Press release
Shutdown of Connexion-by-Boeing Service Predicted; Latest in a
Long Line of Failed Aeronautical Passenger Communications
Businesses
MENLO PARK, Calif., June 28 /PRNewswire/ -- In a briefing note to
clients, Telecom, Media and Finance Associates, Inc. (TMF Associates),
the specialist Mobile Satellite Services consulting firm, predicts that it will
not be possible to make a commercial success of the in-flight Internet
service offered by Connexion-by-Boeing on airlines such as Lufthansa
and Singapore Airlines, and that the service will ultimately be shut down.

Tim Farrar, author of the research, commented, "The Connexion-by-
Boeing service has only attracted just over 1000 users per day in total
across the 125 commercial aircraft on which it is installed, but by our
estimate it costs as much as $150M per year to run. Even if usage of the
service grows further, at least 1000 aircraft would need to be fitted out
for the business just to break even. The service has won plaudits from
users, but in our view there simply isn't enough demand from passengers
to make Connexion a commercial success. There is a long history of
failures in aeronautical passenger communications businesses, and the
recently announced shutdown of Verizon Airfone is just the latest example.
Satellite phones have been installed on commercial aircraft for over a
decade, but still attract less than five minutes of usage per aircraft per day
on average.

"It is conceivable that the Connexion network could be converted to
military and government uses, but we do not believe that the commercial
passenger service can realistically be maintained. Airlines using the service
already incur a substantial penalty in fuel costs for the weight and drag of
the Connexion equipment and are unlikely to subsidize the service still
further. While some of these limitations do not apply to new proposed
in-flight cell phone services, we believe backers of those systems will
need to re-evaluate whether their business projections are simply too
optimistic. Even when surveys indicate that passengers are potentially
interested in new aeronautical communications services, the reality is that
relatively few of them tend to use these services in practice."

To download copies of the briefing note please visit
http://www.tmfassociates.com/articles.

The briefing note forms part of TMF Associates' newly launched
information service on the Mobile Satellite Services (MSS) sector. More
details are available at
http://www.tmfassociates.com/reports.

TMF Associates, headquartered in Menlo Park, California, is a leading
consulting and research firm providing business and technical analysis in
satellite, wireless and broadband telecommunications. The firm specializes
in Mobile Satellite Services (MSS), including Ancillary Terrestrial
Component (ATC) technology, and works with operators, investors and
equipment manufacturers to analyze complex market issues. For additional
information, please visit
http://www.tmfassociates.com.

CONTACT:  Tim Farrar, President
Telecom, Media and Finance Associates, Inc.
650-839-0376 or tim.farrar@tmfassociates.com
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