In the race to corner the market for in-flight Internet, the friendly skies have become anything but. Rivals of British satellite operator Inmarsat are going to court in a bid to block the launch of its European Aviation Network.
The plaintiffs — which include electronics giant Panasonic as well as France’s Eutelsat and its US counterpart, Viasat — are seeking an injunction from the European Court of Justice as they race to develop their own in-flight connectivity system.
Inmarsat — which is working with Deutsche Telekom, France’s Thales and Finland’s Nokia — plans to complete the EAN by year’s end, and big clients have already signed up to use it, including Lufthansa and International Airlines Group, the holding company of British Airways and Iberia.
Carriers have long been looking to offset falling ticket prices with other revenue streams, such as in-flight shopping and onboard Wi-Fi, which could generate €1.20 to €3.60 ($1.44 to $4.31) in additional income per passenger, according to a study by consultant firm Roland Berger. Telecoms and satellite operators are eager to partner with those airlines to provide broadband to the 500 million people who fly in and out of European airports every year.
The EAN would offer in-flight Wi-Fi over water using satellites and over land with the help of 300 LTE towers. Planes must also be outfitted with a satellite-compatible antenna on the roof of the cabin as well as two smaller antennas for LTE reception. Installation, which could be completed as part of routine maintenance work, would cost hundreds of thousands of euros per plane, according to Lufthansa CEO Carsten Spohr.
However, Viasat and its partners accuse Inmarsat of violating rules associated with a years-old S-band license granted to the company by the European Commission. The plaintiffs in the current court battle say that part of the radio spectrum was never meant to facilitate in-flight connectivity.
A spokesman for Inmarsat said the lawsuit should have no effect on its plans to launch the EAN, arguing that the complaint’s only purpose is to undermine the company’s legitimate business interests, thereby strengthening its competitors’ position.
Plaintiff Eutelsat, meanwhile, contends that the case is an attempt to prevent a monopoly on the billion-euro market for in-flight Internet services. Lufthansa declined to comment, citing its client status.
To ensure operation of its EAN throughout Europe, Inmarsat must also have individual licenses from regulators at the national level. Germany’s Federal Network Agency held a public hearing on the S-band controversy last year but ultimately decided that Inmarsat could keep the license authorities it was granted in 2011.
The authority noted that the European Commission had yet to identify “legal or competition problems” with Inmarsat’s business model. German regulators could, however, be forced to revisit the issue based on the decision by the European Court of Justice, which has yet to set a date for the case.
Jens Koenen reported this story and covers the airline industry for Handelsblatt from Frankfurt. Amanda Price in New York City adapted this story to English for Handelsblatt Global. To contact the author: firstname.lastname@example.org