May 9 (Bloomberg) -- The Federal Communications Commission took a step toward improving Web access for air travelers, voting to write rules to open frequencies for an air-to-ground Internet service proposed by Qualcomm Inc.
The agency in a 4-0 vote today advanced the plan to help travelers pull in Facebook pages, spreadsheets, videos, games and music on planes equipped with Wi-Fi systems. The next-generation service needs another vote before final approval by the agency, which is changing leadership.
“We take an important step to improve in-flight broadband service,” said FCC Chairman Julius Genachowski, who is to step down May 17 after leading the agency since 2009. A successor awaits Senate confirmation.
The global market for in-flight entertainment and communications is estimated to grow to $3 billion in 2017, from $2 billion in 2012, Gogo Inc., an in-flight communications company, said in a filing with the U.S. Securities and Exchange Commission April 16.
In 2012, Gogo served 1,811 commercial aircraft, or 82 percent of Internet-enabled North American planes, the company said in its filing. The average revenue per passenger session with the service was $9.74 in 2012, Gogo said in its filing.
It said about 32 percent of commercial aircraft in the North American market were equipped to provide Internet services to passengers in 2012 and “there is significant opportunity for us to continue to expand.”
About one in 20 passengers on Gogo-equipped flights used the service in 2012, according to the filing.
The FCC in December voted to ease licensing requirements for in-flight Internet services. The FCC shares regulation of in-flight communications with the aviation agency. By opening airwaves for the service, the FCC could help meet surging demand that may strain existing ground-to-air Internet services, San Diego-based Qualcomm told the FCC in filings. It asked the FCC to auction frequencies for the new use.
The Qualcomm system is designed to offer travelers “in-flight broadband experience equivalent to what is available in their homes, offices, parks, cars, buses, and trains,” Qualcomm said.
Airlines already use some systems to send data to and from aircraft, allowing passengers to connect to the Internet over a Wi-Fi signal. Qualcomm told the FCC its proposed system would have “significantly greater bandwidth” to support “exponentially increasing data demands.”
In a survey this year, 40 percent of air travelers said they had used the Internet on a flight in the 12 months, Henry Harteveldt, a San Francisco-based travel analyst with Hudson Crossing, said in an interview. The proportion will probably grow as availability widens and ease of use improves, he said.
“The expectation of the traveler, especially the younger generation of travelers, is they can and should be able to remain connected anywhere at any time,” Harteveldt said.
Qualcomm’s proposed system “might mean prices would be better,” Harteveldt said. “But more importantly it means more people can use it, and do more with it.”
The U.S. Federal Aviation Administration allows use of Wi-Fi computers and tablets on flights at altitudes above 10,000 feet (3,048 meters), provided carriers have performed tests to ensure the systems don’t interfere with aircraft systems. Making mobile phone calls or connecting devices to the Internet via wireless phone systems on flights is prohibited by the FCC.
Network congestion will increase as customers increasingly use Google Inc.’s YouTube and Netflix Inc.’s video streaming, and access Facebook, the most popular in-flight application, Gogo said. In a filing Gogo said it supports more airwaves for such services.
Gogo, formerly known as Aircell, has filed to make an initial public share offering through underwriters including Morgan Stanley, JPMorgan Chase & Co. and Evercore Partners Inc.
Gogo, based in Itasca, Illinois, uses 3 megahertz of airwaves to provide its service; the Qualcomm proposal envisions devoting 500 megahertz.
The new service can co-exist with offerings using the same airwaves, and its ground-based technology would cost less than satellite-based systems, Qualcomm said in filings.
The service would help satisfy travelers’ demands for broadband access, Fort Worth, Texas-based AMR Corp.’s American Airlines said in a filing. United Continental Holdings Inc.’s United Airlines in a 2011 filing said it uses Gogo and supports Qualcomm’s proposal because “in order to meet growing broadband connectivity demands on-board aircraft, substantially more spectrum will be needed.”
Qualcomm’s proposed system would degrade service by satellites that generate more than $1 billion in annual revenue, the Satellite Industry Association said in a May 2 filing. The airwaves at issue are used intensively by the satellite industry, the group said.
Activities that may suffer interference include satellite news gathering, some business networks and broadband services for rural America, said the Washington-based trade group with members including Chicago-based Boeing Co., Bethesda, Maryland-based Lockheed Martin Corp., and Falls Church, Virginia-based Northrop Grumman Corp.
Qualcomm’s proposed air-ground mobile service would use between 150 and 250 ground stations to transmit and receive signals from aircraft, the FCC said as it requested comment on the proposal.
Aircraft operators must certify to the Federal Aviation Administration that any electronics on board are safe and won’t interfere with navigation devices and other gear.
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