Impact of Starlink launching in South Africa

When Starlink officially launches in South Africa, one of the most immediate effects will be that existing users will pay much less for the satellite broadband service than they currently do.

Based on information from well-placed industry sources, thousands of households, businesses, and even government departments currently use Starlink in South Africa, even though it is not licensed to operate locally.

They did this by exploiting Starlink’s regional roaming service, which let subscribers use their Starlink kits outside their home country — but on the same continent — for an additional monthly fee.

Following a recent price hike, Starlink Roam for kits registered in nearby Eswatini costs R1,900 per month, whereas the monthly fee for a standard Starlink service is R950.

Aside from the additional cost for roaming, SpaceX’s terms and conditions for Starlink Roam only allow you to roam for 60 days at a time, after which the kit must return home.

Although this latter requirement has not been strictly enforced, Starlink recently started disconnecting users in South Africa for violating this rule.

A recent change to its roaming service, which effectively upgraded regional roaming to global roaming, appears to have given many South Africans an additional 60 days’ grace.

If Starlink officially launched in South Africa, this administrative burden and the extra cost would go away.

However, some industry players are concerned about the competitive impact of Starlink launching in South Africa — especially if it elects to deal directly with customers instead of working through resellers, as it does elsewhere in the world.

They are worried that Starlink could disrupt local satellite broadband resellers and wireless Internet service providers (Wisps), effectively destroying many of these small businesses.

Longer term, as Starlink’s technology improves, it could represent a threat to local ISPs and broadband infrastructure providers.

However, South Africa’s largest Wisp, Herotel, said it is not concerned about Starlink launching in South Africa.

“We think it’s a great product to connect rural South Africa, and we would definitely want to use it — to manage and support the technology for our customers who can afford it,” said Herotel CEO Van Zyl Botha.

Regarding what they believed would help ensure Starlink entered the market on fair terms, Botha said there should be no exclusivity with regard to distribution.

“We would like to use it as an additional technology to fibre and fixed wireless to solve connectivity issues for our customers,” he said.

The Internet Service Providers’ Association of South Africa (Ispa) also said it has no concerns about Starlink coming to the country, provided it complies with all the same rules its members must abide by.

Ispa regulatory advisor Dominic Cull told MyBroadband that for the playing field to be level, Starlink must comply with the Electronic Communications Act, Rica, tax laws, and all other regulations local ISPs are subject to.

The Regulation of Interception of Communications and Provision of Communication-related Information Act (Rica) is South Africa’s lawful interception legislation.

It stipulates the circumstances under which law enforcement agencies may get an order to wiretap a suspect’s communications.

A 2021 Constitutional Court ruling struck down parts of Rica and, in an extreme step, introduced interim legislation while Parliament developed an amendment to fix the law’s shortcomings.

It gave Parliament until 4 February 2024 to correct the defects.

Among others, the ruling banned mass surveillance, introduced a mechanism for the designated Rica judge to exercise discretion when the surveillance target is a journalist or practising lawyer, and added provisions for post-surveillance notifications.

A bill to address the issues raised in the ruling was introduced in August 2023 and made its way through Parliament by 7 December. It is currently sitting on the President’s desk, awaiting his signature.

Another critical — and controversial — compliance issue is Starlink’s need for network, service, and spectrum licences from the Independent Communications Authority of South Africa (Icasa).

The first issue is that Icasa has not issued new Individual Electronic Communications Network Service (I-ECNS) and Individual Electronic Communications Service (I-ECS) licences in fourteen years.

While the Minister of Communications and Digital Technologies must issue a policy directive before Icasa can issue an invitation to apply for I-ECNS licences, Cull previously said this is a relatively simple matter.

Regardless, even if Icasa issues invitations to apply for new licences, it could take months for them to be issued.

Without these licences, Starlink cannot apply for the radio frequency spectrum licences that its satellites use.

Starlink’s alternative options are to buy someone else’s licences, acquire a company that has the requisite licences, or partner with a licensed entity (or entities).

However, the first two alternatives have a significant obstacle — BEE ownership requirements that Icasa recently started enforcing.

Under the Electronic Communications Act, all Individual-type licence holders must be 30% owned by historically disadvantaged groups (HDG).

This includes black people, women, youth, and people with disabilities.

It is unlikely that SpaceX will change its ownership structure or start collecting shareholder demographic data just for regulatory compliance in South Africa.

Therefore, the most logical course would be to establish a local entity and bring on a 30% BEE shareholder.

CIPC records show that SpaceX already registered the local entity in 2019 — SpaceX Internet Services South Africa (Pty) Ltd.

The only director listed in company records currently is Lauren Dreyer, vice president of Starlink Business Operations.

With SpaceX already preparing the ground for a Starlink launch in 2019, this raises the question — why is it rolling out to all of South Africa’s neighbouring countries first?

Although SpaceX has not officially answered the question, industry sources close to the matter have said that concerns over South Africa’s BEE ownership requirements were the main problem.

This was because Icasa published new regulations on 31 March 2021 stipulating that 30% HDG ownership was no longer good enough for Individual licence holders — they had to be 30% black-owned.

Following severe industry backlash during the regulations’ public consultation phase, Icasa suspended this provision when it published the final amendment.

However, these new regulations officially remain on the books, with Icasa able to enact them at any future date — or not at all.

The regulator has given no indication of whether it will withdraw or implement the regulations, leaving a sword hanging over the whole telecommunications industry in South Africa.