Gogo's stock crashes after AT&T unveils in-flight LTE network plans

Gogo still believes it will have a global network for planes, while AT&T is focusing on continental U.S. by end of 2015

In-flight Wi-Fi provider Gogo's stock took a drubbing after AT&T on Monday announced plans for a new air-to-ground LTE service that will surely compete against Gogo, at least in the continental U.S.

Gogo's stock plummeted by as much as 18.8% overnight to $14.92 per share before the Nasdaq market opened on Tuesday. The stock then recovered slightly to $15.20 at Tuesday's opening, then fell back to $14.21 at 10:32 a.m. ET, a 22.68% decline from Monday. Gogo's stock ended the trading day down by 28.61% to $13.12.

AT&T didn't offer many technical details on how it plans to build its network by the end of 2015, but said in a statement that it "sees an opportunity to deliver an innovative and high-performing in-flight connectivity and entertainment service, and will build on existing relationships within the aviation industry to deliver a better customer experience than what is available from others today."

While AT&T called its proposed network "innovative" it also said it doesn't expect additional capital expenditures for the initiative to be material.

AT&T didn't describe how the network will work and how much it will rely upon the terrestrial LTE network it has rolled out across the U.S.

Jack Gold, an analyst at J. Gold Associates, predicted that AT&T won't likely rely on its existing LTE network for the air-to-ground capability.

"To do this correctly, as Gogo and others have done, it requires specific base stations on the ground that are geared towards wide-area coverage for the airplanes and a dedicated frequency for the effort that doesn't directly interfere with terrestrial LTE," Gold said. AT&T said it already has the spectrum it needs for the new service, but didn't elaborate.

Gold also said AT&T won't need to make massive expenditures -- the biggest cost will probably come from outfitting and retrofitting airplanes.

It has cost up to $1 million per plane for Gogo's service, Gold said.

Gogo is now rolled out to 2,000 planes flown by Delta Air Lines, American Airlines, Virgin America, United and US Airways, among others, as well as more than 6,000 business aircraft, according to Gogo's Web site. Gogo first debuted on commercial aircraft in 2008 and is the global leader in inflight connectivity.

In a statement, a spokesman for Gogo said AT&T's announcement validates the "great business that Gogo has created." He emphasized that to compete in the in-flight wireless business, a company needs to be global, which is a focus of Gogo.

Gogo is also deploying two new technologies -- GTO (Ground to Orbit) and 2Ku (which stands for two Ku antennas) that bring a wireless signal to each plane that is faster than 70 Mbps, and will increase to 100 Mbps as newer satellite technologies are rolled out, the spokesman said.

Those speeds are 20 times faster than Gogo's original technology.

GTO is a hybrid satellite and cellular technology that is U.S. based, while 2Ku has global coverage. In an April 8 release, Gogo described 2Ku as offering two low-profile, high-efficiency Ku-band satellite antennas, which are only 4.5-inches tall to reduce drag on an aircraft.

Japan Airlines will trial the technology, which is expected to roll out in mid-2015. The Ku-band is a microwave frequency band used in satellite and broadcast communications, working at from 12 GHz to 14 GHz frequencies.

Questions persist about how well AT&T can build an in-flight LTE network to keep communications consistent to airborne cockpits as well as to onboard Wi-Fi routers, especially during storms. AT&T cited a survey from Honeywell which found that today's in-flight Wi-Fi frustrates nine of 10 users worldwide, with most citing inconsistent or slow connections.

AT&T will work with Honeywell in the in-flight network deployment.

"Wi-Fi services on planes to-day have been very poor quality, unreliable and very frustrating," said Jeff Kagan, an independent wireless analyst. "If AT&T's service works better than what we have now, this would be a very big deal for countless fliers."

The expense of in-flight Wi-Fi and "sketchy connectivity have kept it in the niche category for most flights, so no doubt AT&T thinks it's time to bring in-flight Wi-Fi to the masses," Gold said.

Whether AT&T can offer a superior service at an affordable price is the ultimate question, Gold said.

Perhaps airlines could see an incentive to working with AT&T, through the use of the air-to-ground LTE for monitoring the plane's operations and communicating with the cockpit, other analysts said. AT&T might be able to reduce its costs for Wi-Fi to passengers if it can charge the airlines enough for the cockpit communications and operations updates provided in real-time over the LTE network.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

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