One of the most alluring challenges in the tech industry is figuring out how to transmit broadband internet to far-off places.
Facebook Inc., for example, has been testing wireless broadband transmissions from a solar-powered drone; Google parent Alphabet Inc. is trying to transmit high-speed internet through a network of weather balloons.
A pair of local companies is trying to tackle the problem with what they view as a more practical alternative. Air Lease Corp. of Century City, which sells and leases aircraft to third parties, partnered last month with startup Airborne Wireless Network of Simi Valley to pitch the idea of installing broadband transmitters in the bellies of commercial airliners.
The system would bounce internet broadband from ground stations to aircraft in flight, among those planes, and then back to internet users in remote areas that often lack coverage. Airborne Wireless would act as a wholesaler, auctioning off bandwidth to everyone from internet service providers to in-flight entertainment companies.
“We think the technology shows promise,” said John Plueger, Air Lease’s chief executive. “At peak periods, there are over 5,000 commercial airplanes flying over the continental USA. Those peak periods are also when you have peak voice and data demands.”
The marketing and sales partnership would see Airborne Wireless using Air Lease’s connections with plane manufacturers and commercial airlines to build out the broadcast network. Air Lease also plans to install the technology on its fleet of 250 planes, which is expected to increase to 600 by 2023. Plueger said the company has already broached the idea with French airplane manufacturer Airbus Group and plans to present it soon to Boeing Co.
“We have very close relationships with almost 200 airlines all over the world,” he said. “We routinely help preview technology.”
Digital divide
Airborne Wireless and Air Lease said the soaring demand for internet data, particularly in remote places such as oil rigs and cruise liners, bodes well for the network’s prospects.
Global data traffic to smartphones has grown by 1,800 percent over the past five years, according to Cisco Systems Inc. That number is projected to grow an additional 700 percent by 2021.
Airborne Wireless aims to begin testing a prototype system aboard two Boeing 737 airliners next month. Depending on the outcome, the company could begin a wider test of the system in the continental United States in a year, followed by a full rollout, said Jason de Mos, a former commercial pilot who serves as Airborne Wireless’ vice president of business development and aviation compliance.
“At the distance and ranges that we have, it doesn’t take too many aircraft to cover the U.S.,” said de Mos, claiming that it would take about 2,000 aircraft with transmitters to provide 24-7 coverage over the continental U.S. “We can provide a better system for a fraction of the cost of what (satellite operators) are trying to accomplish.”
De Mos’ father, Marius de Mos, is the company’s vice president of technical affairs and development. He previously helped develop the world’s first wireless airborne public telephone.
Moving target?
The inventor of the airliner-based wireless network, Joseph Lai, was granted a patent for the technology on Sept. 4, 2001. But the Sept. 11 attacks halted all of the concept’s momentum.
“The timing wasn’t right,” said Jason de Mos.
In August, Airborne Wireless, which launched in its current incarnation last year, purchased the patent from Simi Valley’s Apceptive Inc. in exchange for $40,000 worth of the company’s shares, according to filings with the Securities and Exchange Commission. Airborne Wireless shares were trading at $2.49 over the counter on Feb. 9.
While it carried only $2,000 in debt as of Nov. 30, the seven-employee company has not yet generated any revenue. Airborne Wireless has raised about $2 million by selling stock, according to de Mos. It had about $1.3 million in cash on hand as of Nov. 30. The business is led by Chief Executive J. Edward Daniels, who also serves as a managing director at real estate investment firm Cal West Partners of Agoura Hills, according to regulatory filings.
Air Lease Chairman Steven Udvar-Hazy ranked No. 11 on the Business Journal’s 2016 list of Wealthiest Angelenos with a net worth of $4.7 billion. The aircraft firm agreed to take an undisclosed equity stake in Airborne Wireless as part of the partnership. Airborne Wireless has struck several similar agreements, according to financial filings, in an apparent attempt to keep overhead costs low.
But building a broadband transmission network of such magnitude won’t stay cheap for long. Airborne Wireless projected in a 10-K filing on Aug. 30 that it would need $10.5 million to sustain its operations for the following 12 months, and additional funding beyond that, said de Mos in an email.
“We will either raise the funds through partnerships with larger companies or we are contemplating a secondary IPO,” he said.
Airborne Wireless has noted in its SEC filings that it faces competition from low-Earth satellite operators such as Iridium Communications Inc. of Washington, D.C. Its satellite constellation, consisting of 66 spacecraft, is the largest such broadcast system circling the planet.
Andrew DeGasperi, an analyst with Macquarie Group of New York, said Iridium already has a huge head start in the sector.
“I don’t see why (Airborne Wireless) would want to compete with that,” he said. “It’s tough for me to say why this a huge opportunity.”
De Mos said an aircraft-based broadband network holds a number of advantages over rival satellite operators, including the ability to swap in upgraded transmitters in about six hours.
“You have companies out there that are trying to launch these satellite networks that have quite a few issues, including cost. And once you launch a satellite you can’t service it,” said de Mos. “Our network is already flying.”
