Google X's Project Loon to parachute into Indonesia

Jessica Guynn | USA TODAY

Show Caption Hide Caption Google's Project Loon teaming up with mobile networks Google's Project Loon says it's teaming up with three mobile network operators to test its high-altitude, wind-propelled balloons with the goal of blanketing Internet coverage across large swaths of Indonesia, a nation of some 18,000 islands. The go

SAN FRANCISCO — Google X's Project Loon says it's teaming up with Indonesia’s three largest wireless carriers in 2016 to test its high-altitude, wind-propelled balloons with the goal of blanketing Internet coverage across large swaths of the nation.

Project Loon is targeting the world’s fourth most populous country because two-thirds of its citizens don't have Internet access. Mike Cassidy, vice president of Project Loon, says Google parent company Alphabet wants to bring the Internet to 100 million people in Indonesia currently not connected to it.

Project Loon's collaboration with mobile operators Indosat, Telkomsel and XL Axiata would means speeds would be fast enough to surf websites, stream videos or make purchases, Cassidy said.

Cassidy and Google co-founder Sergey Brin announced the news at a press conference Wednesday afternoon at Google's headquarters in Mountain View, Calif., where Loon inflated one of the helium balloons.

Project Loon is part of Google X, the secretive laboratory for experimental projects such as driverless cars that is run by Google parent company Alphabet. Loon beams the Internet from balloons circling the earth at altitudes twice as high as commercial aircraft, helping mobile operators extend wireless networks into more sparsely populated or remote terrains without running fiber optic cable or building cell towers.

Google X is positioning the test as a leap forward for Indonesia, where Internet connections are often spotty or slow and infrastructure is challenging to build because of the nation's 17,000 plus islands and sometimes rough terrain of mountains and jungles. The test has been embraced by Indonesian President Joko Widodo, who has been in office for a year and is wrestling with a slowing economy.

Widodo was scheduled to be in Silicon Valley on Wednesday to meet with Google CEO Sundar Pichai and make the Loon announcement but instead returned to Indonesia "to coordinate the humanitarian response to haze caused by forest fires in Sumatra and Borneo," according to the Consulate General of the Republic of Indonesia in San Francisco. Widodo planned to be in town to drum up investment and interest in Indonesia.

COMPETITIVE WORRIES

Not everyone in the Indonesian telecommunications industry was quick to jump aboard Loon. Telkom, the country's largest telecommunication company, expressed reservations that Project Loon would compete with it, undercutting investments in fiber optic networks and frequency licenses. Telkom is building a fiber optic system connecting the provinces of Maluku and Papua worth hundreds of millions of dollars. Telkomsel is a subsidiary of Telkom.

Project Loon says it plans to share revenue with telecommunications providers. Its pitch: Telecoms keep subscribers while Loon provides a cost-effective alternative to building new cell towers to reach remote areas. Loon has run tests with Vodafone in New Zealand, Telstra in Australia, and Telefonica in Latin America. It says it could eventually turn into a business that could make tens of billions of dollars in revenue a year for Google parent company Alphabet.

The Indonesian experiment is just the latest development as American Internet giants parachute into the developing world. In June, Google signed a memorandum of understanding with Sri Lanka's government, calling it an important step but cautioning it was still early in the process.

Facebook and Google have already saturated most major markets around the globe. Now they are looking to cash in on the rest of the world. Facebook and Google both benefit when more people are online, whether checking status updates or searching the Web, sending a message to friends or streaming a YouTube video.

FACEBOOK'S OFFERING

Much of the world's 7.2 billion people still do not have access to the Internet. Facebook and Google are racing to reach every single person on the planet. Facebook is offering stripped down versions of Internet services that work on low-tech mobile phones with patchy data connections and it's preparing a fleet of solar-powered drones, satellites and lasers to deliver the Internet to far-flung places.

"By far the biggest opportunity sitting in front of both companies is getting people who aren't connected to the Internet connected to the Internet," said Jonathan Chaplin, senior analyst with New Street Research. "They can triple their addressable base if they can figure out how to get the remaining two thirds of the world connected."

The biggest challenge to global domination: Google and Facebook are blocked by the Chinese government, cutting them off from a third of the world's population. So the Internet giants are aggressively pursuing other growth markets.

'BOTTOM BILLION'

Observers generally applaud efforts to deliver Internet access to remote and rural areas.

"It has become abundantly clear that access to the most advanced communications platforms is increasingly essential to people everywhere in the world," said Gene Kimmelman, president of the consumer group Public Knowledge. "(The Internet) offers enormous opportunities to overcome income, educational and cultural barriers."

But Kimmelman says, "it's not just access for access' sake" and corporations must be sensitive to citizens' needs.

"There is a tremendous sensitivity around the world to using communications platform freely and openly without interference from governments and without being dictated to by big corporate players," he said.

Anne Nelson, an international affairs expert on the faculty of Columbia University's School of International and Public Affairs, says the initiatives still put the Internet out of reach for the world's poorest who can't afford even cheap mobile devices or data plans.

"In terms of the bottom billion, there will have to be adjustments made to market structure to make a dent in most countries," Nelson said. She says she hopes Facebook and Google will eventually reach "the economically disadvantaged populations as well as the geographically challenged populations."

FLOATING TOWERS

With Project Loon, balloons are like floating cell towers, Cassidy says. Each one beams an Internet connection to earth. As one drifts out of range, another moves into range.

Loon is also taking other steps to make the Internet more accessible in Indonesia, Cassidy says. It's focused on the proliferation of mobile devices, the medium by which most people will experience the Internet in coming years.

Google says it's making its more economical Android One phones more available in Indonesia. And Google says it's working on features to help people with patchy data connections such as speeding up the load of web pages with Search Lite and making it possible for people to watch YouTube videos offline. Google Translate, which was introduced for Bahasa in 2008 has now added Sundanese, a language spoken by nearly 40 million people on the island of Java.

Indonesia, with its youthful and tech-savvy population and the success of homegrown companies such as motorcycle-taxi hailing app GoJek and online marketplace Tokopedia, is increasingly attracting attention from technology companies and investors around the world. But the lack of broadband infrastructure and highly skilled technology workers have stymied digital expansion in Southeast Asia's largest economy, which has been growing at its slowest pace in six years. Indonesia’s population of 250 million make it the largest market in Southeast Asia but it's still less than a quarter of the size of India and its tech companies are not as well known in the USA.

HIGH-TECH INDONESIA

Indonesia recently said it would allow more foreign investment in the e-commerce sector. Indonesians are among the most active users of Facebook and Twitter in the world. The number of people going online is increasingly rapidly as sales of less expensive smartphones take off.

Advertisers will spend $11.39 billion on ads in Indonesia this year, up 16% over 2014 spending levels, says research firm eMarketer. Growth is expected to continue steadily through at least 2019, when the total media ad market in the country will reach $19.58 billion. Digital's share of that market is still in the single digits but is rising quickly, eMarketer says.

By 2016, more than one in 10 ad dollars in Indonesia will be spent on digital and by 2019, the share will top one in four. Mobile spending is expected to triple this year to account for 15.5% of digital ad spending and eventually will account for the majority of digital ad spending, eMarketer forecasts.

"When people think about Indonesia, I want one of the first things that they think of is that we're a digital country," Shinta Dhanuwardoyo, founder of Bubu.com said in September at a tech conference to help Indonesian start-ups, according to the Jakarta Globe.

Follow USA TODAY senior technology writer Jessica Guynn @jguynn