New technology that allows passengers to make mobile calls while flying on airplanes will have significant impact on Middle East business and airline carriers
Dubai, UAE 01 August 2006. Passengers onboard commercial airlines will soon be able to use their own mobile phones while in flight in the near future, according to Booz Allen Hamilton. Onboard base stations hold substantial revenue potential for mobile network providers and airlines. "We expect the total volume of fees for mobile telephony during flights to reach 2 billion Euros in Europe alone by 2010," says Booz Allen Principal Dr. Uwe Lambrette.
This advancement in technology will have a significant effect on Middle East business. "The Middle East in general and hubs such as Abu Dhabi, Dubai, Jeddah and Riyadh in specific are witnessing increasing traffic year-on-year so in-flight mobile telephony will certainly have an impact on the region," said Karim Sabbagh, Vice President Booz Allen Hamilton. "If you combine that with the fact that mobile phone penetration is advancing rapidly in our region you can see why something such as onboard base stations would be of considerable importance."
On-Board Base Stations
Mobile telephony is currently banned onboard commercial flights because of its potential to disturb an airplane's sensitive electronic systems. Today, mobile handsets emit high-powered signals when searching for an available base station for incoming and outgoing calls. Those high-powered signals can cause interference with an aircraft's electronic circuitry, especially when it is out of reach of a base station.
Various solutions have been developed to overcome the limitations related to on-board mobile telephony, according to Lambrette. For example, deploying an on-board base station on an aircraft reduces the emitted signal strength to a level that eliminates noticeable interference. The signal is then backhauled via satellite to the terrestrial telephony network. Any of the technologies available today will allow a sufficient capacity for on-board mobile telephony once a flight has reached cruising altitude.
Alliances and Attractive Pricing Will Be Key
Alliances and strategic partnerships will be key to maximizing the market's potential. "Many airlines will permit and offer mobile telephony by 2006," explains Lambrette. "In order to develop this lucrative market, airlines and mobile operators must quickly build alliances and sustainable business models that can grow initial offers to maturity." He believes air travel with full mobile accessibility - except for take off and landing - will be standard by 2010, with usage rates exceeding 100 million passengers in Europe alone.
"Developments like this one could also be used as a competitive advantage by an airline that decides to invest in the technology," said Gabriel Chahine, Principal, Booz Allen Hamilton. "At least initially, this will enable airlines to have a profit maker."
Lambrette cautions that mobile operators and airlines will only sustain high-margin pricing during the introductory phase of this service. After 2008, the projected market penetration is expected to reduce the price per minute almost to the level of regular mobile telephony. The average per-minute price is projected to begin at 1 USD and drop to 50-75 Cent per-minute within three to five years of market introduction.
Said Ghassan Hasbani, Principal Booz Allen Hamilton, "I think we can conclude that this development will eventually be second nature to air travelers in the not too distant future. Before long we will have the inexpensive option of using our mobile phones as we travel anywhere in the world."
Other pre-conditions for success and growth in mobile telephony include the option for travels to use their own mobile handsets and business models that do not feature usage barriers, such as credit card phones.
"These pre-conditions will have to be met to enable the success of onboard base stations," said Karim Sabbagh. "But once airlines and developers realise the profit potential of this technology, they will undoubtedly work together to overcome these minor obstacles."
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Booz Allen Hamilton has been at the forefront of management consulting for businesses and governments for 90 years. Booz Allen, a global strategy and technology consulting firm, works with clients to deliver results that endure.
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Contact:
Booz Allen Hamilton
Karim Sabbagh
Gabriel Chahine
Ghassan Hasbani
Tel: + 971 4 3900260
Fax: + 971 4 3908559
sabbagh_karim@bah.com
chahine_gabriel@bah.com
hasbani_ghassan@bah.com
MS&L
Smriti Singh
Tel:+ 971 4 3676156
Fax: + 971 4 3672615
smriti.singh@dubai.mslpr.com
Press Release 2006
