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26 January 2021

Alphabet shuts down Loon, having failed to find a business model

By Wireless Watch Staff

Google parent Alphabet has killed off its much-hyped Project Loon after almost eight years. This introduced a means of delivering Internet access to remote and underserved areas using large steerable balloons in the stratosphere.

These were designed to provide wider coverage than terrestrial base stations, in order to reach remote locations, but with far lower cost and complexity than a satellite solution.

However, it seems that balloon (or stratellite) solutions are being squeezed between low cost approaches to rural cellular build-out, such as Facebook’s OpenCellular, and the increasingly affordable and deployable low earth orbit (LEO) satellites. And while the sky is becoming littered with LEOs, the balloons did not achieve the scale needed to support strong business models for Google itself, or the service providers it aimed to enable.

In a blog post entitled ‘Saying goodbye to Loon’, the unit’s CEO, Alastair Westgarth, wrote: “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.”

Astro Teller, CEO of Alphabet’s X division, which houses its ‘moonshots’, wrote in his own blog: “Sadly, despite the team’s groundbreaking technical achievements over the last nine years — doing many things previously thought impossible, like precisely navigating balloons in the stratosphere, creating a mesh network in the sky, or developing balloons that can withstand the harsh conditions of the stratosphere for more than a year — the road to commercial viability has proven much longer and riskier than hoped. So we’ve made the difficult decision to close down Loon.”

In fact, Loon moved out of the X division in 2018 to become a self-contained business unit, which at the time was assumed to mean it was hitting its pre-commercial targets and poised for success.

Last year, Loon powered its first commercial service outside of emergency response scenarios, partnering with Telkom Kenya. Its pilot service in Kenya will continue to run until March before service operations are wound down. A fund of $10m is being established by ALphabet to support non-profits and businesses focused on Internet connectivity in Kenya, to seek to fill the gap left by Loon, though since the model was to provide a wholesale platform for local MNOs, the impact on consumers will be limited.

Some of Loon’s technology will live on – according to Teller, the high bandwidth optical links that were  used to beam a connection between Loon balloons is now being leveraged in another X initiative, Project Taara, which is developing wireless optical technology to cover long distances using beams of light, and so reach underserved areas.