By Paresh Dave
OAKLAND, Calif. (Reuters) - Alphabet (NASDAQ:GOOGL) Inc is shutting down Loon after concluding the business, which offers balloons as an alternative to cell towers, is not commercially viable, Google's parent company said on Thursday.
Founded in 2011, Loon aimed to bring connectivity to areas of the world where building cell towers is too expensive or treacherous using balloons the length of tennis courts and solar-powered networking gear.
But the wireless carriers which Loon saw as buyers questioned the technical and political viability of the idea.
"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," Loon CEO Alastair Westgarth said in a blog post.
Rich DeVaul, a founder of the project who is no longer with Alphabet, said surging demand for mobile connectivity made towers cost-effective in more of the world than he had estimated a decade ago, diminishing the need for Loon.
"The problem got solved faster than we thought," he said in an interview.
Westgarth said Loon's legacy would include developing helium balloons which last hundreds of days in the sky and communications equipment that can deliver cell coverage across an area 200 times larger than that reached by an average cell tower.
However, a carrier would need several balloons at once, each would cost tens of thousands of dollars and last only about five months.
Loon launched a pilot project in Kenya in 2020, years behind schedule after regulatory delays.
Its partner, Telkom Kenya, said their joint service with Loon will run until March 1.
"Over the coming months, the Loon team will work closely with Telkom to ensure the operations of the technology's pilot service are wrapped up safely and smoothly," Telkom said in a statement.
The technology previously proved successful in short projects to provide cell coverage in Peru and Puerto Rico when cell towers were downed by natural disasters.
Loon sought contracts with countries and international organizations for future emergencies, but with little success.
Loon said it may share its technology with carriers, governments or nonprofit groups aiming to bring high-speed internet to the last few places in the world.
The company employed 200 people as of 2019. It drew a $125 million investment that year from SoftBank’s HAPSMobile, which is working on floating cell equipment using drones.
HAPSMobile declined to comment on the financial effect of Loon's shutdown but said it would "continue to work toward our goal of developing a commercial business".
Separately, companies backed by billionaire entrepreneurs, such as Elon Musk, Richard Branson and Jeff Bezos, continue to look at offering internet connections using satellites in near-Earth orbit.
Alphabet has already closed some of what it calls its "other bets", or entities separate to Google, including one working on power-generating kites.
Its Wing business aims to commercialize goods delivery by drone.