In the months since AirCell won an FCC frequency-spectrum auction to provide wireless broadband connectivity to airplanes flying high above the continental U.S., the Louisville, Colo. company has been off and running. There have been meetings with airline executives and business jet OEMs, planning for the nationwide network of ground towers to support the service and more planning for a new engineering and marketing center to open soon in Schaumburg, Ill.

AirCell promises data rates as high as 3.5 megabits per second, roughly equivalent to a cable modem connection on the ground. The charge for access is expected to be roughly what users in hotels pay–with a premium on top to reflect the difficulty of providing an Internet connection to an airplane traveling at FL450 and 600 mph.

With the shutdown of Boeing’s Connexion in-flight Internet service and promised low hardware prices for AirCell broadband equipment, U.S. airlines are likely at least to take a close look at what the company is offering. Business jet buyers and operators, meanwhile, are sure to jump at the chance to install AirCell Axxess gear to satiate data-addicted passengers.

AirCell CEO Jack Blumenstein sat down with NBAA Convention News to provide an update on all that has happened since the company won the spectrum auction in June and discuss the company’s strategy for the future.

You’re planning to open a sales and engineering facility in the Chicago area?

That’s right. There are four groups that are going to be based in Chicago. One is our commercial aircraft engineering group, which will be responsible for designing and implementing the product on board the aircraft. The second is our network operations group that will be responsible for building the national network that will make broadband to the aircraft possible. Away from the technical side, we’ll also be putting some of our airline sales and marketing resources there, as well as what we’re calling our passenger services group. This group is going to focus on developing the kinds of services and the experience we want to provide for passengers in the cabin.

What are your plans for hiring? How many people do you plan to add, and are you concerned at all that you’ll have trouble ramping upto fill all the roles?

Well, this is going to be a substantial facility, there’s no question. On the engineering side it will be at least as large as, and probably a bit larger than, our existing engineering and manufacturing operation in Louisville, Colorado. So it’s certainly a big step up. But frankly the response to the recruiting efforts that we’ve been making for nearly three months now has been overwhelming. I’m very comfortable and confident saying we’re going to be able to find and absorb the people that we need. We’re just seeing outstanding technical people across the board, who are very interested in doing something as new and exciting as bringing broadband to airplanes. It really has caught the eye of the telecom and aviation engineering communities. And that’s similarly true on the marketing side. So we’re feeling very, very fortunate and we’re seeing just phenomenally strong candidates across the board.

What all has happened since you won the FCC spectrum auction? Are you at a point where you’re ready to start deploying the physical network?

On the FCC side we have been working through the process, we’ve paid for the license, our application has been approved, the FCC has reached the end of its public comment period and there have been no objections to the granting of the license.

On the physical ramp-up side we are targeting for market introduction late next year or early 2008, so the planning and implementation on the network side is tracking along that path. I don’t think we’ll start putting antennas on towers until probably the second quarter of next year because, frankly, the network piece is a fairly manageable task in the scheme of all the things that have to get done.

The initial coverage area will be major flight routes?

No, we’ll have full coverage of the entire continental United States from the start. We want to be sea-to-sea and border-to-border, in part because you never know where airlines are going to fly and in part because we’ll also be serving the general aviation community, and they fly everywhere. So we’re planning on full network coverage from day one.

How long will it take to deploy the network?

The physical side of deploying the network is actually not that terribly time consuming. We can accomplish it–and I’d say conservatively–in three months. Compared to what people think of as a cellular network, which may involve thousands of sites in a single metropolitan area, in our case it takes less than 100 sites to provide full geographic coverage of the entire United States. So if you’re a classic network operating guy from a big cellular company, this would look like a pretty trivial task.

Do you anticipate having difficulty installing ground towers in certain parts of the country due to competing forces that might already have a presence in those areas?

No, I really don’t. Again, we need so few sites and we have fairly wide latitude about where they might be located. Also, from the standpoint of existing cell tower operators, we’re very easy to accommodate. Most people want to be up high on towers looking down. We want to be down relatively low on towers or rooftops looking up. So we have a virtually infinite set of possibilities in terms of where we locate these things.

What is the full complement of services that will be available to passengers through this new service?   

Think flying hotspot. Think full access to e-mail, the Internet and corporate VPNs. It’s the things that you do when you’re a traveler on the road, whether it’s in a hotel, at the airport or in a Starbucks. It’s Wi-Fi based and, in fact, the airplane will be a flying Wi-Fi hotspot.

What data rates can passengers realistically expect to see while flying?

Well, the marvelous thing about this is that you’re able to deliver on the availability of true broadband. The passenger sitting in the cabin is going to feel like he is at the other end of a DSL line or a cable modem into his home or office. He’ll have exactly that same experience of really robust broadband service. It’s quite phenomenal. If any of your readers have experienced broadband service through Connexion, they know. The demise of Connexion is lamented in many ways, but one of the things that wasn’t wrong with that service was the passenger experience. The experience was phenomenally well accepted, and it’s the kind of experience we’re going to be delivering.

What about service pricing? Have you worked out the models, both for the airlines and on the business aviation side?

Well, I guess the simple answer is we won’t be announcing pricing until we get much closer to launch, in part because we want to watch the continuing evolution of wireless and Wi-Fi pricing on the ground. Obviously the world can change a lot in a year or 15 months.

We have two very fundamental principles, however. One is that the pricing not be a barrier to any passenger who wants to take advantage of it. It will be a price that looks to them like something they’re used to seeing, and they’ll see tremendous value in it. And the second principle is that it’s going to look a lot like the pricing on the ground for comparable services, with a bit of a premium reflecting the fact that this is going to be happening at high speed and high altitude. We feel very comfortable that we will be able to meet both objectives because we are going to make it easy to use and easy to pay for. We think it’s going to be a very attractive contributor of incremental revenue to the airlines.

What has been the response so far from the airlines that you’ve talked to?

Extremely positive. The airlines, certainly over the last year and half or so, have been very focused on the fact that broadband was going to emerge as a reality. They’ve been very interested to see the results of the FCC licensing process, and now that it is done and it is clear that AirCell is going to provide the service we’re seeing tremendous interest. We’ve been on the road talking to a number of airlines at very high levels about both our strategy and theirs.

How about the response from business jet OEMs and operators? Have you had a chance to focus on thatmarket very much?

We have, and the level of interest is extraordinarily high, as you might imagine. We, in fact, introduced a new system earlier this year for voice and data communications–we call it Axxess–that operates today using the networks that are currently available, whether it’s Inmarsat, or Iridium for voice. We have told the OEMs and our dealers and our customers that this same system will be upgradeable and compatible with AirCell broadband as it comes forward. So in a sense we’re already installing the equipment that will support broadband and it’s already being incorporated by the OEMs in their manufacturing lines.

What hardware will be needed and what will it cost?

If you’re flying today with an Axxess system on board, you won’t really have to touch anything in the cabin–the Wi-Fi access point, the phone system itself including the VoIP [Voice over IP] handsets, are all there. What you’ll do when the time comes to upgrade to AirCell broadband–or for those who travel internationally, they might want to upgrade to Inmarsat broadband when it’s available–you’ll be adding a new radio and a new very low profile, easy-to-install antenna on the belly of the aircraft.

As far as the price, we’ve published the price for Axxess [about $40,000 for a basic system], but we have not established the price for the broadband component and, again, probably won’t do so until we get closer to the launch date. The system onboard a high-end general aviation aircraft is highly dependent on how many extensions there are and the capabilities that are needed, but typically those get installed for $50,000 to $100,000. The upgrade component of that would be a relatively manageable fraction of that total cost.