The Hangup Act - following the money

Now that the public has pretty much lost interest in HR 5788, the so-called HANG UP Act (Halting Airplane Noise to Give Us Peace Act), the airline industry seems to be the only group that really cares much about it any more. And boy, does the industry care! This is the proposed law before Congress that would ban cell phone voice and VoIP calls in flight. It would still allow cell phones and PDAs to transmit data (including SMS), allow WiFi, and allow voice calls over already-installed telephone systems.

At a panel discussion at the WAEA meeting last month, the HANG UP act engendered easily the most fireworks of the whole week. EMS Technologies CEO Paul Domorski called the Hang Up Act a "national embarassment," and Patrick Brannelly of Emirates (and new VP of WAEA) said it was about as ridiculous as banning pizza on airplanes because of the smell.

To the extent that anyone outside the airline industry cares, people in support of Hang Up usually see it as legislation guaranteeing a last vestige of civility in a confined space. People opposed to it usually feel that (a) good manners can't be legislated, or (b) legislation like this only belongs in the sphere of public safety and defense, and the government has no business curtailing personal freedoms outside this realm.

Meanwhile, the airlines themselves are quite divided. About half of all the airlines I've talked to support voice calls in flight, and half do not. However, of the half that don't, many of their employees privately tell me that they expect the airline's official position to change within a couple of years as in-flight voice catches on at other airlines.

I don't want to get into a political debate here. Voyant doesn't employ me for my political views, just my business views. I'm far more interested in the business ramifications of the Hang Up Act.

Revenue from in-flight connectivity is expected to come from a subset of these sources:

1. WiFi access
2. "Walled Garden" advertising and premium content
3. cellular voice
4. cellular data

In the US, #1 and #2 are the most important today (JetBlue's cellular data offering is an exception), and in the rest of the world, #3 and #4 are most important.

It's perhaps instructive to note the loudest opponents of Hang Up: AeroMobile and OnAir, which depend exclusively for their revenue on cellular services and don't offer WiFi. They've made the most noise, forming a lobbying group called the Passenger Communication Coalition, and airlines likes Emirates and Qantas are early adopters of their services.

On the flip side, AirCell offers only WiFi-based services and no cellular, and so they haven't uttered a peep about Hang Up. After all, they don't want competitors enabled with potential new voice services in the U.S.

As always, when you see companies take positions on issues like this, it's all about where their vested interests like.

At Voyant, we plan to offer both WiFi and cellular services. In regions like the U.S., we'll exclude cellular voice for as long as we have to. But since cellular voice represents about 30% of the potential revenue from aviation broadband services, well ... of course we'll offer it anywhere we're allowed to! And it's one of the reasons why, in the near term, Europe is a more attractive launch market for us than the US.