Google deflates Project Loon

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Google’s Alphabet parent company has closed down its Project Loon which contemplated launching giant stratosphere balloons to beam and reflect broadband signals.

Evidently Google could not get the project’s overall costs low enough to make the concept viable.

“While we’ve found a number of willing partners along the way, we haven’t found a way to get the costs low enough to build a long-term, sustainable business,” said Loon CEO Alastair Westgarth said in a post on January 21st. “Developing radical new technology is inherently risky, but that doesn’t make breaking this news any easier. Today, I’m sad to share that Loon will be winding down.”

“While this isn’t the outcome I envisioned for Loon when I joined four years ago, I continue to be immensely proud of the accomplishments of the entire Loon team and hope that our efforts will live on in ways that we can’t yet imagine,” Westgarth added.

The project has been running for some ninee years and its balloons have been placed over hurricane areas and last year, a major investment covered Kenya and the surrounding regions with 35 balloons.

In a flash note to clients, investment bank Exane/BNPP says the closure represents good news for the satellite industry. “Google Loon was competing against satellites in the market of providing Internet access in remote places. Its closures is hence a positive for satellite operators and underpins the appeal of satellite technology and economics to provide such services, especially with the recent entry into service of Eutelsat Konnect.”

The bank adds: “[The decision] probably also reflects the growing success of Space X’ Starlink. Starlink has now launched 1015 satellites (90%+ of all the additional satellite capacity launched in 2020 came from it) and has entered in beta testing offering speed of 50-150Mbps for $99 a month. Customers have to pay an additional $499 for a satellite antenna…which we believe costs Space X around $2000 to produce.”

“The exit of Google slightly reduces the competitive pressure on incumbent satellite operators. However, the commercial take-up of Starlink (and Space X ability to reduce antenna production costs) as well as the markets Space X will ultimately target (just residential broadband? or Mobility, Backhauling, Government? and on what pricing levels) will be key catalysts to assess the competitive pressure Eutelsat and SES will see from it in coming quarters. For now, Starlink seems focussed on residential broadband and looks to be losing money on each new subscriber. We rate Eutelsat [equal weight] and SES [positive],” concludes Exane/BNPP.


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