In 2008, Gogo became the first company to offer Wi-Fi service on commercial aircraft. It provides the service primarily through ground-based cellular towers. Many air travelers find the $30 price Gogo charges on a cross-country flight to be very high because the speeds offered are too slow to stream movies or other content. Gogo faces competition from newer services that use satellites rather than ground-based towers, which enables them to offer much higher speeds at half the price Gogo charges. According to an article in the Wall Street Journal, in late 2016, Gogo was “rolling out an advanced satellite-based network” that would allow it to offer higher speeds at a lower price. A number of airlines, though, were considering switching to competing services.

a. Will copying its competitors by offering a faster, lower-priced service likely allow Gogo to recapture its market share?

b. Unlike its competitors, Gogo had to spend substantial amounts to build a network of ground-based cellular towers. It has to abandon those towers as it switches to a satellite-based network. Is the cost of those towers a disadvantage to Gogo as it competes with the new firms entering the industry? Briefly explain.