Interest in airborne Net nosedives

Interest in the once-hot market for Internet access on airplanes is losing altitude.

Interest in the once-hot market for Internet access on airplanes is losing altitude. Rockwell Collins has ceased investing in In-Flight Network, its airplane Internet access joint venture with News Corp., citing slower than anticipated market development.

Industry observers have also cooled their expectations. "Some people might be interested in it if it were free and easy and transparent to use," said Roger Rusch, president of TelAstra, a communications management consultancy with expertise in satellite systems. "Even then, I'm not sure how big a market there is."

Price and speed are the main gating factors. One of the most successful companies pushing airborne Internet services, Tenzing Communications, uses existing seat-back telephones to deliver downstream data at speeds under 10 kilobits per second, which is shared throughout the plane. "That's not going to satisfy one person on the plane, let alone 10 guys in business class," said Peter Firstbrook, senior research analyst at Meta Group.

Some airlines agree. "It's slow and expensive," said John Samuel, vice president of e-business at American Airlines. The airline has decided to take a backseat with regard to enabling onboard Net access, figuring next year or the year after will be soon enough to introduce the services.

Experience has taught airlines to be cautious in making technology investments. Before the airlines installed phones in each row of their planes, they conducted studies that revealed great interest in onboard calling--which hasn't materialized. "The phones don't get used because of price," Rusch said.

Caution on the airlines' part is the reason Rockwell pulled its investment in the In-Flight Network venture. "We decided not to continue to invest because of the slowness in the market, and the market for broadband data services hasn't progressed beyond the demonstration and trial phase," a Rockwell spokesman said. The venture hasn't been dissolved, however. Jeffrey Wales, CEO of In-Flight, said News Corp. is considering its options.

Still, at least one formidable competitor is moving ahead with an offering competitive to Tenzing's. Connexion by Boeing is developing a satellite-based Internet access system and last week signed a deal for content with ScreamingMedia.

It's the largest contract ScreamingMedia has ever signed and the content provider is confident in the demand for onboard Internet access. "Having the ability to have relevant news and information will be powerful," said Kevin Clark, CEO of ScreamingMedia.

ScreamingMedia will aggregate content that will be cached on the airplane. Caching content, which Tenzing does too, is far cheaper than letting users make real-time connections.

While Boeing is a name that airlines trust, the company hasn't yet signed on any customers. Cathay Pacific Airways, Singapore Airlines and Virgin Atlantic Airways have decided to roll out Tenzing's offering, and Air Canada and Scandinavian Airlines System are testing Tenzing's product.