June 5 (Bloomberg) -- British Airways is in talks with communications satellite operator Inmarsat Plc about becoming the initial customer for the first pan-European high-speed air-to-ground Internet service.
Negotiations are at an “advanced stage,” with British Airways planning to introduce the technology on U.K. domestic routes, the companies said today in a statement from Inmarsat.
Inmarsat will spend as much as $250 million on a ground network and S-band satellite built by Thales Alenia Space for launch in late 2016, the London-based company said. The only existing air-to-ground 4G broadband network is in North America, where AT&T Inc. said in April it would offer a service from as early as late 2015 to compete with incumbent Gogo Inc.
“We believe there is a strong read-across from the American experience into the European short-haul market,” Inmarsat Chief Executive Officer Rupert Pearce said today on a conference call, adding that the company is in talks with a number of other potential airline customers in addition to BA.
Existing European inflight Internet services, such as one offered by Norwegian Air Shuttle ASA, rely on satellite links with no ground component, making coverage more geographically limited, Inmarsat spokesman Chris McLoughlin said.
The new satellite, in contrast, will provide coverage to all 28 European Union countries pooling rights under a contract that handed Inmarsat some 30 megahertz of the S-band spectrum in 2009. That’s about six times what’s available to Gogo and compares with about 1 MHz in the Ku-band used by the Norwegian system, which taps spare satellite capacity, McLoughlin said.
Airline passengers could be billed directly by the provider for the new service, or charged by the airline which in turn would be expensed by the provider, according to Pearce.
Gogo charges passengers with a particular airline $5 for one hour’s connectivity and $16 for 24 hours, while offering a $60 fee for a month’s connection with any airline, the CEO said.
Inmarsat will share the expense of the satellite, to be called Europasat, with Hellas Sat SA, a Greek business sold last year to Arab Satellite Communications Organization or Arabsat. That will reduce its own costs from the manufacture and launch of the orbiter to $200 million, the statement said.
More than 300 ground stations may also be required to give Europe-wide coverage, Pearce said on the conference call.
BA, the U.K. unit of International Consolidated Airlines Group SA, already offers a limited text message, e-mail and Internet service on its business-class only Airbus Group NV A318 flights from London City airport to New York’s John F. Kennedy International airport via Ireland. The system relies on SwiftBroadband in the L-band part of the spectrum.
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