Telcos See Little Revenue Potential In Domestic In-Flight Services

Although the Department of Telecommunications (DoT) is working at a fast pace to put in place rules and licences for in-flight connectivity, yet there is little enthusiasm among telecom operators as this is not going to be a major revenue generation source for them.

DoT on Monday undertook a meeting with telecom operators, airlines, satellite service providers and Civil Aviation Ministry officials to finalise a roadmap and guidelines for in-flight connectivity.

Business Standard spoke to various airlines officials who sounded quite optimistic about the service and wanted a workable solution that can be implemented. However, telecom operators were not too enthused about it and the reason was clear, in-flight connectivity, though sound very glamorous, cannot be a major revenue creator for them.

Rather, it can be a niche service which can earn some revenue for operators, especially those who are already offering VSAT or satellite connectivity services like Bharti Airtel and BSNL. Reliance Jio also has a licence for VSAT and the operator is also providing connectivity services using satellite in remote areas.

An executive of a telecom firm said the next fight between Jio and Airtel may undertake in the sky as both may try to grab a pie of the in-flight connectivity services.

However, pricing remains a concern for mobile operators. An official from a leading telecom firm on condition of anonymity said airlines are asking the telcos to install the equipment on the aircraft, which will cost them Rs 150 million for each aircraft. On top of that, the airlines are demanding at least Rs 36 for a call, which leaves little margin for telecom operators to make money.

Given the scenario, companies already giving VSAT may be able to get into some kind of arrangement with airlines as they have the bandwidth and other technical capabilities, an industry insider said.

Mobile operators feel the in-flight connectivity had little significance for domestic routes as it takes around 2-3 hours to reach from one destination to another and even during that time, connectivity will be barred for some time during take off and landing. “Why will anyone spend a few hundred rupees to surf internet and make calls for an hour in the flight when he can do so with nominal charges after landing,” one executive of a telecom firm said. The mobile tariffs in India are one of the lowest in the world with people getting around 20-25 GB of data and unlimited calling for under Rs 400. The latest plan by Jio giving the same benefits under Rs 200 is going to be a game changer.

The executive, though added for international flights, the service is going to make sense and they may look at tie-ups with global carriers.

Civil Aviation Secretary R N Choubey had earlier said the DoT would “invite application for new licenses either by month-end or early next month for airlines for wi-fi connectivity”.

Telecom Secretary Aruna Sundararajan had expressed hope that the facility would be fully rolled out in 3-4 months. A separate category of licencees — in-flight service providers — would be created and licence fee for such niche providers will be pegged at Re 1 initially. – Business Standard