FORTUNE Small Business

Wi-Fly

Boeing couldn't make a business out of in-flight Internet. AirCell bets it can.

Subscribe to Top Stories
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

wifly.03.jpg

Should you be doing a lot more business at 35,000 feet in 2008, you'll have Jack Blumenstein to thank. The CEO of Denver-based AirCell has inked deals with American Airlines (Charts, Fortune 500) and Virgin America to bring wireless Internet access to their aircraft, starting in the first half of 2008. "When people are in that cocoon, they're cut off," Blumenstein says. "This gives them control of their time." His consumer research says that 75% of passengers with laptops would use onboard Internet every time they fly. The airline pays $100,000 for the installation, the passenger pays $10 per flight, and Blumenstein thinks he can bring in $1 billion a year.

It's a proposition some giants of the industry couldn't make work. Connexion by Boeing, the joint wireless Internet venture between Boeing (Charts, Fortune 500), American, Delta (Charts, Fortune 500), and United, folded in 2006 after onboard equipment proved too expensive and heavy - as much as $800,000 and 1,000 pounds. Few passengers knew about the service, let alone wanted to fork out as much as $30 to get online. "Boeing failed to create demand," says Henry Harteveldt, a travel analyst at Forrester Research.

What makes AirCell different? The company's Internet equipment is significantly lighter (at 150 pounds) and less expensive than Boeing's technology. Unlike Connexion, which used satellites, AirCell's engineers use cellphone towers on the ground to create a roaming hot spot in the air. AirCell worked with equipment maker Qualcomm (Charts, Fortune 500) to fine-tune existing cellphone radios and mount them atop existing towers. Because there's nothing up there to get in the way of the signals, AirCell will use just 100 cell towers to cover the continental U.S.

The service required some serious political finagling on top of the technical know-how. AirCell needed a license from the U.S. Federal Communications Commission to operate in a key slice of air-to-ground spectrum - a slice that Verizon (Charts, Fortune 500)'s Airfone already uses for its phones on the seatbacks of most airplanes.

Blumenstein had to spend two years arguing with the FCC that most of Airfone's competitors had gone out of business, and the spectrum needed to be recalled for bigger and better broadband. (It worked, and AirCell won an auction for the spectrum in 2006 with a $31 million bid.)

There has been no Wi-Fi on international flights since Connexion failed. AirCell aims to expand into Mexico and Canada by 2009. It won't have the world to itself. Row 44, based in Westlake Village, Calif., will offer Wi-Fi using satellite technology on Alaska Airlines in spring 2008.  To top of page

Photo Galleries
Here are the 20 most ticketed cars in America The racy Subaru WRX tops the list, but some of the other ticket magnets will surprise you. More
Lamborghini to unveil 910 horsepower plug-in hybrid The Lamborghini Asterion concept car will have a V10 engine and three electric motors. More
The weapons of The Walking Dead Zombies are fiction, but the weapons on The Walking Dead are real. More
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.