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Not tethered -- watch http://www.google.com/loon/how/

Definitely not tethered. Cables become super heavy at those lengths. Not to mention you need very strong/thick cables.

If you just try flying a kite on a good windy day an keep feeding it string, it will pretty quickly start loosing altitude.

Not tethered, as nostromo mentioned. The hazards created by cables in the air for airplanes would kill the idea before it could take off (pun not intended).