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Wi-Fi on airplanes isn't always great.

For the first flight was with American Airlines. I paid $17 for internet, and most of the time it didn't work. The second flight I was with Southwest, I paid $8 for internet, and it pretty much ran the entire time.

Just took 2 Delta flights. The first flight had really good wifi and it was free. The second flight, the wifi was not very good. It also wasn't free. It was

$9.95.

I just got off a United flight, SFO to Newark, and the wifi was okay. It was pretty good. It worked well. Speeds were fine. I was actually able to watch YouTube.

So I just took a flight from Newark to Milwaukee on United. I paid $8 and the internet basically didn't work. I might even reach

out to United for a refund because the internet was just so bad on that flight.

The demands of in-flight connectivity by the passengers have grown rapidly, way faster than any of the providers could keep up with. We are chasing that at-home experience in the sky.

We have to coordinate hitting a satellite in space that's 22, 000 miles away when the aircraft moving on at 30, 000 feet, 500 miles an hour. So the coordination of those 2 things is obviously super complex.

American United and other U.S. Airlines have been updating their fleets to provide better Wi-Fi. Delta has spent over $1 billion on its planes to bring free Wi-Fi to its customers.

None of this is cheap to deliver into the airplanes, and part of it is just general ancillary revenue, but part of that is they really do believe that there's a better opportunity to make passengers happier and hope that they come back.

It's been a disconnected environment for so long. How can this come up? You know, in our homes are getting more connected. Even our bodies are getting more connected with watches. Cars are being connected.

You know, why can't the airplane?

CNBC got an inside look at how Delta is updating over 1, 200 planes to improve Wi-Fi and why it's so difficult to get good Wi-Fi at 30, 000 feet. Airplane Wi-Fi has been around for decades.

Our breakthrough and our really start there was in the late 90s with a company called Connection by Boeing. It was an internet provided by Boeing as an initiative and we are a technology provider.

It started with a long time ago with a satellite system that lasted very short amount of time and it was quickly became too expensive and scuttled. From there, we went to cellular technology. That was the original GoGo air to ground product that survived for many, many years. And it's still in service on some smaller regional jets. It's really been the past decade that passenger demand for internet on airplanes and the ability to deliver it has come about.

And so that was, you know, started with the air to ground systems that evolved into the satellite systems.

The downside with cellular towers is, you know, line of sight. You can't see it when it's on the ground, so it doesn't work at the gate. And as you get out of view of cell towers like over water, over the ocean, just in the remote areas, it doesn't work at all. Satellites give you a broader view of the aircraft, less obstructions because it's looking down at the top of the airplane. You don't have to worry about any of the line of sight issues.

Because of this, more airlines are switching to satellite-based internet.

It's probably only the last 2 years or so that there's been enough capacity available that many airlines could support the large volume of traffic that's being pushed across the satellite links, which isn't to say they haven't all tried, but we're finally getting to the point now where there's enough satellites in the sky to be able to support that.

Here's how it works. After passengers board a plane, devices connect to wireless access points, which are connected to a server or modem underneath where the passengers sit. This modem is connected to the antenna on top of the aircraft, which then talks to a satellite, which talks to ground stations to provide the internet.

Each 1 of those spots has a bottleneck, and the satellite is really defining the defining characteristic of the entire network.

The aircraft technology has gotten a lot better. When you're trying to connect with a satellite 22, 000 miles away with a signal this width of a pencil, the accuracy of those technologies have to be really, really finite. So the new antennas that we're putting on aircraft now have a huge amount of fidelity for closing those connections.

The satellite internet industry was a $7.9 billion market in 2022. And there are several big players in the space.

Viasat is quickly growing and is about to overtake the top role. Panasonic Avionics is currently holding that top spot. Inmarsat, Intelsat, and then, of course, SpaceX and Starlink coming on strong as well.

Viasat provides satellite Internet service for homes, defense communications and airlines.

Picking the right provider is a really expensive gamble in a lot of ways for the airlines. They have to look at what services are available today, what capacity is available today, and then also figure out where the system is going to be in 235, maybe even 10 years, depending on what that contract looks like. Engines full power and liftoff of Biosat-3. Go Biosat, go Falcon Heavy.

Biosat recently launched the first satellite of 3 to expand its global coverage. These satellites orbit the Earth from space. 1 satellite can support coverage for an entire continent.

And 1 of the features of that satellite, the new satellite, is expanded coverage. So right now our coverage for Viasat is within, say, the continent of the United States, Mexico, Caribbean, and then parts of Brazil, and then North Atlantic and Canada, over to Europe. But if you were to, say, fly from LA to Hawaii, all of a sudden you cut out because our satellites weren't covering Hawaii with this new satellite wheel. And so often when it doesn't work, it's not because of some other technical issue, it's because likely we just don't have the satellite coverage up yet, which we're quickly expanding.

Demand for Wi-Fi has grown tremendously over the past 10 years due to the growth of smartphones and users expecting access to the Internet to be available everywhere, like airplanes, making capacity and bandwidth increasingly important. The newest satellite, Viasat-3, has speeds of up to 1 terabytes per second, compared to 260 gigabytes per second in Viasat-2.

Busy airports like Atlanta, Dallas, O'Hare, you know, the New York area, you get a lot of planes on the ground at 1 time or in the near airspace. So you have a high concentration of aircraft and users and demand and often systems just don't have enough spot capacity. They just don't have enough to serve that demand. So it looks like it doesn't work. It's not really broken.

It's working as designed. They just ran out of bandwidth.

For airlines, that demand went from supplying Wi-Fi for a few business customers checking some emails to an entire plane, sometimes hundreds of people trying to stream movies.

You get transcon flights where take rates can be as much as 60, 70 percent. I was on a flight this week where 118 passengers on board had 166 devices connected.

It's absolutely a challenge. We wanted to deliver unfettered internet to our customers, meaning if you wanted to watch Netflix, you can. If you wanted to go to work, you could. If you want to scroll social media, you have the capacity to do that, which means we really need to be able to provision enough capacity in an aircraft to let anybody do whatever they want. So being able to deliver that much power to a plane has its own challenges.

When we first came in, Wi-Fi, I'll say, internet connectivity and IFE, in-flight entertainment, were kind of viewed as 2 separate systems. I think we knew it was happening in the market was everyone's, everyone's was bringing content on board. It wasn't like bring your own device. It's not like bring your own subscription. So the Internet has become synonymous with entertainment.

The need for more bandwidth on board also means aircraft, especially older planes in the fleet, need to be upgraded. New planes like Delta's 737 MAX 10s will come with Viasat already installed. When it comes to using Wi-Fi on a plane, it can vary widely depending on the route, the type and age of the aircraft. Most airlines now offer free messaging, but when it comes to Wi-Fi, passengers can pay a range of prices. In our testing of various US airlines, we paid anywhere from nothing to up to $29 per flight.

A Few airlines like Delta and JetBlue offer Wi-Fi for free, and some don't offer it at all.

The airlines that have chosen to invest in Wi-Fi are doing it, and they're doing it pretty aggressively. You do have the other airlines, Frontier, for example, who are an allegiant. They don't want Wi-Fi on their planes right now. They're not doing it.

We started way back in 2019 with a team of industry experts that we hired on specifically to go test and theorize the capabilities of all these satellite networks and providers on the airframe to find eventually bias that they can deliver this experience. And we did that progressively from 2019 through

2021, 2022,

as we led up to the confidence that we had to launch free Wi-Fi in February.

Probably our fastest growing business line is the commercial aviation segment over the past, you know, say several, 5 years.

We visited Delta's Tech Ops Center in Atlanta to get a behind-the-scenes look at a 737's Wi-Fi system being upgraded.

Teams already opened up the aircraft to start running the wires from the antenna, which will be around the middle of the aircraft, to the front where our server and modem is going to be, and then back through all the wireless access points that are gonna distribute wifi to each of our passengers. As you transition through the plane, let's say you were in first class and you wanted to go to the lab in the middle, you would switch from the first wireless access point to the second to the third seamlessly as you transition from front to back.

Delta's goal is to retrofit its entire fleet by the end of 2024 and are about halfway there. The airline believes by offering free wifi, it will acquire more loyal customers. And in the first month, it saw 100, 000 new SkyMiles members.

There has been a shift of late away from the ancillary revenue approach and more towards the whether it's sort of Delta's decision that they think they can make more money with SkyMiles members and convincing everybody to join the program and having happy customers.

JetBlue has offered free Wi-Fi for years.

Since launching with JetBlue in December of 2013, we've now added American Airlines, United Airlines, Delta and Southwest Airlines, and most recently Porter and Breeze, 2 smaller carriers that are up and coming.

Hawaiian expects to offer free Wi-Fi provided by SpaceX's Starlink on certain aircraft early next year. Outside the U.S., Singapore Airlines announced free Wi-Fi starting on July 1st, 2023.

They all say, we think that the passengers will be happier and they'll probably buy another ticket next time. And we just hope that we can get a little more revenue from them on the next ticket in the fair, rather than trying to sort of eke it out on as an ancillary separate line item. JetBlue has always said it's sort of part of their marketing costs. They've been free since they launched, so they know better than everyone. But I've yet to see an airline say that with the cost of the install and ongoing sort of bandwidth charges, it's a profitable endeavor.

The overall airplane Wi-Fi experience still greatly varies on availability and dependability.

The regional jet world is definitely the last frontier for getting decent performance. The ones that are online are still generally running with the air to ground system that just doesn't have enough spectrum available. That's going to change starting early next year.

But the investment airlines like Delta are putting into its Wi-Fi offering will only ramp up competition with rivals.

We've been really passionate about free Wi-Fi for a long time now, but the technology really hasn't been there with the capacity in space and the aircraft hardware to really deliver that experience at scale. Now we're there. And more and more satellites are being put into orbit every day. It's all the time now. And that's just going to continually get better over time.

The bad news is that's still probably not that great. And There's a long way to go. The good news is that with more satellites launching to support the systems, we're starting to get to the point where the systems can handle the amount of demand that's being placed on them.

That's probably the hardest thing for us to do is to get people to trust that it works online and you can depend on it. BISAD 3, all the things we've been doing and working, it's the technology and the hard work behind it that makes it reliable, makes it consistent, and makes it have all the capacity. And then the satellite itself is fundamentally behind, that's the bottleneck. And if you solve that problem and you have enough capacity where there's demand, you're gonna make the system work. And I think everyone's gonna be joyed instead of frustrated.

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