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In-Vehicle and In-Flight Video Takes Off

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"When it comes to the experience itself, OEMs want it to be first class," says Dimkovic. "The car is not a cheap investment. 4K, 7.1 audio, and multizone (isolated streams for different passengers) must be enabled, no matter how many displays. Users should also be able to share content seamlessly while the system respects content protection rules from content providers."

With data from Counterpoint suggesting that 75% of cars will be connected to the internet by 2025, the vast majority using 5G networks, that's potentially a billion IVI monthly subscriptions up for grabs.

In-Flight Connectivity and Entertainment

In-flight connectivity (IFC) is set for takeoff. After decades of high equipping costs during which passengers were reluctant to pay high prices for unreliable performance, airlines are optimistic that a new wave of technologies, moves to standardization, and the consolidation of operators with connectivity providers have potential to launch untapped revenues.

Wi-Fi in the sky has historically fallen far short of expectations on reliability, speed, and coverage. That's increasingly marked as passenger interest has shifted from data to voice, from talking to browsing either using the onboard IFE systems or their own devices. In short, there is latent demand to make cellular and Wi-Fi connectivity as seamless and high speed in the air as it is on the ground.

Only a quarter of commercial aircraft currently offer IFC of any kind, according to U.K. satellite communications specialist Inmarsat. This is why broadband-enabled in-flight revenue was only $900 million in 2018 compared to revenue from other "ancillary" sources like in-flight retail, baggage fees, and ground car hire, which is estimated to hit $134.8 billion in 2020. 

And yet, according to "Sky High Economics," a report created for Inmarsat by the London School of Economics (LSE), broadband-enabled revenue for airlines could reach a stratospheric $30 billion by 2035. This figure includes potentially lucrative deals with partners, advertisers, and sponsors, whom Inmarsat assumes won't wish to be associated with substandard onboard connectivity.

The entire commercial airline industry wants to reach this destination, but different groups are taking different routes to get there. The Seamless Air Alliance (SAA), which counts Delta Air Lines, Etihad Airways, OneWeb, Panasonic, Sprint, and Airbus among its members, thinks the answer lies in promoting open standards. Building every aircraft the same way can lower the cost of manufacture because standards allow airlines to plug and play equipment rather than custom-install every wire and rivet. Integration of connectivity products includes suppliers of airplanes and airplane radios, Wi-Fi, and IFE. The SSA has published specifications that cover network architecture, onboard radio access, and authentication and regulatory constraints. 

A study released by the SSA in March 2019 concludes that technology standardization could increase the value of the IFC market by $11.4 billion. Inmarsat, which is not part of the SSA, comes up with a similar figure. It believes that greater digital connectivity in flight diagnostics, airline manufacture, and flight disruption management could deliver efficiency savings (in fuel as much as anything) of $15 billion a year by 2035.

Encouraging BYOD benefits airlines that are looking to divest themselves of the cost and weight of outfitting aircraft with seat-back screens. The SSA wants to create industry standards that enable travelers on any flight to go online with their own devices—without struggling through complicated sign-ups or costly paywalls.

Monetization is the other big challenge. The LSE/Inmarsat report predicts that broadband-enabled ancillary revenues will derive from four main areas: in-flight broadband upgrade charges, ecommerce with real-time offers, advertising, and premium content. The latter is in line with wider trends and could bring in $1.4 billion in revenue (of the $30 billion total) by 2035. Getting there means offering premium on-demand content not already available via the IFE system—streamed to the aircraft rather than already installed on it. 

Another monetization option is W-IFEC (wireless IFE and connectivity) bundling, in which IFC purchase is a precondition to access premium streamed entertainment on BYODs. In­marsat calls this an ideal model for short-haul carriers without embedded IFE systems. 

The third monetization option is live entertainment. The obstacles to this may seem far more challenging than those for on-demand, but Inmarsat has demonstrated the possibilities. In September 2019, a Singapore Airlines plane flying at 35,000 feet broadcasted a live interview for Sky Sports with the Alfa Romeo Formula 1 racing team. Signals were relayed over Inmarsat's Ka-band GX Aviation satellites to a SITAONAIR portal, which acted as a mobile hotspot onboard.

Inmarsat contends that airlines haven't got connectivity right to date because they lack global, dedicated coverage. It says, "Instead, their providers rely on leasing capacity across a patchwork of satellites from multiple operators, the vast majority of which are dedicated to services other than aviation. The nature of this stratospheric quilt means that as planes try to disconnect from one satellite network and connect to another, airlines risk those signal drop-outs that are so frustrating for passengers." Inmarsat will be launching a series of satellites in the Ka band in 2023 that are capable of delivering thousands of spot beams simultaneously to increase capacity per aircraft and offer global coverage. 

Satellites remain the primary means of delivering in-flight high-speed broadband. OneWeb and Airbus have developed OneWeb constellation, which comprises hundreds of low-Earth-orbiting (LEO) micro-satellites. They orbit 2,000 kilometers above the Earth rather than the 36,000 kilometers at which geostationary satellites operate. OneWeb claims this proximity will shorten data-transmission times and provide faster connectivity not just to aircraft but to ground cells as well. These satellites are key to helping bring 5G to the skies, and OneWeb and Airbus aren't the only organizations that are looking to take a lead.

In-flight broadband connectivity company Gogo plans an air-to-ground (ATG) 5G network launch in 2021 across the U.S. and Canada. Its partners, Cisco, Airspan Networks, and First RF Corp., will be responsible for onboard system hardware, software, and antennas, including a proprietary modem.

The network's Air5G platform will provide 5G virtualized-RAN (radio access network) base station technology that uses Massive MIMO (multiple input, multiple output) antenna arrays for increased capacity. Gogo says in a press release that the platform also "features advanced beamforming and tracking techniques, capable of communicating with an aircraft travelling in excess of 750 mph, at long range, all while providing an enhanced mobile broadband 5G experience."

Gogo further explains that "belly-mounted airborne multi-band antennas" will connect its onboard 5G system to the Gogo 5G network on the ground—which already consists of more than 250 cell towers. Gogo will continue to employ its 3G and 4G networks as backup to the 5G network.

In concert with arguments for 5G's terrestrial impact, a 5G ATG network should deliver operational advantages, including lower OpEx and lower latency.

Network slicing, another familiar 5G concept that dedicates bandwidth for applications, is expected to be used for 5G ATG connectivity. The SSA says that aeronautical broadband radios facilitate network slicing through controls being developed by groups such as standards body SAE (Society of Automotive Engineers) International. 

Connectivity providers are battling for airline customers. "Sky High Economics" suggests that those who make the leap now by investing in connectivity will be able to grab a piece of a market it values at $33 billion purely in terms of passengers electing to pay for journeys that offer superior IFC. Today, states the report, 12% of less-engaged passengers are willing to switch allegiance to an airline that offers reliable Wi-Fi.

This demand will only rise as the first truly digitally native generation, Generation Z (born between 1997 and 2012), becomes the largest group of air passengers in the next decade, growing the value of loyalty to $45 billion—and that's on top of the $30 billion in upgraded broadband-enabled revenues. 

Airlines in Asia-Pacific have the largest growth potential. Of the $30 billion estimate, $10.3 billion is pegged to Asia-Pacific, $8.2 billion to Europe, and 7.6 billion to North America. 

Despite global concerns over air-travel carbon emissions, Inmarsat projects air traffic to double by 2035, when there will be 7 billion people in the air annually. That's a lot of capacity that will need to be filled.

"Globally, if airlines can provide a reliable broadband connection, it will be the catalyst for rolling out more creative advertising, content, and e-commerce packages," says Alexander Grous, author of "Sky High Economics." "Broadband-enabled ancillary revenue has the potential to shape a whole new market, and it's something airlines need to be planning for right now."

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