AT&T Abandons Plans for In-Flight Wireless Service (Updated)

AT&T is abandoning an in-flight wireless initiative that would have positioned it to compete with services such as Gogo.

The nation’s second-largest wireless carrier had announced plans this spring to bring high-speed 4G LTE wireless service to flights as soon as next year through a partnership with Honeywell.

At the time, AT&T described the skies as full of opportunity — noting that nine out of 10 customers surveyed by Honeywell expressed frustrations with in-flight Wi-Fi, including inconsistent or slow connections. The carrier touted that its technological know-how and deftness at building and managing networks would allow it to provide better quality service.

“We expect this service to transform connectivity in the aviation industry — we are truly mobilizing the sky,” AT&T Chief Strategy Officer John Stankey said at the time of the announcement.

The carrier issued a statement Monday reversing course, saying it has decided to “no longer pursue entry into the inflight connectivity industry.” The news was first reported by RunwayGirl Network.

AT&T said instead it plans to devote its resources to expanding its international presence through deals including the $2.5 billion offer to acquire Iusacell, a wireless company in Mexico.

It is also focusing on “transformative investments” such as its $48.5 billion plan to acquire DirecTV, which would allow AT&T to offer consumers a bundle of services that would include pay TV, broadband Internet and wireless service.

One travel industry analyst, Henry Harteveldt of Atmosphere Research, said AT&T may have discovered that many North American airlines already are locked into contracts with other in-flight broadband providers, such as Gogo and Row 44.

“I was surprised when AT&T made its announcement, simply because it’s a mature market at this point,” Harteveldt said. “And they didn’t appear to be offering anything that was tangibly different.”

AT&T’s news proved a boon for Gogo, whose stock was down roughly five percent in morning trading, after it posted a third-quarter loss of 29 cents a share that was steeper than analysts’ projections. It reported a loss of $24.9 million on record quarterly revenue of $104 million.

However, Gogo’s stock rebounded by the end of the day, closing up 10 percent on news of the rival’s exit.

Gogo Chief Executive Michael J. Small declined to comment Monday on AT&T’s decision, but issued a statement underscoring his company’s $1 billion investment in building its in-flight broadband business.

“We firmly believe that we are a leader in this space because we specialize in aviation and we’ve built a network to service the global aviation market,” Small said.

This article originally appeared on Recode.net.