Google’s Loon is actually starting to look like a genuine business

The idea of using balloons floating 20km above the earth to provide connectivity quite frankly sounds bat-sh*t, but Google’s Loon is actually starting to look like a feasible business.

Google is a company which certainly attracts criticism, but you cannot argue with the creativity which is nurtured. The company has a knack of taking an idea which no-one has much commercial faith in and running with it.

Take Google Maps as an excellent example. For years it was nothing more than a helpful tool for users, but now it is turning into a commercial success. And Loon might just be the next moonshot to make waves. Speaking at AfricaCom, Alastair Westgarth, CEO of Loon, gave some insight into progress being made at the business, but also some of the challenges faced when attempting to use balloons to deliver the internet to some of the worlds digital baron lands.

Loon started life as ‘Project Loon’, one of the freewheeling ideas to come out of the mysterious X labs at Google. The idea was initially conceived in 2012 as a means to connect the five billion people around the world who are still without the internet, and named so purely because of the audacity of the concept. Last year, with the team gathering pace, the ‘Project’ part of the name was dropped and the company spun out into its own separate company. Justification for the confidence came soon after, with the team signing its first commercial customer in Telkom Kenya.

“Something which we’re really excited to announce today is that we have all our necessary regulatory approval in Kenya for our operations,” said Westgarth.

“It took a long time, it took partnership with government, partnerships with regulators as well as the MNO you’re working with. As we went on that journey we’ve been working with Liquid Telecom, Nokia, working with Telkom Kenya to install ground stations to connect the balloons, and that process is almost complete. Also we’ve been making sure we have the interconnection between where the Telkom Kenya ground infrastructure is and where our ground infrastructure is, so when someone finally connects to a balloon the signal goes all the way through from our balloon to Telkom Kenya.”

What Westgarth pointed out is this is not a substitute for traditional infrastructure, but an opportunity to enhance coverage. With each balloon capable of delivering a 5000 square km cone of LTE connectivity, this is an opportunity for those countries who deal with hostile environments to deliver the internet and bridge the digital divide in areas where traditional infrastructure is a no go. Westgarth pointed out around 50-60% of the world’s land mass is yet to receive the connectivity euphoria.

With the technology and concept validated, the challenge now is to make Loon a viable business. “As much as we want to do good things in the world, we also want to be a profitable business,” said Westgarth.

The technology has more than proved its value after launches in Peru following an earthquake which decimated Telefonica’s network, as well as Puerto Rico following Hurricane Maria. These were ventures which justified the six years of struggles attempting to keep a balloon the size of a tennis court in the air for more than a month, while also keeping it juiced up and automating the steering.

This was a challenge which took ages according to Westgarth, as engineers had to learn how to read wind forecasts, before applying that to the balloons logistics, and then automating the process. It turns out getting a balloon to stay in the same place is a tricky task, as is getting it up in the air in the first place. The engineers had to design a completely custom launch system which, again, has been automated. Then you have to figure out how to monitor the health of the asset, as well as bring it down safely, in the right place and collect all the equipment.

The issue now is on the commercial side. The team are talking to various operators around the world, with particular enthusiasm from Africa and South America, though business is being massaged as the team search for the right balance between CAPEX and OPEX investments from the operators. Right now the balloons operate on an as-a-Service model, though you have to remember this is still early days, a business which is very much taking the first steps of its journey.

The focus will continue to be on Telkom Kenya for the moment, it is important to nail the first project or the business will never be a success, though Westgarth hopes to have more customers in 2019. Africa is seemingly the best opportunity for Loon, though having done most of the testing in South America, there is interest from the operators, while certain Asian markets fit the bill as well.

The balloons are now up there, and staying up, the boring commercial side has to be figured out now. However, this is just another example of how Google’s bold and adventurous attitude can reap rewards; it’s not an accident Google is one of the most influential companies on earth. And now even 20km above it…