April 29 (Bloomberg) -- AT&T Inc., the second-biggest U.S. mobile-phone carrier, will introduce 4G LTE wireless Internet access to commercial flights, mounting a challenge to Wi-Fi provider Gogo Inc.
With help from Honeywell International Inc., AT&T will begin offering the service in the continental U.S. as soon as late 2015 for in-flight Wi-Fi Internet connections and entertainment, as well as for cockpit communications, according to a statement yesterday. The 4G LTE technology is the same standard AT&T employs for its fastest mobile-phone network.
The company is seeking to tap into growing demand for reliable Internet access on planes as more passengers bring digital devices, such as tablets and e-books, to pass the time during flights. That’s a market that Itasca, Illinois-based Gogo has tried to corner, offering broadband service on more than 2,000 commercial aircraft and more than 2,000 business jets. Gogo has estimated the market opportunity for commercial aircraft is $402 million, according to Bloomberg Industries.
AT&T would be the first provider of 4G LTE to planes, said Roger Entner, an analyst with Recon Analytics in Dedham, Massachusetts.
“The service could potentially be faster, since you don’t have to bounce up to a satellite,” he said.
The service will use ground-based antennas aimed skyward at receivers on planes, AT&T Strategy Chief John Stankey said in a phone interview. Pending final approval from regulators, AT&T will use some of the Wireless Communications Service, or WCS, spectrum it acquired in 2012 to transmit the LTE signal to the planes, Stankey said.
“We already have this dense wireless infrastructure, and now we are going to build on it to offer additional quality services,” Stankey said.
AT&T also plans to use ground-to-satellite antennas to cover areas not reached by ground-based antennas and also to eventually provide service outside the U.S., he said. There will be no increase to the capital spending budget for this program, he said.
Shares of Gogo dropped 29 percent to $13.12 at the close in New York, the biggest one-day decline since they began trading in June. AT&T rose 1 percent to $35.42.
AT&T said it will disclose pricing and availability before the service is introduced. Gogo, whose system of ground towers and mobile-phone spectrum has grabbed the largest share of the U.S. in-flight Internet market, charges customers fees such as $16 for all-day service or $5 for a one-hour pass.
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