Why your in-flight Wi-Fi is slow and expensive: It’s all about the pipe

It has been five years since American Airlines first launched Wi-Fi on its domestic flights in the U.S. and, frankly, since that time, Wi-Fi on airplanes is still stuck on the runway. It’s expensive, slow and based on GoGo data, less than 10 percent of flyers even attempt to use the service, even if someone else is paying for it.

But there’s a new promise on the horizon, with a leaked memo showing that JetBlue plans to offer Wi-Fi on planes in 2013 from a new provider, a service that could offer up to 12 Mbps per passenger on a flight thanks to a new type of satellite. But this scenario is unlikely, and understanding why explains why Wi-Fi on planes costs so much and is relatively slow. It also offers lessons on the limits of wireless.

So as entitled as we might feel to the same Wi-Fi experience in the air as we have on the ground, it’s not going to happen overnight. It’s going to cost more, have less capacity and come with limits. Don’t blame the airlines (or worse, the flight attendants): blame physics. After all, getting a mobile connection in a metal tube flying at a speed of 500 miles per hour is actually pretty freaking phenomenal.

It’s the economics, stupid.

The most fundamental cost is the cost of delivering data over the network, measured as the cost per megabyte. Currently there are three different types of networks, with the Exede satellite that JetBlue will offer being a fourth.

GoGo: The top provider in the U.S. (American Airlines (s aamrq) and Delta (s dal) are GoGo customers) has built a ground-based network that provides capacity up to planes, as opposed to beaming signals from a satellite. Tim Farrar, a satellite analyst, estimates that it costs GoGo roughly 20 cents to deliver a megabyte of data on a plane. That’s about $200 for a gigabyte, which makes AT&T’s (s t) and Verizon’s (s vz) $10 per gigabyte charges for wireless data look reasonable by comparison.

Satellite in the Ku-Band: Row 44 and Panasonic Avionics are both buying satellite capacity in this band. Airlines such as Southwest (s luv) and some United (s ual) carry this service. To afford their connectivity plus operate their business Farrar estimates they have to charge roughly 20 cents a megabyte to break even. At that price downloading a standard definition TV show that’s an hour-long would cost roughly $100.

Satellite in the L-Band: This is really expensive, but on international flights Inmarsat is subsidizing the cost somewhat because it wants to keep customers while it waits to launch a cheaper alternative, said Farrar. Singapore Airlines and Emirates use this service, but if they were paying full price their connectivity would cost $5 per megabyte, he said. Because that’s essentially the connectivity they are buying. Needless to say, these don’t offer rapid speeds.

Satellite in the Ka-band: Here’s what JetBlue is going to implement, and what Inmarsat and even GoGo hopes to deploy in 2015 to its customers. Using the Exede service delivered by ViaSat, airlines will pay roughly 2 or 3 cents per megabyte for their connectivity said Farrar. The service depends on a new satellite launched in 2011 that can deliver up to 12 Mbps per person on a flight according to ViaSat.

What do airlines want their Wi-Fi to do?

Since network connectivity is the largest continuing cost of Wi-Fi on planes, it’s clear to see why the services are so expensive. It’s also why they are so slow. Even if the VisSat bird can deliver 12 Mbps per passenger on a plane, streaming a two-hour SD movie at a gigabyte will still cost between $20 and $30. How much of that will be subsidized, and who will do it?

The answer can depend on the agreements the airlines sign with the Wi-Fi companies as well as their goals in offering the service. GoGo isn’t designed for every passenger to hop online –it’s designed so premium business-class passengers will hop online. And they will pay for it, as evidenced by the recent price increases. This is a cold calculation that only a few people will pay the additional fee, but those people will pay a lot.

Other airlines may want to use Wi-Fi to entice passengers to fly with them as it seems JetBlue might. In that case, going with a cheaper service that you can offer on a limited basis to passengers makes sense.

This Wi-Fi is not home or event hotspot Wi-Fi.

Given the cost, the smaller pipe that satellite broadband offers, it should be easy to understand why you can’t expect to get the same Wi-Fi in a plane as you do at home, or even at Starbucks. At its median, it’s 20 times the cost of cellular data and the bandwidth is roughly that of a 3G network.

All Wi-Fi is not created equal — the backhaul to the Internet determines its capacity and how quickly you can download things. Your home Wi-Fi, if connected to a fast cable or fiber connection, is connected to a fire hose. The Wi-Fi from an LTE mobile hotspot is more akin to a garden hose and the Wi-Fi from current in-plane systems is like a drinking straw (some like L-band are like cocktail straws).

So don’t complain, after all, I managed to write this post on a plane with no Wi-Fi at all.

Alaska Airlines airplane image courtesy of Flickr user as737700.