Starlink’s satellite saga: Legal battles and telecom titans clash in South Africa
December 11th 2023
In an article by Jan Vermeulen, the potential threat posed by Starlink, SpaceX’s Low-Earth-Orbit (LEO) satellite network, to South Africa’s mobile network operators, Vodacom and MTN, is discussed. The Independent Communications Authority of South Africa (Icasa) recently declared the use of Starlink in the country as illegal, citing the need for specific licenses. Regulatory expert Dominic Cull emphasizes that the stringent licensing process, coupled with equity ownership rules, has hindered Starlink’s entry into the market. Cull suggests that despite public statements, Vodacom and MTN are exploring partnerships with satellite projects, acknowledging the competitive challenge posed by LEO operators. He warns of potential disruptions to the telecommunications supply chain if Starlink, known for retail-centric operations, launches messaging and mobile services as planned, diverting revenues away from local businesses. The article highlights the need for a forward-looking conversation about the impact of emerging satellite services on the local market.
Starlink will eat Vodacom and MTN’s lunch
By Jan Vermeulen Handset-to-satellite communications technology being developed by Low-Earth-Orbit (LEO) network operators like SpaceX’s Starlink could threaten South Africa’s mobile network operators. This is according to telecommunications industry regulatory expert Dominic Cull, who told TechCentral that this fact is often overlooked when discussing Starlink’s legality in South Africa. The Independent Communications Authority of South Africa (Icasa) recently issued a formal government notice declaring that using Starlink locally is illegal. Icasa’s notice is the latest in a somewhat antagonistic exchange between local suppliers importing kits and helping customers sign up for Starlink’s regional roaming service. As an indication of the strained relations — one company calls itself IcaseSePush. According to Icasa, operators like Starlink need Individual Electronic Communications Service (I-ECS) and Individual Electronic Network Service (I-ECNS) licences to offer services in South Africa legally. Cull explained that an ECNS licence lets you build a physical network and sell wholesale access on it, while the ECS licence lets you deal directly with end-users. Industry sources have told MyBroadband that Starlink hasn’t launched in South Africa because obtaining these licences is onerous. Currently, the only way to get the necessary licences is to buy them from someone who already has them or enter into some other commercial arrangement with a licensed entity. The Internet Service Providers’ Association of South Africa (Ispa) — for which Cull is the regulatory advisor — decried this state of affairs in a recent media statement. Ispa said “second-hand” licences sell for as much as a million rands each, effectively keeping entrepreneurs out of the market and undermining government’s transformation objectives.
Equity rules
Additionally, acquiring a licence is not as simple as Starlink paying an existing licensee R2 million and picking up the paperwork — Icasa must approve the transfer. For that, Starlink’s local subsidiary or partner will have to comply with ownership requirements stipulated in the Electronic Communications Act, which Icasa started cracking down on around ten years ago. The industry regulator warned in 2014 that it had noticed “an alarming trend of transfer of control and ownership applications that sought to diminish levels of equity ownership by historically disadvantaged groups (HDGs).” In response, Icasa stated it would no longer approve licence transfer applications that result in less than 30% equity ownership by HDGs. According to Icasa, this didn’t have the necessary effect on the industry. By 2017, around 53% of I-ECS and I-ECNS licensees did not comply. Icasa then kickstarted the process to introduce regulations to address equity ownership in the telecommunications sector, beginning with a 2017 discussion document. This culminated in draft regulations in 2020 that would make 30% HDG ownership insufficient for many Internet service providers — they would need to have 30% black ownership within 24 months of the regulations being promulgated. Icasa’s proposed amendments were met with severe industry backlash. It was around this time that Starlink was looking to enter the South African market. Pre-orders for Starlink in South Africa first went live at the start of 2021, with the website stating that it aimed to launch by 2022. While Icasa’s proposed equity ownership rule amendments were never introduced, the regulatory uncertainty was enough to sour Starlink on South Africa. The country’s rollout was soon deprioritised. By November 2021, Starlink had delayed the South African launch to 2023. By December 2022, it was changed to “unknown”. From being one of the first African rollouts, South Africa is now one of the few African countries that does not have a target launch date.