The companies fighting to keep Starlink out of South Africa

Starlink, which offers affordable broadband access, is ideal for households and businesses in rural South Africa. However, the mobile operators are doing their best to keep the service out of the country.

Starlink provides satellite-based internet connectivity to underserved areas, offering fast and affordable broadband in rural locations.

Starlink is operated by Starlink Services, an international telecommunications provider that is a wholly owned subsidiary of American aerospace company SpaceX.

South African-born billionaire Elon Musk is the largest shareholder of Space X, and he has been a vocal critic of Starlink being blocked in South Africa.

“Even though I was born in South Africa, the government will not grant Starlink a license to operate simply because I am not black,” Musk said last week.

Musk referred to South Africa’s black economic empowerment (BEE) requirements for telecommunications companies to obtain a license to offer services in the country.

For SpaceX to obtain the necessary operating licences, it must either work through a local middleman or sell 30% of its local entity to an investor classified as historically disadvantaged.

This means that people in rural parts of the country will continue to be blocked from getting access to Starlink unless a historically disadvantaged person benefits.

Many stakeholders, including the Democratic Alliance and the business sector, have slated this requirement.

DA member of parliament Natasha Mazzone said South Africa is kept in digital darkness until connected cadres can get their slice of the pie.

She explained that the BBBEE requirements demand that 30% of the implementing corporation’s equity be “transferred into their greedy hands”.

“They do not care that South Africans are trying to lift themselves out of poverty, access jobs online, teach themselves skills, and educate their children,” she said.

Well-known fund manager Piet Viljoen said it is fascinating that so-called black empowerment laws are holding back Starlink.

“I would have thought that if you wanted to empower black people, access to cheap, fast Internet in rural areas would be quite a powerful tool,” he said.

“I suppose the ANC considers the enrichment of a few tenderpreneurs more critical than uplifting its voting base.”

Starlink poses a threat to South Africa’s mobile operators

Starlink poses a significant threat to South Africa’s mobile operators. In addition to offering affordable broadband access, it also has voice calling capabilities.

Starlink’s Direct to Cell service gives satellite calling capabilities for iPhone and Android devices through its satellite network.

Starlink Direct to Cell uses specially designed satellites that function essentially as cell towers in space to expand terrestrial coverage into otherwise unreached areas.

This development is widely regarded as revolutionary, as it enables people to make calls, send texts, and browse the internet from anywhere.

Starlink Direct to Cell is already commercially available in the United States and New Zealand, enabling satellite messaging service for 4G LTE mobile phones.

This service should scare any mobile operator, especially in a country like South Africa, where affordable broadband and voice calling are not available everywhere.

For South Africa’s large mobile operators, including Vodacom, MTN, Telkom, and Cell C, the solution to this problem is to ensure Starlink is blocked.

The fight to keep Starlink out of South Africa

The good news for South African telecommunications companies is that they have the perfect weapons to fight against Starlink – local regulations and BEE.

Vodacom said Starlink should be held to the same standards as terrestrial operators, particularly regarding local ownership, control, social obligations, performance, and sanctions.

The Association of Communications and Technology (ACT), which acts on behalf of local telecommunications companies, shares the same arguments.

ACT’s members include major network operators like Cell C, Liquid Intelligent Technologies, MTN, Rain, Telkom, and Vodacom.

It believes that any attempt by the regulator, Icasa, to develop a satellite licensing framework with the hope of achieving universal broadband connectivity will be doomed to failure.

It argues that the regulator should first repair the broken framework for universal service and access to communications.

“We urged the regulator to pause its satellite inquiry and institute a formal process to review licensing provisions in the 20-year-old Electronic Communications Act (ECA),” it said.

“We have been vocal about the need for a review of licensing provisions to align them with a global trend towards a regime that levels the regulatory playing field and which is future-proof.”

ACT also insisted on a socio-economic impact assessment (SEIA) study to better align with South African legislation and consider local needs.

These are the oldest tricks in the book. Telkom has used the requirements for reviews and studies for years to protect its fixed-line monopoly.

They know that these studies are complex, open to criticism, and take a very long time. This is ideal for stalling progress and protecting incumbents against competition.

So, Vodacom, MTN, Telkom, and Cell C are doing what they are expected to do – protect their turf against a disruptive competitor like Starlink.

Vestact director Byron Lotter said he does not blame the government for preventing Starlink from operating in South Africa without requiring it to jump through a few hoops.

“MTN and Vodacom have been forced to deal with many regulatory hurdles to operate mobile data networks in this country,” he said.

“I do not doubt that these companies are lobbying hard to prevent the entry of Starlink and for good reason. It would be unfair to let these guys in without similar treatment.”

The biggest losers, which is usually the case with regulations, are ordinary South Africans. They suffer while big companies and politicians fight their turf wars.

This article was first published by Daily Investor and is reproduced with permission.