Row 44 Inc., a Westlake Village startup that has long strived to provide high-speed wireless Internet to commercial airline passengers, went through years of tests and trials but still trailed its main competitor by a wide margin.
However, the 20-employee company made a game-changing play recently when Southwest Airlines Co., one of the largest domestic airlines, announced Aug. 21 that it planned to make Row 44 the exclusive provider of Wi-Fi for its fleet of more than 530 planes. Southwest had been testing Row 44's Internet devices on four of its Boeing 737 aircraft since March.
"It's a huge deal for Row 44," said Michel Merluzeau, who specializes in aerospace at G2 Global Solutions in Seattle, a research and consulting firm. "When you get the vote of approval of an organization like Southwest, you get a vindication of your technology as well as your production and marketing strategy. It's like earning a triple-A rating."
Southwest and Row 44 are negotiating final terms of the deal, said John Guidon, Row 44's chief executive. Until now, the only other deal Row 44 has inked was with Norwegian Air Shuttle Sweden Ab, a low-cost European carrier with a fleet of about 40 planes. Those devices will be installed next year.
"Needless to say, we're very pleased," Guidon said.
Row 44 plans to begin installing its devices on Southwest planes next year. Financial terms of the deal were not disclosed. The average cost of buying and installing one of Row 44's Internet devices is about $200,000 per plane. Given Southwest's fleet, that could translate into more than $100 million for Row 44, although that's assuming the company receives full price.
Row 44's technology makes the cabin of a commercial airplane a wireless hotspot, where passengers can use the Internet much as they would in any other Wi-Fi environment. The company builds and installs a server and modem that weigh about 175 pounds and are the size of four small pizza boxes stacked up. They are concealed in the cabin's ceiling and can pick up and send data via satellite. The satellite signals are transmitted by an 8-inch antenna that looks like a bump on the top of the plane.
Southwest plans to charge passengers a use fee likely ranging from $2 to $12, said Angela Vargo, Southwest's manager of product development. The final price could be determined by the length of the flight, or whether the passenger is logging on with a laptop or a mobile device such as a BlackBerry.
Guidon hopes to sign more airlines soon. Alaska Airlines Inc. has been testing Row 44's technology aboard one of its planes since 2007. Guidon said Row 44 was "very, very far along" in negotiations with Alaska. The company is also in talks with most of the other leading U.S. airlines.
Until the Southwest deal, Row 44 was lagging far behind its main competitor, AirCell Inc. of Itasca, Ill.
The two companies are a study in contrasts. AirCell, which also builds airplane communications equipment, is a well-established technology company founded in 1991. It jumped into the airborne Wi-Fi market in 2006. AirCell has installed devices on more than 510 planes operated by eight major U.S. airlines, including American Airlines Inc. and Virgin America Inc. But its wireless Internet devices rely on towers on the ground.
Row 44, which has been around for only five years, uses satellite-based Internet transmitters. Its system is now installed in only five planes in the United States, all on a trial basis.
The main advantage of Row 44's satellite-based system is that it works over oceans as well as land. That makes it possible for Row 44 to provide wireless Internet to international flights, provided that a satellite is pointed in the flight path.
However, AirCell has other advantages: Its devices can be installed cheaper and faster, and are about 50 pounds lighter than Row 44's.
With more than 500 installations, AirCell can also claim the advantage of experience. John Happ, AirCell's executive vice president of airlines, said he didn't see Row 44's Southwest deal as a threat.
"We have our own views on how long it takes to install in a fleet the size of Southwest's," he said. "We'll see what happens."
Guidon said Row 44 can handle the spike in business. The company relies largely on third-party companies to manufacture, assemble and install the devices, allowing Row 44 quickly to scale up production.
"That's why we designed the company this way," Guidon said.
Merluzeau of G2 said Row 44 now holds a slight edge over AirCell because it can provide wireless Internet to almost all flights, not just domestic ones. But Happ said AirCell is developing a satellite-based system as well.
The next challenge for companies such as Row 44 and AirCell is to prove their services can handle mass amounts of Internet traffic. With relatively few planes now equipped with Wi-Fi, it's easier for a company to tout high connection speeds and reliability. But as more passengers jump online in midflight, the system will become strained and could slow.
"When you have several hundred airplanes around the country demanding bandwidth all at the same time, it's going to be interesting to see how providers handle that," Merluzeau said.
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