Boeing Considers Sale Of Internet Unit

June 27, 2006

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Boeing is to halt expansion of its airborne broadband Internet business and is considering a sale of the slow-growing unit.

The business, called Connexion by Boeing, sells the equipment for airlines and other operators to offer passengers high-speed, broadband communications on their planes.

Only a handful of airlines have installed the service, as US carriers pay more attention to the potential of cheaper, cellular network-based Internet services.

Boeing said the market for the service had not developed satisfactorily and it would limit further commercial expansion of the unit. It said it was considering selling the business, working with a partner or terminating the service altogether, and would announce its plans after talking with customers.

The plane-maker's move comes a week after The Wall Street Journal reported that Boeing had approached a number of commercial-satellite operators and other potential buyers who might be interested in acquiring the business or becoming a major partner.

The use of laptops on planes to access Internet and email has not blossomed as many expected when the Connexion unit was set up six years ago.

Air China, Japan Airlines, Singapore Airlines and Lufthansa are among the few major airlines using the satellite-based service, but take-up rates with passengers has been lower than expected.

United States carriers are concentrating more on traditional cellular networks for in-flight Internet connections.

Earlier this month a unit of US low-cost carrier JetBlue Airways was one of two companies that won licenses for wireless airborne communications services.

The airline is expected to offer travelers a choice of voice communications, Internet access and email while in flight. The licenses granted by the Federal Communications Commission require that the winners provide "substantial service" to aircraft within five years.

(Reuters)