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.
