{"id":32477,"date":"2022-10-06T14:47:58","date_gmt":"2022-10-06T13:47:58","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=32477"},"modified":"2022-10-06T15:06:13","modified_gmt":"2022-10-06T14:06:13","slug":"cma-warns-viasat-and-inmarsat-merger-may-raise-prices-for-in-flight-wifi","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2022\/10\/cma-warns-viasat-and-inmarsat-merger-may-raise-prices-for-in-flight-wifi.html","title":{"rendered":"CMA Warns Viasat and Inmarsat Merger May Raise Prices for In-flight WiFi"},"content":{"rendered":"

The UK’s Competition and Markets Authority<\/a> (CMA) has warned that the proposed merger between two major global satellite<\/a> communication and broadband operators, Viasat<\/a> (USA) and Inmarsat<\/a> (UK), could lead to airlines facing “higher prices for on-board wifi<\/a><\/em>” due to the removal of a key competitor from the market.<\/p>\n

Readers may recall that the two operators agreed to merge in a $7.3 billion (\u00a35.4bn) deal announced in November 2021. The move was partly seen as a response to growing competition from a new generation of mega constellations in Low Earth Orbit (LEO), such as those being launched by rivals such as Starlink<\/a> (SpaceX), OneWeb<\/a>, Telesat and Amazon<\/a> (Kuiper) etc. All of which are also moving into the aviation connectivity sector.<\/p>\n

The investigation by the CMA found that Viasat and Inmarsat currently “compete closely in the aviation sector, particularly for the supply of onboard wifi<\/a> for passenger use<\/em>” (supplied via broadband backhaul via satellite<\/a>). While only some airlines currently offer in-flight connectivity, the availability of these services is expected to grow significantly in the coming years.<\/p>\n

However, despite the growing competition in this sector, the CMA warned that there was currently still “significant uncertainty about when \u2013 if at all<\/em>” the new LEO based providers would be in a position to compete effectively with such established players. The watchdog added that it would be “very difficult<\/em>” for existing airlines on the Inmarsat \/ ViaSat platforms to switch providers, which they say could “effectively lock in a large part of the customer base<\/em>” before rivals can compete.<\/p>\n

The fear is that airlines might thus end up facing “higher prices<\/em>” and be “offered lower quality connectivity solutions<\/em>“.<\/p>\n

Colin Raftery, CMA Senior Director, said (here<\/a>):<\/strong><\/p>\n

“This is an evolving market, but the merging companies are currently 2 of the key players \u2013 and it remains uncertain whether the next generation of satellite operators will be able to compete against them effectively.<\/p>\n

Ultimately, airlines could be faced with a worse deal because of this merger, which could have knock-on effects for UK consumers as in-flight connectivity becomes more widespread.”<\/p><\/blockquote>\n

The authority added that the proposed merger, which recently received support from the Government’s own Department for Business, Energy and Industrial Strategy (here<\/a> and here<\/a>), will be referred for a deeper phase 2 investigation, unless the parties offer acceptable undertakings to address the aforementioned competition concerns.<\/p>\n

The firms now have 5 working days to submit proposals to address the CMA\u2019s competition concerns. The CMA then has a further 5 working days to consider whether to accept any offer or go for the phase 2. But it’s difficult to see how Viasat and Inmarsat, which both disagree with the CMA’s assessment and see plenty of “strong<\/em>” competition (e.g. Starlink<\/a>), can remedy this issue without running into a potential conflict of interest.<\/p>\n

Rajeev Suri, Inmarsat CEO, said:<\/strong><\/p>\n

“There is no lack of competition in satellite connectivity for the aviation sector.<\/p>\n

Strong players are already offering in-flight connectivity and the new low-earth orbit (LEO) players\u2014which already operate over half the satellite broadband capacity available globally\u2014are aggressively and successfully targeting aviation. We expect competition to be robust in the years ahead and, together, Viasat and Inmarsat will be well-placed to invest in the technologies needed to meet the growing needs of aviation customers and compete with the LEOs and others.<\/p>\n

In addition, the highly complementary combination of Viasat and Inmarsat will support the UK Government\u2019s objective to drive growth by providing more jobs and investment in the UK space industry than we expect could be provided by Inmarsat as a standalone satellite communications provider.”<\/p><\/blockquote>\n

We can’t help but wonder whether the CMA would have reached the same conclusion had they conducted this investigation two years from now, after Starlink and OneWeb<\/a> have both had a chance to grow their influence in the aviation sector. Nevertheless, it is fair to say that neither of those two recent entrants have made much of a dent in this side of the market yet, but that is changing.<\/p>\n","protected":false},"excerpt":{"rendered":"

The UK’s Competition and Markets Authority (CMA) has warned that the proposed merger between two major global satellite communication and broadband operators, Viasat (USA) and Inmarsat (UK), could lead to airlines facing “higher prices for on-board wifi” due to the removal of a key competitor from the market.<\/p>\n","protected":false},"author":1,"featured_media":20241,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[77,476],"class_list":["post-32477","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-satellite","tag-wifi"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nCMA Warns Viasat and Inmarsat Merger May Raise Prices for In-flight WiFi - ISPreview UK<\/title>\n<meta name=\"description\" content=\"The UK's Competition and Markets Authority (CMA) has warned that the proposed merger between two major global satellite communication and broadband\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2022\/10\/cma-warns-viasat-and-inmarsat-merger-may-raise-prices-for-in-flight-wifi.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CMA Warns Viasat and Inmarsat Merger May Raise Prices for In-flight WiFi - 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