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Sky-High Price Limits In-Flight Broadband Service

Wi-Fi connectivity deployments in airplanes have grown rapidly from a couple dozen in 2008 to an expected 2,000 planes by end of year 2010. While Internet access availability is progressing, paid usage generated from in-flight broadband service has been extremely low, according to the latest market study by In-Stat.

In-Stat believes that in-flight broadband is now at the stage of market development where it must prove its sustainability through the ability to generate meaningful revenues. However, the current high price of services has limited the prospects of further adoption. That scenario may be subject to change.

"Revenues from in-flight broadband will reach $95 million in 2010, up from just under $7 million in 2009," according to Frank Dickson, VP Research at In-Stat. "However, the fee per connect is expected to deteriorate as lower connect fees are negotiated for roaming and billing partner subscribers."

Data points that impact revenue include:

- Connect fees are projected to decline 24 percent from 2010 to 2014.
- In-Flight broadband connects will exceed 76 million in 2012.

In an effort to bolster Internet revenues, providers are beginning to explore the opportunity to provide video, Direct Broadcast Satellite (DBS) and Internet-based video. DBS revenues promise to be over 3x the size of Internet video in 2014.

Aircell is currently the in-flight broadband provider market leader with announced airline partners including Air Canada, Air Tran, Alaska Airways, American Airlines, Continental Airways, Delta Airway, Frontier Airways, United Airlines, US Airways, and Virgin America.

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