Google Inc. is close to investing roughly $1 billion in Space
Exploration Technologies Corp. to support its nascent efforts to
deliver Internet access via satellites, according to a person
familiar with the matter.
The investment would value SpaceX, backed by Tesla Motors Inc.
Chief Executive Elon Musk, at more than $10 billion according to
this person. It isn't clear what exact stake Google could end up
with in the fast-growing space company.
If Google completes the deal, it would be the Internet company's
latest effort to use futuristic technology to spread Internet
access to remote regions of the world, alongside high-altitude
balloons and solar-powered drones. By extending Web access, Google
increases the number of people who can use its services.
Spokesmen for Google and SpaceX declined to comment.
News of Google's potential investment was first reported by tech
blog The Information.
Google has been considering satellite-based Internet service for
more than a year. In late 2013, it hired satellite-industry veteran
Greg Wyler, who at one point last year had more than 10 people
working for him. Mr. Wyler left Google last summer and is now
developing his own satellite-Internet venture.
SpaceX builds and launches rockets and spacecraft. Mr. Musk last
week described a general concept for SpaceX to launch hundreds of
satellites into relatively low orbit to deliver Internet access
across the globe. Mr. Musk told BusinessWeek the project could cost
$10 billion to build and take at least five years, but gave no
details about funding or manufacturing plans.
Mr. Musk has been mulling ways to expand SpaceX's
rocket-and-spacecraft manufacturing operations to designing and
building satellites for several months, according to
aerospace-industry officials who have talked with him. Though short
on specifics, his latest comments were the clearest sign yet of a
long-term commitment to such expansion plans.
It is likely to take years to establish designs and potentially
set up a specialized satellite-making facility. But SpaceX already
has some important building blocks. Industry officials said the
company builds its own navigation and flight-control systems for
spacecraft, which could provide some elements for satellites. There
also are synergies between parts SpaceX makes today for solar
arrays on spacecraft and such devices intended for satellites.
Another unanswered question is how SpaceX plans to transmit
Internet signals to Earth. The company isn't believed to control
rights to radio spectrum.
Mr. Musk has discussed using optical-laser technology in his
satellites, according to a person familiar with the matter. That
technology works by beaming information from satellites in space.
But lasers wouldn't be a reliable way to deliver Internet service
to Earth because, unlike radio waves, they don't easily pass
through clouds.
The talks are somewhat unusual for Mr. Musk, who has resisted
most outside investments that could reduce even slightly his
control over SpaceX. Industry officials said if problems arise,
SpaceX might need additional capital in the next few years to fund
new rocket development and more launches. It isn't clear what terms
are under discussion.
The Wall Street Journal reported Mr. Musk's interest in
satellite-Internet service in November, saying he was talking with
Mr. Wyler.
Mr. Wyler last week said his new venture, OneWeb Ltd., had
secured funding from Richard Branson's Virgin Group and chip
company Qualcomm Inc. Mr. Wyler said he hopes to provide Internet
service from a constellation of 648 satellites in low-Earth orbit,
using a large block of radio spectrum he controls. Mr. Wyler
estimated the plan would cost as much as $2 billion.
Messrs. Musk and Wyler stopped working together because of
disagreements over control of any joint project, according to a
person familiar with their discussions.
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