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September 25, 2006

Panasonic May Reach Critical Mass for In-Flight Broadband

In an interview this morning with Panasonic Avionics's David Bruner, he said the firm could hit its target of 500 committed aircraft: The avionics division of Panasonic said last week that they would consider deploying a satellite-based high-bandwidth broadband system in aircraft, which would be similar to a system developed by Connexion by Boeing. Connexion is being shut down in stages, shuttered due to massive revenue shortfalls. Panasonic's Bruner, their head of strategic product marketing, told a trade journal that the firm wanted a critical mass of commitment of 500 aircraft within 60 days to make the deployment viable before launch.

In an interview this morning, Bruner clarified two points made elsewhere. First, the 500 aircraft would be equipped over five years. Second, commitments of 150 aircraft by airlines so far include no Connexion customers. They hope to make a deal good enough for those airlines, such as Lufthansa and SAS, to agree to be part of the new network. "If we take what we have together with the number of aircraft that were committed to CBB [Connexion by Boeing], we're getting very close to the number we want to have to launch," Bruner said. "We set this target for ourselves to ensure that there really is strong airline demand for this service. We believe that there is, but we need people to commit to it."

Panasonic's approach to offering this service to airlines differs from Boeing's in several important ways. Panasonic will be deploying 2006 technology, not 1999 technology. "We've got a significant advantage, probably two generations forward, just in the modems that are used in these types of satellite communications," Bruner said. Also, with a firm commitment of aircraft in hand in advance, Panasonic won't face uncertainty. Boeing had a certain kind of commitment from domestic US airlines prior to 9/11 after which all bets were off, and the company had to retool its model without having the money to invest in refreshing generations of gear.

The new satellite modems and antennas weigh considerably less and have nearly three times the throughput over the same bandwidth, Bruner said, with 12 Mbps down and 3 Mbps up (versus 5/1 for Boeing) expected. Bruner also noted that his firm can add a second antenna without reducing drag that can substantially boost download speeds--he wouldn't say by how much--for on-board media services, like many channels of television. (Their TV service has appeared on Delta's Song, and they have commitments from two international airlines coming on line soon. The TV system can have broadband easily added to it should the broadband plan go forward.)

Bruner emphasized that the "return channel," or satellite uplink, was critical for onboard broadband. The 3 Mbps they expect to offer should provide the necessary pipe for rich email, VoIP, and other services, which could include video surveillance and other security and safety telemetry by the airline.

While Bruner couldn't project fees passengers would pay, the goal is to get their wholesale price as low as possible to encourage the greatest number of customers, which would include airlines and airline partners, such as Aeromobile, which will deploy mobile phone picocells, and has previously signaled its interest in working with whatever backend transport was available on planes. In contrast to Boeing, which viewed Connexion back in 1999 as a way to bring in billions in revenue, Bruner said that "I don't think anybody's trying to get rich off" their potential new offering, and that some airlines are interested in offering broadband as an included amenity, while others look to charging on a break-even basis.

Because Panasonic Avionics already integrates many kind of onboard gear, they will work with Boeing and Airbus to allow their system to be installed while a plane is being built, which can substantially reduce cost.

The new system, by employing the Ku satellite frequency band, will give Panasonic a fixed yearly expense for transponder rentals; they won't be paying for satellite time by the minute or megabyte, which is how Inmarsat charges its customers. Panasonic will contract with a satellite operator to coordinate satellite  and ground station operations, removing yet another cost that Boeing incurred in building its own in-house expertise and own worldwide network of ground stations.

The Ku band is limited over the polar extremities, because the satellites point at populated areas, although they do also cover the Pacific route thoroughly for aviation purposes. Bruner said that Panasonic expects about 90 percent coverage of all existing air routes measured by miles or hours in flight.

Inmarsat's system covers most of the globe in its 3rd and 4th generation satellites, a key advantage for airborne communications of all kinds, but at a high cost. Bruner said that Panasonic installs Inmarsat equipment on plane's today, and that Panasonic's custom software works extremely hard to trim any excess bytes over that pricey wire. Inmarsat's 4G system will offer 432 Kbps per module; planes could have one to four modules installed.

But Bruner notes that Panasonic's system could be coupled in a single aircraft with Inmarsat and even AirCell's upcoming domestic US broadband airborne service so that an airline could choose the cheapest or best method of broadband. Bruner said the company is very interested in working with AirCell as one of their integrators. A combination of Ku band and AirCell gear would make sense for certain wide-body planes that fly over the US and internationally, Bruner said, while narrow-body and regional jets would be poor candidates for satellite access.