New black empowerment laws in the telecommunications industry are jeopardising the rollout of SpaceX’s Starlink Internet service in South Africa.
Excitement has been building over Starlink’s potential to provide uncapped, high-speed, low-latency Internet to the most remote locations in the world.
Starlink uses a constellation of thousands of small low earth orbit (LEO) satellites to beam Internet services to customers using its cutting-edge dish antennas.
It is already available in the US, UK, Canada, and Australia in a beta, currently capable of speeds between 50Mbps and 150Mbps, with latency between 20ms and 40ms.
The performance is expected to improve as more of its satellites are launched into orbit over the next few months.
In February, SpaceX opened pre-orders for Starlink in several countries around the world – including South Africa.
Placing an order for an address in the country revealed that Starlink was expected to go live in South Africa in 2022.
To provide Internet services in each of the countries it plans to operate in, it would have to receive regulatory approval from the respective telecommunications authorities.
While SpaceX has already registered as a company in South Africa with the Companies and Intellectual Property Commission, approval to provide Internet services via Starlink would fall to the Independent Communications Authority of South Africa (ICASA).
ICASA previously told MyBroadband that it had held discussions with SpaceX, but that the company still needed to apply for an Individual Electronic Communications Network Service (I-ECNS) and Individual Electronics Communications Service (I-ECS) license to provide its satellite-based broadband Internet locally.
In addition, it would have to acquire a Radio Frequency Spectrum licence to allow for Starlink to communicate on specified frequency spectrum bands for satellite broadband services.
There is one major problem, however.
ICASA recently published new regulations which require all telecoms licensees in the country – including ISPs – to have black owners.
“An Individual Licensee must have a minimum of 30% of its ownership equity held by black people, determined using the flow through principle,” the regulations stated.
In addition, individual licensees must have a minimum of 30% of its ownership equity held by historically disadvantaged groups, which include black people, women, people with disabilities, and youth.
“An Individual Licensee must comply with both the black equity requirement and the HDG equity requirement,” ICASA said.
Furthermore, both individual licensees and class licensees must have a minimum B-BBEE contributor status of level 4.
MyBroadband asked ICASA whether SpaceX would have to meet these new rules, given that it was a US company and not required to implement such measures under that country’s laws.
The Authority said that any new applications for ECS and ECNS licences would not be considered if the company does not meet the new black equity requirement.
According to ICASA’s latest update, SpaceX has not applied for these licences yet.
Therefore, if it does not have 30% black ownership, it would not be able to acquire the necessary regulatory approval and spectrum to offer Starlink services in South Africa.
As SpaceX is not publicly listed, very little is known about its exact ownership breakdown, aside from CEO Elon Musk’s majority share in the company.
The most recent information from an FCC filing showed that Musk held 54% equity and 78% voting rights in SpaceX.
According to Reuters, the remainder of the shareholding is split between SpaceX employees, Google, five Fidelity Investments funds, and private investors like Draper Fisher Jurvetson, Founders Fund, Valor Equity Partners, and Capricorn.
None of these shareholders owned 10% or more of the company as of 2018.
The exact racial make-up of these shareholders is an even bigger mystery, and is unlikely to have been recorded.
Based on the optimistic assumption that as much as half of the remaining shareholders were black, it would still not be enough to meet ICASA’s new black equity requirements.
MyBroadband asked SpaceX whether it would be able to provide a breakdown of its shareholders by race, but the company did not respond by the time of publication.