Apparently, Boeing is shutting down their in-flight Internet Service due to lack of a market. Astute readers may remember a cool post about this subject from a few months ago when I was returning from RIPE in Turkey. It was fun to watch the updates to the global routing table cascade across the Internet as my plane crossed the Atlantic.
At the time, I was impressed with the service and the value. It was a great way to get a bunch of work (and a blog posting) done while stuck on an airplane. According to Boeing, I guess not enough people agreed. But I think there were ways that this service could have succeeded.
This may have been a fairly classic channel problem. Boeing makes planes, services planes and sells them to airlines. Airlines fly planes. It was never clear to me why Boeing was the right company to offer the Internet service on planes. Obviously, the infrastructure to offer the service would be more cost-effective when spread among several airlines. That would also have the effect of building a market.
As I pointed out previously: in order to build a market for this sort of service you have to offer two things consistently: power and connectivity on every flight a business person is likely to get on. Once there exists the general assumption that power for laptops and connectivity via wireless is available on every flight on an airline, people will begin to rely on it and use it in greater numbers. It's possible that the demand would still not have materialized, but given the way many airlines rolled out this service (haphazardly) we will never know.
A really interesting suggestion was made to me recently by Mike Hughes, the Chief Technology Officer of LINX, the member-owned London Internet Exchange: Why not run Connexion as a member-owned coop just as the LINX and AMS-IX Internet exchanges are run? The airlines could contribute capital costs (to purchase the defunct service from Boeing and capitalize some operations). And a member-owned cooperative could run it.
It's clear that this is not a strict competitive differentiator among airlines: no one airline could possibly afford to operate the service by themselves. It's also clear that this venture is not obviously profitable. So why not use it to drive more volume of travel in general, and improve productivity of travellers?
Comments
Being the insane person who suggested the co-op idea, I just thought I'd like to follow up with a couple of thoughts...
Firstly, CBB, as it originally stood, was seriously overengineered:
Who needs 9 Cat35xx in a plane?
Why flood wire a 747-400 with CAT5 to every seat, yet not put laptop power in every seat as well so people can use it for the whole flight?
Why flood wire at all? Why not just use WiFi?
Almost all portable devices these days have WiFi. If anyone cares about the security of what they are doing, they'll end-to-end encrypt it, right?
If someone on the plane wants to use the service and doesn't have WiFi, sell them a card from the inflight shopping cart!
My point is that even despite certifications and making things friendly for the aircraft environment, things could have been done more "lightweight".
I found myself baffled why CBB didn't go onto United's p.s. Transcon service (JFK-SFO/LAX) when it was relaunched? These planes were provided with power in every seat as part of the refit, the service was assigned a small dedicated fleet of aircraft (keeping the lid on capex), and has ~5hr flight times on mostly daylight sectors, entirely within the CBB service footprint. Oh, and being a US Domestic flight, had a primary clientele of "Crackberry-obsessed" email addicts. You know, the ones who twitch for the phone the moment the wheels kiss the runway. It was the perfect application for CBB.
It seemed like the only stumbling block was that UAL were in Ch.11 at the time. But they managed to do other deals while in Ch.11. So what stood in the way? Existing marketing deals with VZ? (Hey, couldn't they just get the judge to cancel them while in Ch.11? Seemed to work okay for cancelling aircraft leases.) Lacklustre marketing? Poor management? Corporate big-headedness? Maybe we'll never know.
Finally, Boeing are talking over $320m in wind-up costs for CBB. How many people actually worked for CBB? That's some redundancy money and contract penalties being paid out there... someone has to have been riding this like a gravy plane.
Posted by: Mike Hughes | August 18, 2006 12:53 PM