Disrupted Telecoms – Google Project Loon becomes real and dangerous

Project Loon looking ready for production – goodbye traditional telecom subscription business model?

Disruption Index Score: 10/10

Beaming gigabit internet from the stratosphere via balloons and satellites (via Google investment in the SpaceX satellite transportation system) may have sounded a little far fetched in 2014 but MIT reports it’s close to reality:

“Google says these balloons can deliver widespread economic and social benefits by bringing Internet access to the 60 percent of the world’s people who don’t have it. Many of those 4.3 billion people live in rural places where telecommunications companies haven’t found it worthwhile to build cell towers or other infrastructure. After working for three years and flying balloons for more than three million kilometers, Google says Loon balloons are almost ready to step in.

Google Loon Internet BalloonsThe helium balloons are inflated to the size they reach in the stratosphere. The “ballonets” inside are filled with air or emptied to make the balloon fall or rise.

It is odd for a large public company to build out infrastructure aimed at helping the world’s poorest people. But in addition to Google’s professed desires to help the world, the economics of ad-­supported Web businesses give the company other reasons to think big. It’s hard to find new customers in Internet markets such as the United States. Getting billions more people online would provide a valuable new supply of eyeballs and personal data for ad targeting. That’s one reason Project Loon will have competition: in 2014 Facebook bought a company that makes solar-powered drones so it can start its own airborne Internet project.”

The Disruption Effect: The problem with the Google messaging is simply this – it says it’s positioning to provide fast internet to the world’s developing companies. Great, and well done Google. But Google’s business model is based on leveraging marginal cost opportunities. The marginal cost of positioning Loon balloons over first world countries is very marginal – providing subscription free wireless internet access to all – so is it goodbye BT/EE before the paperwork is even signed?

 

From MIT