FCC spectrum auction for in-flight services takes off

An in-flight satellite TV provider owned by JetBlue Airways Corp. and a bidding company affiliated with aircraft communications company AirCell Inc. have won an auction for spectrum that could be used to provide Wi-Fi Internet access on U.S. airliners.

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The U.S. Federal Communications Commission (FCC) is selling licenses for 4MHz of spectrum around 800MHz that Verizon Communications Inc. now uses for its Airfone service, which uses narrowband phones in seatbacks. The voice-only service has not been widely used, and in 2004 the FCC gave Verizon a non-renewable five-year license and moved to open up the air-to-ground radio frequencies.

AC BidCo LLC, in New York, won the auction for 3MHz of the spectrum with a bid of US$31.3 million. The company is affiliated with AirCell Inc., which makes communications systems for airliners as well as business, private and government aircraft. If AC's full application for the frequencies is approved and it is granted the license, Verizon will have two years from that time to vacate the spectrum, according an FCC spokeswoman. The contact person for AC BidCo's bid declined to comment.

LiveTV LLC, a wholly owned subsidiary of upstart U.S. airline JetBlue, made the winning $7 million bid for 1MHz of the spectrum. Verizon is allowed to keep using that part of the band for Airfone until its license expires in 2010. LiveTV provides live satellite TV and XM Satellite Radio Inc. channels on about 300 aircraft used by JetBlue and other airlines. The company bid for the spectrum with an eye to offering unspecified future services, said Jeffrey Frisco, vice president of engineering and products at LiveTV.

The 4MHz of spectrum is intended as an air-to-ground "backhaul" for wireless services accessed by multiple devices on a plane. Those services could include broadband Internet access and other data services as well as voice, the agency said last year.

The winning bids in the auction totaled less than $40 million and Verizon dropped out early in the bidding. Interest was probably dampened by uncertainty over whether the FCC would allow the spectrum to be used for backhaul of cell phone calls, said Gartner Inc. analyst Tole Hart. New technologies offer a way around some of the technical problems with cell phone use on planes, but concerns about disturbing passengers have put a chill on hopes that it will be allowed.

Fliers probably will get in-flight Wi-Fi once the new license holders come on board, and they may be allowed to make calls using VOIP (voice over Internet Protocol) on a notebook, Hart said. Airlines and regulators may see that as a lesser threat to in-flight peace because fewer passengers would use VOIP than their cell phones, he said.

"If you allow cell phones in, then it's like an avalanche," Hart said.

Service providers using the air-to-ground spectrum band may face competition from companies using satellite links, which are currently used for the Wi-Fi service offered by Connexion by Boeing outside the U.S.