This story has been updated from 8:27 am EDT to include analyst commentary and stock price changes.
NEW YORK (TheStreet) - AT&T (T) announced on Monday that it was building a high-speed 4G LTE-based in-flight connectivity service for airlines and passengers in commercial, business and general aviation.
AT&T's new service will directly compete with Gogo (GOGO), an in-flight connectivity and wireless provider currently used by a several U.S. and international commercial airlines including Delta Air Lines (DAL), American Airlines, Virgin American, Japan Airlines and others. Gogo also has more than 6,300 business aircraft outfitted with its communication services. The service is expected to be launched in late 2015, AT&T said in a press release.
Shares of Gogo were plummeting 21.6% to $14.39 on Tuesday, while AT&T shares were rising 0.91% to $35.40.
"We think it's validation on what a great business Gogo has created that some of the largest businesses in the world want to be a part of it," Gogo spokesman Steve Nolan said in an emailed response Monday evening. "To compete in this business, we believe you need to be global and have global solutions and that's what we are focused on right now.Nolan added that the Itasca, Ill.-based company is "confident that our GTO/2Ku technologies will compete with anything here both domestically and obviously globally."
AT&T's service will be capable of providing in-flight broadband for customers including "fast, reliable Wi-Fi and onboard entertainment," the company said. Following the launch, aviation customers can also expect "improved connectivity solutions such as cockpit communications, maintenance operations and crew services."AT&T is building an "air-to-ground network" in the continental United States to deliver the new service. It will be based on global 4G LTE standards, to provide fast speeds and efficient utilization of spectrum already owned by AT&T, it added. "Everyone wants access to high-speed, reliable mobile Internet wherever they are, including at 35,000 feet," said John Stankey, Chief Strategy Officer at AT&T, in the release. "We are building on AT&T's significant strengths to develop in-flight connectivity technology unlike any other that exists today, based on 4G LTE standards. We believe this will enable airlines and passengers to benefit from reliable high speeds and a better experience. We expect this service to transform connectivity in the aviation industry - we are truly mobilizing the sky." AT&T plans to work with Honeywell (HON) to provide hardware and service capabilities to deliver the in-flight connectivity solution. AT&T, with more than 116 million wireless subscribers, more than 16.5 million total broadband subscribers, said it sees an opportunity to deliver an innovative and high-performing in-flight connectivity and entertainment service, and "will build on existing relationships within the aviation industry to deliver a better customer experience than what is available from others today." The company plans for its in-flight connectivity service to support both business aviation and commercial airline customers at launch. It will provide information on pricing and availability prior to launch.
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