Google is reportedly preparing to invest in Elon Musk's Space Exploration Technologies to fund its efforts to bring Internet to remote parts of the world via satellites.
Reports made by technology blog The Information and the Wall Street Journal cite people familiar with the matter who claim that Google will be investing north of $1 billion in SpaceX, valuing the company at $10 billion, in a funding round with other investors where the total value raised will be even larger.
Google's move comes as its own efforts to bring satellite Internet to hard-to-reach areas of the world crashed to the ground following the resignation of Greg Wyler, a satellite industry veteran hired to head Google's satellite venture. At one point, Wyler reportedly had 10 people working for him, but he left in 2013 to open his own satellite Internet company WorldVu, now renamed OneWeb.
However, Google appears adamant about its plan to beam satellite Internet down to Earth. Allowing more people to connect to the Internet means giving Google a bigger market for its multitude of services.
"Google needs to find additional sources of revenue," says Greg Sterling, vice president of strategy and insights of the trade group Local Search Association. "If they can expand into new markets, obviously they can expand their revenue and keep investors happy."
Last week, Musk said in an interview with Bloomberg Businessweek that SpaceX is planning to build its own satellite-enabled Internet service that he describes as "a giant global Internet service provider." The plan, he said, involves building hundreds of satellites that would orbit 750 miles above the surface of the Earth, which is much closer than traditional communications satellites located 22,000 miles in the atmosphere. This, Musk said, will bring faster Internet speeds by using optical-laser technology to beam information from satellites to Earth-bound antennas.
"The speed of light is 40 percent faster in the vacuum of space than it is for fiber," Musk explained. "The long-term potential is to be the primary means of long-distance Internet traffic and to serve people in sparsely populated areas."
This is only part of Musk's plans for its satellite Internet system, which he doesn't expect to become a reality in at least five years' time. The SpaceX chief said the low-hanging satellites could also be used to send Internet to the city colony he plans to build on Mars.
"It will be important for Mars to have a global communications network as well," he said. "I think this needs to be done, and I don't see anyone else doing it."
Wyler's OneWeb, however, is doing it, and some believe only OneWeb can make satellite-based Internet a reality. Last week, Wyler announced that OneWeb has secured funding from Richard Branson's Virgin Group and chipmaker Qualcomm to help finance the company's plans to build 648 low satellites that will beam Internet down to Earth through a huge block of radio spectrum that Wyler owns.
"Greg has the rights and there isn't space for another network - like there physically is not enough space," said Branson. "If Elon wants to get into this area, the logical thing for him would be to tie up with us, and if I were a betting man, I would say the chances of us working together rather than separately would be much higher."
Musk and Wyler had been participating in talks for some time before their negotiations fell through. Reportedly, the two company heads were in conflict about who controls any joint venture but Musk said it was a "fundamental agreement about the architecture."
