Political and Telco roadblocks stall Starlink's South African launch

Key topics:

• Telcos use delay tactics to block Starlink's entry into South Africa

• Icasa faces political pressure over BEE-aligned satellite regulations

• Critics say regulatory delays harm rural access to affordable Internet

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By Jan Vermeulen

South African telecommunications operators are using techniques from an old bag of tricks to indefinitely delay Starlink’s ability to enter the country without going through middlemen.

This comes after the Independent Communications Authority of South Africa (Icasa) began public consultations on developing a regulatory and licensing framework for satellite services in South Africa.

Communications minister Solly Malatsi also recently published a proposed policy direction to align the telecoms industry’s BEE and ownership equity requirements with national legislation.

If finalised, the policy direction would request that Icasa align its regulations’ various B-BBEE and equity ownership requirements with the B-BBEE Act and ICT Sector Code.

This has been a politically fraught endeavour, with Malatsi “invited” to appear before the Parliamentary Portfolio on Communications for a grilling by ANC, EFF, and MK MPs.

At the same time, incumbent network operators have opposed these proposed regulatory reforms on various fronts.

The Association of Communications and Technology (ACT), an industry body representing six major carriers, recently cautioned against changes to South Africa’s telecom regulatory regime.

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

It believes Icasa’s attempt to develop a satellite licensing framework with the hope of achieving universal broadband connectivity will fail.

ACT argued 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 study to better align with South African legislation and consider local needs.

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

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

Rather than laying the foundation for regulatory reform, these types of reports open an additional angle of attack to further frustrate the process.

So, the regulator and the minister are damned if they do, and damned if they don’t. If no impact assessments are conducted, any regulatory amendments will be challenged on that basis.

However, if they conduct an assessment and it finds in favour of reforms, the operators will no doubt challenge some aspect of the studies to argue that they were malformed or — a favourite term — “irrational”.

Protecting their turf

This is not unexpected from Vodacom, MTN, Telkom, and Cell C. Faced with a potentially disruptive competitor like Starlink, which company would not defend its territory by any means, including weaponising BEE?

Vestact Asset Management director Byron Lotter said he has no doubt Vodacom and MTN are lobbying hard to prevent Starlink’s entry into South Africa — and for good reason.

“I’m a big fan of Starlink, especially after using it while travelling to remote places in Southern Africa,” Lotter wrote in a recent Vestact newsletter.

“I do not blame our government for preventing Starlink from operating in South Africa without jumping through a few hoops.”

Lotter argued that MTN and Vodacom have been forced to deal with many regulatory hurdles to operate mobile data networks in South Africa.

“They have also ploughed in billions of rands, building infrastructure, creating jobs, and connecting most of our country to the Internet,” he said.

“Sometimes they have been forced to provide a signal in remote areas, even if it didn’t make financial sense. But they did it to please the regulators.”

Therefore, it would be unfair to let Starlink in without similar treatment.

More than equal treatment

However, in addition to equal treatment, Vodacom has advocated for guardrails to be established to govern how satellite services integrate into terrestrial infrastructure.

South Africa’s largest mobile operator said this was to ensure that satellite players would not harm existing services to consumers or the associated infrastructure investments.

“A prudent approach would be to consider satellite operators’ direct-to-device services as supplementary infrastructure providers to local licensees,” Vodacom said.

Direct-to-device refers to a satellite service delivered directly to a smartphone or similar consumer-grade device.

Vodacom suggested that Icasa clarify that satellite operators who intend to provide D2D services need to gain the agreement of mobile network operators on mutually agreeable commercial terms.

However, while big companies fight their turf wars and politicians posture to present a particular ideological stance, ordinary South Africans are the biggest losers.

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.”

This article was first published by MyBroadBand and is republished with permission