AT&T has reversed itself on in-flight Wi-Fi, dropping a plan announced just months ago that would have seen the carrier launch services on airliners next year.
The entry of a telecommunications giant like AT&T might have reshaped the in-flight wireless business, which so far has been served mostly by specialist companies. While the number of airlines and planes with Wi-Fi has steadily grown over the past few years, the speeds that in-flight systems can deliver have lagged behind what many consumers are used to on the ground. All passengers' connections have to go through a relatively slow satellite or air-to-ground link in order to reach the Internet.
In April, AT&T said it would offer Wi-Fi services on commercial aircraft with an air-to-ground LTE network as backhaul. The carrier didn't say how fast the service would be but said it could be used for Web browsing, social networking, email and business productivity. The system would have used radio spectrum that AT&T already owns. AT&T's announcement sent shockwaves through the in-flight Wi-Fi industry at the time, briefly pushing down shares of airborne Wi-Fi specialist Gogo.
Now the telecommunications giant has decided not to make the investment.
AT&T's announcement on Monday came just days after the company announced it would acquire Mexican mobile operator Iusacell for US$2.5 billion. It is also seeking government approvals to acquire satellite TV operator DirecTV.
"Last week we announced our intent to acquire Iusacell, a wireless company in Mexico. At the same time, and after a thorough review of our investment portfolio, the company decided to no longer pursue entry into the in-flight connectivity industry. We are focusing our capital on transformative investments, such as our Iusacell and DIRECTV deals," an AT&T representative said in a statement.
On Monday, Gogo's stock rose by $1.76 to $18.40, a gain of more than 10 percent. Gogo provides in-flight Wi-Fi on Delta Air Lines, American Airlines, Virgin America, United Airlines and other carriers. The company is developing technology it says will boost a plane's shared Internet link to 70M bps (bits per second) and later 100M bps.