft and users and demand.
And often systems just don't have enough spot capacity.
They just don't have enough to serve that demand.
So it looks like it doesn't work.
It's not really broken. It's working as designed.
They just ran out of bandwidth.
For airlines, that demand went from supplying Wi-Fi for a few business customers, checking some
emails to an entire plane, sometimes hundreds of people trying to stream
movies.
You got TransCon flights where take rates can be as much as
6,070%. I was on a flight this week where
118 passengers on board had 166 devices connected.
It's absolutely a challenge. We want to deliver unfettered Internet to our customers.
Meaning if you wanted to watch Netflix, you can.
If you wanted to go work, you could.
If you want to scroll social media, you have the capacity to do that, which means we really need to
be able to provision enough capacity to aircraft to let anybody do whatever they want.
So being able to deliver that much power to a plane has its own challenges.
When we first came in, Wi-Fi, Internet connectivity and in-flight
entertainment were kind of viewed as two separate systems.
I think we knew it was happening in the market was everyone's everyone's was bringing content on
board. It wasn't like bringing your own device.
It's not always bringing your own subscription.
So the Internet has become synonymous with entertainment.
The need for more bandwidth on board also means aircraft, especially older planes in the fleet,
need to be upgraded.
New planes, like Delta's 737 Max ten, will come with ViaSat already installed.
When it comes to using Wi-Fi on a plane, it can vary widely depending on the route, the type and
age of the aircraft.
Most airlines now offer free messaging, but when it comes to Wi-Fi, passengers can pay a range of
prices. In our testing of various US airlines, we paid anywhere from nothing to up to
$29 per flight.
A few airlines like Delta and JetBlue offer Wi-Fi for free, and some don't offer it at
all.
The airlines that have chosen to invest in Wi-Fi are doing it, and they're doing it pretty
aggressively. You do have the other airlines, frontier, for example, who are an Allegiant.
They don't want Wi-Fi on their planes right now.
They're not doing it.
We started way back in 2019 with a team of industry experts that we hired on
specifically to go test and theorize the capabilities of all these satellite networks and
providers on the airframe to find eventually ViaSat that could deliver this experience.
And we did that progressively from 2019 through 2021, 2022, as
we led up to the confidence that we had to launch free Wi-Fi in February.
Probably our fastest growing business line is the commercial aviation segment.
Over the past, say, several five years.
We
visited Delta's tech ops center in Atlanta to get a behind the scenes look at a 737 Wi-Fi system
being upgraded.
Teams already opened up the aircraft to start running the wires from the antenna, which will be
around the middle of the aircraft to the front where our server and modem is going to be, and
then back through all the wireless access points that are going to distribute Wi-Fi to each of our
passengers. As you transition through the plane, let's say you were in first class and you wanted
to go to the lab in the middle, you would switch from the first wireless access point to the second
to the third seamlessly as you transition from front to back.
Delta's goal is to retrofit its entire fleet by the end of 2024 and are about half way
there. The airline believes by offering free Wi-Fi, it will acquire more loyal
customers and in the first month saw 100,000 new SkyMiles members.
There has been a shift of late away from the ancillary revenue approach
and more towards the whether it's sort of Delta's decision that they think they can make more
money with SkyMiles members and convincing everybody to join the program and having happy
customers.
Jetblue has offered free Wi-Fi for years.
Since launching with JetBlue in December of 2013.
We've now added American Airlines, United Airlines, Delta and Southwest
Airlines, and most recently Porter and Breeze, two smaller carriers that are up and coming.
Hawaiian expects to offer free Wi-Fi provided by SpaceX's StarLink on certain aircraft early
next year. Outside the US, Singapore Airlines announced free Wi-Fi starting on July 1st,
2023.
They all say, we think that the passengers will be happier and they'll probably buy another ticket
next time. And we just hope that we can get a little more revenue from them on the next ticket
in the fare rather than trying to sort of eke it out on as an ancillary separate line item.
JetBlue has always said it's sort of part of their marketing costs.
They've been free since they launched, so they know better than everyone.
But I've yet to see an airline say that with the cost of the install and ongoing sort of
bandwidth charges, it's a profitable endeavor.
The overall airplane Wi-Fi experience still greatly varies on availability and
dependability.
The regional jet world is definitely the last frontier for getting decent
performance. The ones that are online are still generally running with the air to ground system
that just doesn't have enough spectrum available.
That's going to change starting early next year.
But the investment airlines like Delta are putting into its Wi-Fi offering will only ramp up
competition with rivals.
We've been really passionate about free Wi-Fi for a long time now, but the technology really hasn't
been there with the capacity in space and the aircraft hardware to really deliver that
experience at scale.
Now we're there and more and more satellites are being put into orbit every day.
It's all the time now, and that's just going to continually get better over time.
The bad news is that's still probably not that great and there's a long way to go.
The good news is that with more satellites launching to support the systems, we're starting
to get to the point where the systems can handle the amount of demand that's being placed on them.
That's probably the hardest thing for us to do, is to get people to trust that it works online and
you can depend on it. Viasat-3.
All the things we've been doing and working.
It's the technology and the hard work behind it that makes it reliable, makes it consistent
and makes it have all the capacity.
And then the satellite itself is fundamentally behind.
That's the bottleneck. And if you solve that problem and you have enough capacity where there's
demand, you're going to make this system work.
And I think everyone's going to be joyed instead of frustrated.