This week, we hosted investor meetings with Gogo President and CEO Michael Small, Executive Vice President and CFO Norman Smagley, and Vice President of Investor Relations Varvara Alva. The upgrade to ATG-4 and Ground to Orbit (GTO) technology on aircraft is expected to continue driving increases in the take rate and average revenue per session. Business aviation revenue has benefited from the introduction of voice and text services on Gogo s air-to-ground network. The official launch of texting for commercial passengers, in the second half, should also be a positive inflection point.
The service is in beta with select Gogo customers. We believe that its low price point will likely attract a demographic different from Gogo s core business customer. We believe that with positive secular trends, the service is in solid position to meet or exceed 2014 guidance, which is for 25% revenue growth at the midpoint. The proliferation of Wi-Fi enabled devices and the rollout of additional services should allow industry in-flight Internet take rates to more than double over the next five years, in our view. As the world s largest provider of in-flight Internet, Gogo will be one of the biggest beneficiaries of this trend.
We believe that it would be challenging for AT&T (T $35.27; Market Perform) or other competitors to infringe on Gogo s North American commercial business because of large barriers to entry resulting from 10-year contracts and high switching costs. The international market is still in the nascent stage, and we believe that it will drive the next leg of growth for Gogo.
We expect that Gogo will elaborate further on these growth opportunities and its solid competitive positioning at its analyst day on June 18. The valuation, at 3.4 times our 2014 revenue estimate, is an attractive entry point for investors, in our view. Considering that the total available market for in-flight connectivity is for roughly 40,000 aircraft and that the total available market for terrestrial wireless Internet stands at 300 million subscribers in addition to the Internet of Things, AT&T s motives behind its in-flight connectivity announcement puzzled several investors.
The following is a summary of items that seem to suggest that AT&T s foray might not get off the ground, so to speak: 1) AT&T will be distracted with integrating the $67 billion DirectTV (DTV $84.03) deal in the United States and Latin America, 2) AT&T s ability to engineer an ATG network using LTE will be daunting as an ATG network using LTE has never been done before and the skill set and components are different from those of terrestrial wireless, 3) AT&T might have difficulty mimicking Gogo s ATG technology without infringing on Gogo s 40 patents, and 4) receiving the necessary approvals from the Federal Aviation Administration to install equipment on each type of aircraft will likely take much longer than expected given that AT&T is new to the process. Even assuming that AT&T can accomplish all of this, Gogo s commercial aviation business, from which 60% of its revenue is derived, is essentially impenetrable as the main carrier contracts do not begin to expire until 2021.
For the business aviation side, the performance of AT&T s proposed LTE ATG network will likely not be superior to Gogo s ATG-4 technology, which features 9.8 Mbps per aircraft. Assuming that AT&T delivers on its target exactly as planned and offers service in late 2015, the business aviation market will likely be 20% penetrated in North America, compared with 12% today. Because Gogo has long-standing relationships with the narrow-body aircraft OEMs dating to the early 1990s, it will be challenging for AT&T to penetrate the channels as a newcomer, especially if its service is not demonstrably better than Gogo s.