Broadband Profits at 51,000 Feet?

It's a bird. It's a plane. Actually, it's both. It's HALO (High Altitude Long Operation), a special aircraft that carries satellite technology. (Satellites are "birds," in aerospace parlance.) Why combine the two? According to Marc Arnold, CEO of Angel Technologies, which developed the plane, HALO could be the most economical answer to the demand for superfast Net connections in densely populated urban areas.

Here's how it would work: Three HALO planes would take shifts circling metropolitan areas 24 hours a day, seven days a week. The high-capacity communications equipment would provide the equivalent of 650,000 ultrafast T1 connections for users anywhere in a 1,000-square-mile radius below the aircraft's flight pattern. And unlike with DSL and cable modem services, HALO offers "burstable" bandwidth. At any given time, a user can order extra speed that might be necessary for a big deadline or to process and send heavy files such as high-quality video. Customers pay based on what they use.

Is such a crazy scheme possible? Some analysts are skeptical. But systems such as Angel Technologies and SkyStation, which hopes to provide a similar service using blimps, believe they could revolutionize satellite communications. Angel's planes would fly 51,000 feet above the earth. That's above the altitude of 30,000 to 40,000 feet that commercial planes fly in, but not high enough to require special regulation.

CLEARING THE TREES. And unlike geostationary satellites, which float 21,000 miles from earth, the planes would not be high enough to experience the quarter-second delay that regularly occurs when information has to travel thousands of miles to a geo-satellite before being beamed back to earth. Nor would the planes be low enough to be obstructed by tall trees or buildings that often block a user's connection to a terrestrial wireless transmission tower. Not too high. Not too low. Just right.

Broadband providers could be glancing heavenward for other reasons about now. Since the beginning of the year, small DSL providers NorthPoint Communications (NPNTQ) and Flashcom have filed for bankruptcy protection. Larger wholesalers such as Covad Communications Group (COVD) and Rhythms NetConnections Inc. (RTHM) have announced layoffs to stay up and running.

Angel Technologies' sweet spots are vertical markets, such as the entertainment industry, where huge video files need to be transferred from shooting locations shooting to studios for editing. Production companies don't need that kind of bandwidth on a regular basis, just on deadline and for big file transfers. (See BW Online: Defense Contractors Have a New Ground Zero: Hollywood. Hollywood also needs sudden bursts of bandwidth when a group of independent producers or editors collaborates on a project for a few months and then disbands. "We can just say that whoever is working on a certain project gets a HALO connection. Then we can shut it off. For that vertical market, we have a unique solution," says Arnold.

SINGLE TEST. HALO services also could be used to set up communications during natural disasters such as forest fires or after a hurricane had wiped out ground infrastructure. Instant bandwidth would also serve maritime, coastal, and border patrols during emergencies. Such ideas sound far-fetched, but they actually have historical precedent: During the Korean War, the U.S. bounced TV signals off a plane for military reconnaissance because it didn't want to rely on ground facilities that might be vulnerable.

But Angel isn't quite ready for takeoff. So far, the company has had only one test run, over Los Angeles last August. Although the planes were able to connect customers and provide speeds up to 50 megabits per second, skeptics argue that metro areas are precisely where such services are not needed. Fiber communications are more reliable than wireless and cost less. Once fiber is in the ground, sending signals costs virtually nothing. Compare that with the costs of maintaining high-tech jets, pilots' salaries, and at least 50 gallons of jet fuel per hour. (That's far less than commercial jets burn, but it does add up.)

Arnold dismisses the criticism, saying the economics make sense. The top markets in the world account for less than 1% of the planet's surface but house 15% of the world's population and generate 35% of world gross domestic product. That may be. But with cable and DSL concentrating their rollouts in high-density cities, HALO may well need a guardian angel to make this business plan fly. By Jane Black in New York

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