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Alphabet is spinning out laser-based internet company Taara from its “moonshot” incubator, hoping to turbocharge the start-up that provides high-bandwidth services to hard-to-reach areas in competition with Elon Musk’s Starlink network of satellites.

Taara is the latest project to spring from X — Alphabet’s experimental hub that produced AI lab Google Brain and Waymo’s self-driving cars — and has its origins in a concept called Loon. That envisaged shooting beams of light between thousands of balloons floating on the edge of space to provide phone and internet services across remote areas.

Loon was wound up in 2021 due to the political and regulatory hurdles to flying the balloons and the difficulty of servicing the 20-mile-high equipment. However, its lasers found a second life on Taara’s towers under engineer Mahesh Krishnaswamy.

The technology works by firing a beam of light the width of a pencil from one traffic light-sized terminal to another, using a system of sensors, optics and mirrors to fix it on a 1.5 inch receiver. Alphabet says the system can transmit data at 20 gigabits per second over 20km, extending traditional fibre-optics networks with minimal construction and lower costs.

Based in Sunnyvale near Google’s headquarters in Mountain View, California, Taara has two dozen staff and is hiring aggressively. The start-up has secured backing from Series X Capital and Alphabet will retain a minority stake, but the company refused to disclose any details about its seed funding or financial targets.

“We’ve realised over time that for a good number of the things we create, there’s a lot of benefit to landing just outside of the Alphabet membrane,” said Eric “Astro” Teller, X’s captain of moonshots. “They’re going to be able to get connected quickly to market capital, bring in strategic investors and generally be able to scale faster this way.”

Taara already operates in 12 countries including India and parts of Africa. It has created a 5km laser link over the Congo River between Brazzaville and Kinshasa, the capital of the Democratic Republic of Congo where internet costs are much higher. It also supplements overloaded mobile phone networks at events such as the Coachella music festival in California.

Krishnaswamy, Taara’s general manager, says the next stage of development is a tiny silicon photonic chip that will obviate the need for many of the terminals’ mirrors and lenses and allow multiple connections from one transmitter. The light-based chip units could also potentially replace radio-based WiFi networks in offices down the line, so-called LiFi.

Taara has a long way to go before it can compete with SpaceX’s Starlink, whose 7,000 satellites generated an estimated $9.3bn in revenue from 4.7mn subscribers last year.

While Musk’s business sells subscriptions directly to consumers, Taara partners large telecommunication companies such as Bharti Airtel and T-Mobile, extending their core fibre-optic networks to far-flung locations or within dense urban areas where laying cables is expensive or impossible.

“Think of it as a backbone that helps augment and accelerate existing infrastructures that’s out there,” Krishnaswamy said.

Teller and Krishnaswamy claim that Taara has numerous technological advantages over Starlink. Musk’s satellites use radio signals that transmit a limited amount of bandwidth to a fixed area, so more people in that space means a smaller amount of signal available to each one, slowing overall speeds.

That makes Starlink most effective in remote areas or on cruise ships and in airlines, but it is unable to compete with wired fibre- or light-based systems in cities at its current capacity.

Moreover, Taara terminals can be strapped to poles, trees or buildings in hours rather than being blasted into space on rockets and there are no politicised auctions of radio spectrum to navigate. The laser beams can criss-cross without the interference that radio frequencies suffer from.

“Connectivity is a pretty big problem . . . there’s still 3bn people left behind” said Krishnaswamy of the rivalry with Starlink. “I actually think there’s a lot of room for both of us.”

Teller said that as more people come online, the world will run out of traditional radio frequency bands and will have to shift even further up the electromagnetic spectrum.

“If you can figure out how to be the first business that starts moving data via light, once the whole world moves to that part of the spectrum, we think Taara is going to be in a really nice place,” Teller said, adding that it is “skating to where the puck is going to be”.