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American Airlines Makes Nice With WiFi Firm

FORT WORTH (CN) - American Airlines has dropped its lawsuit against in-flight Internet provider Gogo, but still plans to solicit offers from competitors with faster WiFi speeds.

American filed a notice of nonsuit without prejudice in Tarrant County Court on Monday.

It sued Chicago-based Gogo on Feb. 12 for declaratory judgment, claiming Gogo refused to abide by their 2012 contract that allows American to "notify Gogo of competitors that offer connectivity services that materially improve on Gogo's air-to-ground system," which relies on ground-based cellular towers.

Gogo dominates the in-flight WiFi market, controlling 80 percent it and providing service to more than 9,000 aircraft, American said in its complaint. The airline said new competitors, including satellite-based ViaSat, offer better "pricing and business models" for airlines and their customers.

American says in-flight WiFi has "profoundly impacted" the airline industry, with its availability affecting flight selections of 66 percent of passengers.

"Whereas Gogo's system provides 3 Mbps (or at most, 10 Mbps) of bandwidth shared among all users on a flight, and blocks most video content, these new satellite-based services offer 12 Mbps per device - more than enough for passengers to stream music, movies, and television," the complaint stated. "Also, with antennas facing up to satellites, instead of down to cell towers, these competitors can offer gate-to-gate WiFi access for customers, even over oceans."

American dropped the lawsuit one week after Gogo filed a Form 8-K with the Securities and Exchange Commission, saying it plans to submit a new proposal under the contract.

"Earlier this month, American notified Gogo that it considers a competitor's connectivity service to offer a material improvement over our early generation air to ground service with respect to a portion of American's fleet representing approximately 200 aircraft," the 8-K filing states. "We plan to submit a competing proposal to install our latest satellite technology - 2Ku - on this fleet. We believe that 2Ku is the best performing technology in the market and look forward to discussing our offer with American."

Gogo declined to comment on the lawsuit, but said American is a "valued customer" and that it looks forward to resolving the "disagreement regarding contract interpretation" that led to the lawsuit.

American spokesman Casey Norton said the airline will no longer pursue the case.

"Gogo can still submit a proposal and we will evaluate their proposal when we receive it," he said Monday.

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