Starlink black ownership plan in South Africa

Communications minister Solly Malatsi is talking to the Independent Communications Authority of South Africa (Icasa) about creating an equity equivalent programme for multinational telecommunications companies, MyBroadband has learned.

This is in preparation for issuing a policy direction that Icasa urgently consider implementing such a programme, which would provide an alternative way for overseas companies to meet South Africa’s BEE ownership requirements.

Although Malatsi was careful not to mention the SpaceX-owned Starlink when he first announced the plan in October, his meaning was plain.

“This is part of an initiative to significantly expand access to broadband connectivity to poor South Africans and people living in remote parts of the country,” Malatsi stated.

While any multinational telecommunications operator could benefit from an equity equivalent programme, trying to establish one urgently points to Starlink.

Thousands of households and businesses in underserviced areas are already using Starlink, even though it is technically operating in the country illegally.

However, using Starlink’s roaming service as a permanent Internet connection in South Africa has become increasingly difficult.

SpaceX has cracked down heavily on roaming users in the past year, increasing the price and adding a surcharge to activate a kit outside its home country.

It has also started enforcing its terms and conditions, which stipulate that a kit may only roam for 60 continuous days before it must return to its home country.

According to recent feedback on local Starlink community groups, the kits must be used in their country of registration for at least several hours every two months to be reset.

This rule aims to discourage customers in more affluent countries from abusing cheaper roaming plans available elsewhere in the world.

However, in South Africa, people used the roaming plans to buy Starlink’s services — not cheat it out of money.

Regardless, SpaceX was violating African telecommunications regulators’ rules. With Starlink expanding its official footprint into more African countries, it had to begin complying with local regulations.

More recently, SpaceX halted sales of Starlink’s roaming plans in all African countries.

This has made it more difficult and expensive for all future and some existing South African customers to use the service.

It has even paused Starlink sales to users around certain major cities, with its availability map showing the area as “sold out”.

Affected cities include Maputo in Mozambique, Harare in Zimbabwe, Lusaka in Zambia, Nairobi in Kenya, Accra in Ghana, and Port Harcourt, Warri, Benin City, Lagos and Abuja in Nigeria.

Based on user feedback, Starlink’s service has experienced significant speed degradation in recent months, suggesting that its capacity over Africa is under strain.

South Africa was previously one of the first countries on Starlink’s list of planned rollouts, with pre-orders for the service launching locally in February 2021.

The low Earth orbit satellite broadband service initially targeted a 2022 launch for South Africa.

However, in March 2021, Icasa issued new regulations that changed ownership equity laws for telecommunications companies in South Africa.

These new regulations stipulated that it was no longer sufficient for national network operators and service providers to be 30% owned by historically disadvantaged groups, which include black people, youth, women, and people with disabilities.

Instead, telecommunications providers with a national footprint had to be 30% black-owned.

Due to the industry backlash during the public consultation period for these regulations, Icasa suspended this provision until an unspecified future date.

Therefore, the old ownership equity requirements remain in effect, but the cloud of regulations that could change at the drop of a hat has hung over the industry for three and a half years.

In April 2021, Icasa also told MyBroadband that Starlink would need to comply with the black ownership requirement.

Six months after the regulations were published, around November 2021, Starlink pushed back its planned launch in South Africa to 2023.

Nearly a year later, in September 2022, it was changed to “unknown’, where it has remained until today.

Although SpaceX never confirmed this regulatory change and the uncertainty around it caused it to halt its South African plans, well-placed industry sources have said they were absolutely to blame.

Earlier this year, Malatsi met with representatives from Starlink to discuss a potential investment into South Africa, while President Cyril Ramaphosa met with Elon Musk.

Malatsi explained the purpose of his meeting was to get a sense of Starlink’s plans for potential investment in South Africa while explaining the current regulatory requirements.

He also provided guidance on what Starlink would need to do to comply.

In response to the article about the meeting, Elon Musk posted on Twitter/X that he would love to invest in and otherwise support South Africa.

Malatsi responded with his own post on Musk’s social media platform.

“We’re committed to broadening digital inclusion and exploring every avenue that will help achieve this while contributing to economic growth and jobs.”

While Malatsi’s proposal does not eliminate equity requirements, an equivalent programme would allow companies to fulfil the requirements of BEE ownership through a public or private scheme.

“After consultation with Icasa, the proposed policy direction will be published for comment as per the Electronic Communications Act,” Malatsi stated.

While those consultations are currently underway, it is clear that establishing an equity equivalence programme for the telecommunications sector is no fast-track solution.

If the goal is to get Starlink to launch in South Africa as quickly as possible, it may be necessary to consider alternatives.

For example, SpaceX could consider partnering with local companies that already have the necessary network and operating licences to get the ball rolling in South Africa.