Stagnant usage of in-flight WiFi could soon be disrupted by super-fast satellite connections.
In-flight WiFi is basically the worst. To get online at all, you usually have to run the gauntlet of a complicated transaction page, typing in your credit card number or performing some kind of log-in. Then you have to fork over three or four coffees’ worth of money just so that you can get speeds that rival your parents’ dial-up Internet.
With this kind of middling experience, it’s no surprise more people aren’t flocking to in-flight WiFi services like Gogo. According to company data published by Quartz, barely 7 percent of passengers on flights where Gogo is offered actually buy it. That number hasn’t changed much since 2011.
But as you can see with the line in blue, according to Quartz, Gogo’s revenues have been rising in recent years. Some of this may be attributable to Gogo increasing some of its prices. Gogo is also experimenting with variable pricingin an attempt to see how much users will pay for 30 minutes, an hour, or some other amount of Internet access.
The fact that Gogo’s “take rate” has been more or less stable for years represents a conundrum. Although the company may be growing its revenues, it’s having trouble convincing more people to sign up. At best, what this means is that its existing customer base is buying longer and longer access periods in order to surf more. At worst, it suggests Gogo is wringing its growth out of the same people by jacking up prices.
But soon in-flight WiFi will be reshaped by some of the same trends affecting Internet connectivity on the ground. People are shifting away from traditional, fixed broadband connections and toward wireless connectionsthat allow them to surf the Web outside the home and office on their mobile devices. Cisco predicts that by 2019, Americans will consume 10 times more mobile data than they did last year.
Those forecasts will undoubtedly affect how the industry provides in-flight WiFi. Upgraded communications satellites will soon allow not just faster airborne Internet, but also fancy video services such as live sports, music streaming and even in-flight mobile advertising, providing what the Wall Street Journal reports will be a “near-home type experience.” New satellite technology promises speeds of 50 megabits per second, up from the 500 kilobits per second on older satellites, according to the Journal.
The big question is whether all of these new features will also come with lower prices for consumers, or if carriers like Gogo will charge premium rates for such access.
A big determining factor could be competition. In the air, there just isn’t much right now. At the moment, Gogo serves some 70 percent of all Internet-enabled flights, according to Quartz. The other major provider in the United States is Row 44, which serves passengers on Southwest Airlines. But Panasonic is jumping into the fray, saying it’ll have 14,000 planes equipped to handle in-flight WiFi by 2025, according to the Wall Street Journal.
The problem is reminiscent of what’s happening on the ground. It’s expensiveto set up all the hardware needed to provide Internet. But what will likely keep pushing the in-flight WiFi industry forward is the knowledge that consumers’ expectations are constantly rising. They want the same experience that they get in their home, an experience that’s enabled by ground-based Internet providers and content services. And if the in-flight WiFi companies can’t figure out how to give it to them — well, you need only look at that Quartz chart to predict how that’ll end.