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Starlink disrupts South Africa’s satellite internet market, leaving established providers struggling

February 1, 2024
in Business
Starlink disrupts South Africa’s satellite internet market, leaving established providers struggling
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SpaceX’s Starlink broadband service is reshaping South Africa’s satellite internet landscape. Existing providers like Vox Wireless are losing customers to Starlink due to its high-speed, low-latency, and cost-effective offerings. Starlink’s direct-to-market model has caused tension with resellers, but regulatory hurdles remain, as it operates without local telecoms licenses. Eutelsat OneWeb, targeting enterprises, launched in South Africa, but consumer-friendly alternatives like Amazon’s Project Kuiper are awaited. While criticised for their business models, Starlink is making inroads, serving diverse sectors from mining to schools and restaurants.

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By Hanno Labuschagne

SpaceX’s Starlink broadband service is already impacting at least one established satellite provider despite not being officially available locally.

Satellite broadband services have been beaming Internet connectivity to South African homes and businesses, mainly those in remote areas, for several years.

Using large geosynchronous (GEO) satellites orbiting around 35,000km above the Earth, their operators can provide Internet access to customers with a specially designed dish antenna and an active subscription.

Two of the world’s main satellite network operators — Eutelsat and Hughesnet — resell their offerings through Internet service providers (ISPs) like Morclick and Vox.

The big problem is that these services are expensive — in part due to the high costs of launching and managing satellites in space and the relatively low number of customers they rely on to make a profit.

For example, Vox’s Eutelsat uncapped packages start at R700 with download speeds of 5Mbps and upload speeds of 2Mbps.

To get a 50/5Mbps package, you must spend R2,696 per month, compared with the R500 to R600 that a fibre-to-the-home (FTTH) product with symmetric 50Mbps speeds typically costs.

These products also have highly constrained bandwidth, so stringent fair use policies limit speeds after only a few hundred gigabytes of monthly usage.

In addition, the altitude at which the satellites operate means latencies are typically over 600ms, making applications like videoconferencing and competitive multiplayer online gaming very difficult.

Enter Starlink

Low-earth orbit (LEO) broadband services such as SpaceX’s Starlink use smaller, more densely-packed satellites that operate much closer to Earth to beam high-speed, low-latency connectivity to the globe.

As a result, Starlink can provide speeds over 100Mbps to most of its users, while latency is also substantially lower than GEO services.

While the once-off equipment cost of a Starlink kit is expensive, between 2.2 and 2.3 million customers had already signed up for the service by December 2023.

In South Africa, Starlink is yet to apply for regulatory approval and cannot officially be shipped to a local address.

However, it is possible to access the service by registering the kit to an address where Starlink is officially supported, importing the kit to South Africa, and enabling Starlink’s regional or global roaming service.

If done via eSwatini, users will pay R12,000 for the kit and R1,370 for the regional roaming service.

At least 14,000 Starlink kits have been imported to South Africa using third-party providers since early 2023.

Starlink dish at Mathekanyane Lookout in Kruger National Park

Vox Wireless has already lost customers to Starlink, and according to the division’s head, Theo van Zyl, the service definitely poses a threat to existing consumer satellite services.

Van Zyl said Vox was currently in discussion with LEO operators to add their offerings to its product line-up, but he could not provide more details at this stage.

However, he did reveal that Starlink was not willing to work with resellers in South Africa due to its direct-to-market model, which undermined current service providers.

This would not have been a problem if Starlink had the required telecoms licences.

“Operators in South Africa are liable to pay Icasa licensing which adds costs to pricing, where at this stage, Starlink is not liable for these costs,” Van Zyl said.

Don’t expect OneWeb to come to the rescue

One LEO provider has already officially launched its service in South Africa — Eutelsat OneWeb, offered by enterprise connectivity provider Q-KON.

However, it does not offer solutions for individuals or small businesses.

Instead, it is focused on the enterprise market, which is willing to pay substantially more for reliable Internet connectivity.

According to Van Zyl, the 100/20Mbps uncapped OneWeb package with a fair use policy of 500GB is expected to cost roughly R30,000 per month.

The uncapped package with no fair usage policy (FUP) and a committed information rate could sell for as much as R1 million per month.

OneWeb parabolic dishes installed on roof of a business in South Africa

Van Zyl said that there was still hope that affordable LEO services could officially launch to consumers in South Africa.

“Amazon’s Project Kuiper could find its way into South Africa, but it’s still unclear as to how they would be able to operate here and if they would form partnerships with local players,” Van Zyl stated.

Vodacom has announced an official partnership with Project Kuiper to bring 4G/5G connectivity to rural areas.

MTN has also confirmed it is in discussions with Starlink over using its cellular roaming service.

However, these services will be much slower and more bandwidth-limited than Starlink or Project Kuiper with a fixed or mobile dish.

They will primarily be intended for use in scenarios where tower-based communication is unavailable.

QKON Group CEO Dawie De Wet has criticised business models followed by operators like Starlink, stating these would not “add enough value” to the ecosystem.

“The ‘light-touch’ models are based on limited in-country investments while maximising subscription payments, which will naturally be questioned by governments and regulators with a more long-term interest,” De Wet said.

“Eutelsat OneWeb is well experienced in providing services to the African continent and clearly understands the value in engaging with the industry and enabling the end-to-end ecosystem for long-term sustainable business benefits, with the technology being only the enabling part.”

“The strategic interests, focus and priorities of the Eutelsat OneWeb environment are clearly demonstrated as they are working with regulators in Africa to map a win-win for all.”

Although Starlink’s business offerings are not as highly specialised as OneWeb’s, it does offer higher-performance dishes specifically designed for businesses with more demanding speed and bandwidth requirements.

According to third-party Starlink importers like IcaseSePush and StarSat Africa, these services are already being used by businesses in South Africa — including major mining companies, rural schools, and a number of vehicle dealerships and restaurants, including certain Toyota and KFC branches.

Read also:

South African Mobile giants are embracing Starlink and other satellite networks
SA’s ‘equity’ hurdles limit investment in satellite internet service, Starlink
Tech giants’ $10 trillion battle: Microsoft, Alphabet, Meta, Amazon, Apple’s market showdown

This article was first published by My Broadband and is republished with permission

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