Google and Its 99 Broadband Balloons

Google, according to The Wall Street Journal, is thinking about teaming up with Space Data Corp., a company that sends balloons carrying small (micro) base stations about 20 miles up in the air for providing connectivity to truckers and oil companies. The balloons burst almost every 24 hours and need to be sent up again and again. The electronic payload is retrieved by farmers after it drifts back using a small parachute. The farmers do it because they get $100 per payload retrieved, WSJ says.

The Internet giant — which is now pushing into wireless services — has considered contracting with Space Data or even buying the firm, according to one person…Google believes balloons like these could radically change the economics of offering cellphone and Internet services in out-of-the-way areas, according to people familiar with its thinking.

Given that there is only one anonymous source that is linked to Google, I remain highly skeptical of this plan. And if it is true, then it is yet another example of Google having more money than knowing what to spend it on, which in itself is a dangerous sign for its investors.

Comments

[David Lentz:]

It's only dangerous for the investors if they are smarter than Google is, and who would otherwise invest their funds in ways that are novel and profitable.

Presumably, Space Data either is profitable, or has projections to become profitable (although the WSJ piece did not offer any hints as to whether this is true or not). It is an interesting play on the notion of a "virtual" company, without manufacturing plants, warehouses, or much in the way of full-time personnel.

And doubtless the experience they gain would be very valuable to any of the companies contemplating more capital-intensive forms of aerial ISPs, such as "permanent" high-altitude platforms, collecting power from solar cells and hovering above the turbulence in the atmosphere. If Google is contemplating such a move into wireless, such an approach might well be much less capital intensive than slugging it out with AT&T, Verizon, Sprint, and T-Mobile in the cell tower arena. Or purchasing huge quantities of fiber bandwidth. With a couple of aerial wireless platforms a company could manage an end run around most of the installed base of ground-based fiber and cell towers. Such an approach is cheaper than orbiting satellites, as the platforms are relatively stationary, requiring fewer of them for complete coverage of the entirety of North America with none of the lag that geosynchronous satellites have, and none of the expense of a network of low orbit satellites like Iridium uses.

It also offers the potential of bringing something new to the communications industry, actual competition, such that I could choose to buy bandwidth from someone other than the local cable or phone company, two should-be adversaries that have instead opted to divide up the territory between them instead of competing on bandwidth, price or service.

If Google is investigating entering the communications field, this could easily be an exceedingly cheap way to gather the experience needed to decide whether to move forward or not.

2008 Feb 21 09:59 AM