Alphabet’s Project Loon Facing Strong Headwinds Image

Alphabet’s Project Loon Facing Strong Headwinds

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Reaching the lower echelons of the economic pyramid with a high-technology product is always a challenge, and extending Internet access to all strata of society is a tough problem to solve.  Alphabet (Google) Project Loon and three Indonesia mobile operators, Telkomsel, Indosat and XL Axiata, are trying the technology in five areas. 

Mobile broadband and 4G smartphones are a means to reaching the next 5 billion with Internet service.  The Project Loon balloons are an experiment to provide low-cost Internet service to low-density populations.  Here we examine the case with an initial deployment of balloons with 120-degree antenna beam width.  This is wider than anticipated for Project Loon, but leads to a 40 km cell radius and could cover 5,000 sq.km.   This can help with initial deployments by spreading the resource over a larger area, making command and control easier, and reducing CapEx and OpEx for the initial launch. 

Since the Loon balloons are not a launch and forget system like satellites, the technology is suitable for pay-as-you-grow.  A problem with any big footprint cellular solution is serving subscriber and traffic growth.  Project Loon balloons don’t stay up forever, so the footprint size can change with the antenna characteristic.  This is one way to grow the capacity as more subscribers sign up – change the antenna on the balloons when replacements are launched.  If they can start with 5,000 sq.km coverage, and then shrink to 1250 km. sq when demand exceeds capacity, they can have a pay-as-you-grow system. 

Even so, Project Loon faces three strong headwinds: 1) price of 4G smartphones 2) subscriber and broadband traffic density and 3) operations.  These headwinds are not insurmountable, and are addressed in the analysis.   The incremental approach of Project Loon is mindful of a lean start-up, where they build a little, learn a little, revise, and repeat. Alphabet moves Project Loon to the next level with the Indonesian operators, and this study looks at the challenges.     

Table of Contents

  • 1. Indonesia FAQ
  • 2. Indonesia Market
  • 3. Handsets
  • 4. Millions and Millions
  • 5. Do the Math
  • 6. Headwinds
  • 7. Commentary