sferics vs Nexrad
Thomas, are you aware of any service which can be used for airborne
data - other than the full TCP/IP thing from say Iridium?
Inmarsat offers a service, I think. Connexion by Boeing works with
Inmarsat, too. And Iridium, as you say.
Article in todays Wall Street Journal.... Boeing is dumping the
Connexion business.
Boeing to Shutter Connexion
As Web Service Failed to Catch On
By J. LYNN LUNSFORD
August 18, 2006
In a setback for efforts to make Internet service widely available to
air travelers, Boeing Co. threw in the towel on its Connexion in-flight
Internet venture, saying it plans to shut down the unprofitable
six-year-old service by year's end.
Boeing acknowledged in June that it was in talks with
commercial-satellite operators and other potential suitors, but it also
hinted strongly that it might abandon the business altogether. The
satellite operators concluded that there was too much risk in buying
Connexion outright, a person familiar with the situation said.
In a statement, Boeing Chairman and Chief Executive Jim McNerney said:
"Regrettably, the market for this service has not materialized as had
been expected. We believe this decision best balances the long-term
interests of all parties with a stake in Connexion by Boeing."
Boeing's experience with Connexion underscores how difficult it has been
for companies to find a profitable way to keep passengers connected to
the ground, even though such ability would enable business travelers to
be more productive. Many airlines that might have been customers appear
to be leaning toward a much-cheaper technology with less capacity that
relies on traditional cellular networks, but even those fledgling
projects aren't without financial and technical challenges.
Boeing said it plans to take a charge of as much as $320 million, or 26
cents a share, to cover the costs of shutting the service. About $290
million of that will be taken in the third quarter and the balance in
the fourth. The company previously estimated that the potential charge
could be as much as $350 million. Beginning next year, the company said,
it expects a benefit of about 15 cents a share to reflect the
discontinued investment in Connexion.
The U.S. unit of Luxembourg's SES Global SA -- a supplier of satellite
capacity for Connexion -- confirmed that it had been in discussions with
Boeing about possibly taking over the service, but after months of
discussions no agreement was reached. Monica Morgan, a spokeswoman for
the unit, declined to elaborate.
Annual revenue for the unit from Boeing's onboard Internet service is
less than $25 million, according to industry officials. But Ms. Morgan
said SES also has booked about $300 million in its order backlog related
to Connexion. She said Boeing and SES are in talks about phasing out the
service, and what penalties Boeing will have to pay for canceling
long-term leases of satellite capacity. SES declined to discuss details
of those talks.
Boeing said it expected that most of the 560 employees of Connexion
would be moved to jobs within Boeing. It said it would work with
customers to begin an orderly shutdown of the service. In addition to a
handful of international airlines, Connexion is used on several U.S.
government planes, including Air Force One. A company spokesman said
that Boeing plans to honor its contracts with the government until a
solution can be worked out.
The service is available on select long-haul flights by a handful of
airlines, including Lufthansa, Japan Airlines, Singapore Airlines and
others. A Boeing spokesman said that even on those flights, the usage
rate among passengers was "in the low single digits." Boeing has never
said how much it invested in Connexion, but people familiar with the
venture put the figure at about $1 billion.
Mr. McNerney, who took over as chairman, president and chief executive
of Boeing just over a year ago, made it clear that he wasn't as enamored
as his predecessors were with Boeing's foray outside of its core
businesses. This year, Mr. McNerney gave the first outward signal that
changes were afoot when he removed the Connexion unit from reporting
directly to his office and put it under the oversight of the company's
director of mergers and acquisitions.
--Andy Pasztor contributed to this article.
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