AT&T Scrapping In-Flight Service Plans Likely Due to High-Barrier to Entry, Evercore Says
AT&T’s decision to drop its plans for an in-flight connectivity service confirms that there are high barriers to entry in the in-flight connectivity business, said Evercore ISI analysts. AT&T announced the change of plans in a Reuters report. At the…
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time that AT&T announced its plans to develop the service, Evercore analysts cited FCC approval of spectrum use for air-to-ground service and high equipment switching costs as barriers to entry, analysts said in a research note. Gogo is the only company to combine telecom service provider DNA with aeronautical DNA, and “both are necessary to be successful longer-term,” they said. No current competitors are telecom service providers, “and speculated competitors have no background in the aeronautical space,” they said. Last week, AT&T announced its intent to acquire Iusacell (see 1411100034), a wireless company in Mexico, an AT&T spokesman said. "At the same time, and after a thorough review of our investment portfolio, the company decided to no longer pursue entry into the Inflight Connectivity industry." AT&T will focus its capital on transformative investments, such as international and video, he said.