A Loon balloon. Photo: Loon/Alphabet

High Altitude Platform Stations (HAPS) are promising connectivity infrastructure options to address the digital divide in rural and remote locations. These systems, which operate in the stratosphere and can offer terrestrial-grade latency, line of sight propagation capabilities, and more coverage than ground-based systems. The commercial trial of HAPS in Kenya by Loon (an Alphabet/Google spin-out) in 2019 signaled a new era for HAPS-based connectivity. Unfortunately, the project was shut down in 2021 without achieving commercial success.

A statement from a Google X executive on the shutdown pointed to issues with commercial viability, which proved “much longer and riskier than hoped.” For future successful rollouts, it is vital to reassess the assumptions driving HAPS business and implementation against the lessons learned from Loon.  Broadly speaking, three main areas should be looked at to analyze the HAPS ecosystem: technology, business model, and regulation.

The technology area has progressed relatively well with advances in lightweight structures and modest improvements in solar panel efficiencies and battery storage capacities. However, achieving persistent flights and reliable operations will require more work in energy storage, power usage, platform reliability, and a host of other technical issues. A Loon balloon already achieved a record 312 days of continuous flight, while Airbus fixed-wing HAPS Zephyr holds the record of approximately 26 days in the aircraft category. HAPS technology development is making progress overall with some consistent development trajectory.

HAPS business models, on the other hand, still require a thorough understanding of the supply and demand dynamics. This has proven to be a challenge. Addressing the HAPS business model question should be the highest priority to further advance the commercial adoption agenda. Some underlying assumptions about the HAPS business model and applicable use cases have to be revisited.

For instance, the rural connectivity use case — where HAPS is considered a key contender for the rural broadband infrastructure market — is proving riskier than projected. The rural connectivity market is challenging due to population density and buying power against the cost of providing the services. As Loon demonstrated, advanced technology alone is not sufficient, the economic fundamentals of demand and supply must be addressed.

Investors must understand the cost model at which this market can be profitable, and the numbers are quite challenging. For instance, according to Nikkei, HAPSMobile, one of the major players in the HAPS business, targets a price point of $1 per month for every user but will have to drop the cost of developing its aircraft from $6.8 million to about $1 million to achieve this.

In addition, the rural connectivity market may become more crowded with the expected entrance of Low-Earth Orbit (LEO) satellite-based constellation projects like SpaceX’s Starlink and Amazon’s Project Kuiper. Regardless of the enumerated challenges, HAPS still maintain a unique selling point and with some innovation and adjustment in strategy, can defend the niche space.

An integrated business model approach that combines rural connectivity with other use cases is required to address some of the issues highlighted. Designing systems and business models solely on the rural connectivity use case may be increasingly risky. HAPS business models will be better insulated from failures by seeking out services and markets that can be integrated right from the idea conception stage both at the technical and business layers.

For instance, payload and system designs that can handle urban and suburban traffic offloading, backhaul service, Internet of Things (IoT) connectivity, etc., in addition to rural connectivity can serve the needs of different market segments. Airship and fixed-wing HAPS are potential candidates for such integrated use case payloads and systems due to form factors and available power relative to balloons. Multi-HAPS implementations, deployments at scale and HAPS colocation considerations are required to achieve this goal.

Regulations and standards should be negotiated against this backdrop to future-proof the HAPS industry against risks associated with the market. The regulatory framework for HAPS should allow for flexibility in use case integration and should not stifle innovation as this will be crucial for the industry. Governments should consider establishing shared licensed spectrum policies in rural and remote locations to further reduce costs, creating strategic commercial synergies and partnerships. The HAPS Alliance can be pivotal to achieving these regulatory and standardization goals which are critical for commercial viability.

HAPS are more than rural connectivity technologies, their potential can be extended to urban and suburban markets and use cases, this narrative should be amplified within the HAPS ecosystem and beyond.

Dr. Ogbonnaya Anicho is a researcher and member of the HAPS Research team headed by Professor Atulya Nagar at the Liverpool Hope University (HOPE), United Kingdom. The HAPS research at HOPE focuses on multi-HAPS coordination, multi-HAPS implementation challenges like routing and autonomy, HAPS modelling & simulation platforms and HAPS technology and policy issues.