Winding Up to Deliver Pitch

 

Small tech firm beats rivals with the right proposal for the right product

 

BY DOUG TSURUOKA

INVESTOR’S BUSINESS DAILY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sometimes a secret to success in small business is a great business pitch that says it all. Especially if the concept behind the slogan is complex. Row 44 offers satellite-based broadband services for planes.

 

The small firm wanted to build a low-cost system that delivers Internet, roaming cell phone, BlackBerry and various Wi-Fi services to millions of commercial airline and private plane fliers in the U.S.

 

It didn’t want to fly solo. So it approached a bigger company, Hughes Network Systems, to jointly develop the network. Hughes Network is a unit of the DirecTV Group.

 

Row 44 CEO John Guidon says having the right pitch made a big difference.

 

“We told Hughes we wanted to make an airplane look like a house,” said Guidon, a British-born former electrical engineer.

 

Forrester Research says over 700 million passenger boardings are expected in 2005, making airborne Internet service potentially a multibillion-dollar market.

 

Hughes came on board in early February, signing an exclusive deal with Malibu, Calif.-based Row 44, which has three full-time employees. The project is up and running, and testing is set for late 2005. Several big airlines and broadband carriers are interested in the service.

 

Guidon’s way of pitching the service captured the idea that air passengers could use the same kind of communications devices they do at home.

 

A key to the system is it relies mainly on existing aircraft components, making it cheap to build and operate.

 

No Difference

 

Dick Armstrong, now retired, was Hughes Network System’s vice president for North America when the companies teamed up.

 

“We sat across the table from Dick, and it didn’t take him long to get what we were talking about,” Guidon said. “The idea was that passengers wouldn’t notice any difference when they were using things like cell phones in a plane or when they were on the ground.”

 

The Federal Aviation Administration bans the use of cell phones on commercial flights. A public debate is taking place on whether it should be allowed. Critics say the phones are a nuisance. It isn’t clear if the ban will be lifted.

 

But Row 44’s pitch dramatized an important point.

 

Using such devices on planes right now isn’t like being at home. Passengers can’t download movies or music on their laptops because there’s no Internet connection.

 

There can be technical and other glitches. And cash-strapped airlines would have to spend a lot of money installing a costly patchwork of networks on their planes to provide passenger connectivity.

 

The key, Guidon says, is putting a small satellite antenna on a plane. It would resemble a home satellite TV antenna and would be wired to existing communications systems, like Ethernet, a fiber and cable local area network that’s already installed on many aircraft.

 

Keeping Costs Down

 

The plane’s network sends and receives its broadband signals from satellites, just like home satellite TV systems.

 

“We’re providing several different physical (communication) layers on planes using these existing resources. Roaming cell phones will be able to receive and make calls,” Guidon said.

 

Passengers would also be able to use Wi-Fi enabled gear, BlackBerrys and other text messaging systems.

 

In addition to antennas, Guidon says, all that’s needed are small pieces of electronic gear such as a satellite transceiver and control boxes.

 

Altogether, the system would weigh 150 pounds. It would cost a fraction of what competing systems would cost.

 

It wasn’t just a strong pitch that sold Hughes, Guidon says. It also took persistence and having an important in at Hughes.

 

Gregg Fialcowitz, Row 44’s president, worked on an earlier project with Hughes. It involved adapting Hughes’ Direcway broadband satellite platform for use in multiple-unit buildings, such as condo complexes and office parks.

 

After seeing how Direcway works, Fialcowitz realized the same system could be used on planes. Row 44 made feasibility studies and pitched Hughes on developing the system.

 

At first, Hughes wasn’t interested. But Fialcowitz and Guidon kept at them.

 

“We dared to imagine this could be done and followed through,” Guidon said. “Dick Armstrong was impressed by our persistence. When he realized we weren’t going to go away, he personally identified with our enthusiasm.”

 

In the end, the project was a go, with Row 44 using about $1 million of its own capital to get it off the ground.

 

Hughes provided the Direcway platform and help in designing parts such as a system modem.

 

The plane’s antenna was developed by and outside contractor. Electrical subsystems were made by a Chicago firm, Armstrong Aerospace, which is not connected to Dick Armstrong.

 

Flying the Extra Mile

 

Enthusiasm was the catalyst that gave Row 44’s deal with Hughes the boost to take off.

 

Guidon, an avid pilot in his spare time, gets excited about anything with wings.

 

The project had everything to do with planes and helped Guidon go the extra mile to see it through.

 

“Flying is a passion for me, and a personal love or interest can definitely stimulate you in a business project like this,” said Guidon, who flies his Socata Trinidad turboprop all over California.