Companies such as Connexion by Boeing, OnAir (which has Boeing’s main competitor, Airbus, as a shareholder) and Arinc (which has launched the AeroMobile brand in association with Norwegian telco Telenor) are at different stages of offering WiFi access on planes, installing access points (APs) on the aircraft and using satellite for the air-to-ground leg of the connection. These services, of which only Connexion’s is already in operation on a number of airlines, offer significantly cheaper connectivity than the erstwhile GSM-over-satellite: $30 for long-haul flights such as London to Los Angeles, compared to around $10 a minute for cellular calls.

Specifically in North America, however, both voice and data services in the air look set to be cheaper still. A specialized networking company called AirCell has been installing special upturned antennas on an existing 125 cellular base stations across the US, with which it plans to backhaul data and voice over WiFi connections, passing them on into the PSTN network, without the need of a satellite. Today we have a 1G analog network offering 9.6kbps, which can handle email and FAX, and shortly we’ll be upgrading to broadband, said Jack Blumenstein, CEO of the Louisville, Coloroado-based company.

The first generation network was put up in the late nineties to serve the private aviation market, i.e. corporate jets, and used dedicated phones for voice communications, Blumenstein explained. Now the model is changing from using a dedicated onboard handset to your own device, he went on.

The regulatory framework for direct air-to-ground services is still being finalized by the FCC, with trial flights expected to take place in July, such that companies will get the final go-ahead to implement the new network in the first quarter of 2006, in time for services to debut in the third quarter of next year. It’ll be for 3G cellular phones, i.e. 3Mbps to the aircraft, resembling DSL and CATV speeds. Within the plane, he went on, the infrastructure will support EV-DO in a first rev, then GPRS/UMTS and WiFi in subsequent ones.

The infrastructure on the plane, he explained, will consist of a pico-cell and hotspot environment for mobile and WiFi, forwarding data to a front-end converter which will send an IP signal over the 3Mb pipe to the antennas on the ground.

The frequency band in which the service will operate is the 800MHz range, which the FCC is repurposing for direct air-to-ground, a situation Europe’s multi-country, multi-regulator scenario makes impossible. In other large landmasses where it might be appropriate, such as Australasia or South America, the land infrastructure simply doesn’t support the antenna network AirCell is envisioning.

The spectrum will be licensed, and as such a licensing process will need to go before any actual service(s) get underway. In any case, AirCell intends to be a participant: there may be just one licensee and that may be us, in which case there will a legal requirement to resell; there may be two licensees, one of which being us, or we may be beaten at auction and not secure a license, in which case we could look at a reseller deal, Blumenstein continued.

In any case, direct air-to-ground services look like being cheaper than those going over satellite. OnAir and AeroMobile are talking 2.50 euros-3.00 euros per minute, which is better than current rates but still expensive. We’re targeting sub-$1.00 a minute on the voice side, while our data sessions should be around $10.00 a session, compared to a probable $20-$25 from OnAir, said the AirCell CEO.

The two services are clearly not in competition: AirCell’s will be US- or, at best, North America-specific, whereas the satellite-based services can clearly extend across the globe. Indeed, Blumenstein confided, there is a possibility that OnAir could use the AirCell network for the North American portion of long-haul flights, then switch to satellite when necessary. This would lower its costs for that portion, enabling either more competitive pricing or fatter margins, depending on the competitive environment when it comes to market, which is also set for the second half of 2006.