Is Starlink emerging as a significant market player, disrupting competition, and potentially raising prices over time (“boiling the frog”).
Over the past few weeks, I had the opportunity to visit Africa, attending AfricaCom in Cape Town and spending time in Ghana with former colleagues in the broadband sector. A recurring topic of discussion was Starlink and its activities in Africa. While there were some positive sentiments, many expressed concerns about its approach and impact.
To be clear, I fully support initiatives that aim to provide affordable connectivity and lower communication costs. However, achieving this should involve reducing the actual cost to consumers through strategies like infrastructure sharing, improved spectrum management, optimized dense network technologies, and government-backed gap financing for areas where infrastructure deployment is prohibitively expensive. The challenge arises when price wars or unsustainable market strategies lead to unmet expectations, hinder competition, and ultimately harm the market’s competitiveness.
Here are my observations from recent discussions and market insights:
1. Starlink’s Pricing
The price of Starlink’s residential standard service is incredibly attractive:
• $65 in Ghana
• $38 in Zambia
• $22 in Nigeria
This includes unlimited bandwidth but no guaranteed speed commitments.
2. Fiber Pricing Comparison
Fiber pricing in these markets varies significantly by speed and data limits:
• Zambia: 20 Mbps unlimited fiber costs between $94 and $106.
• Nigeria: 15 Mbps unlimited fiber ranges from $15 to $50.
• Ghana: 30 Mbps unlimited fiber costs $102, while capped plans with 200GB of bandwidth range from $20 to $23.
3. Impact on Market Dynamics
Price wars often hurt smaller competitors. We’ve witnessed the fixed wireless market in Ghana collapse, with most major ISPs exiting the market due to financial constraints and unsustainable debt. Currently, Telesol remains the sole active fixed wireless access (FWA) licensee as of August 2024.
| Fixed Wireless Operator | Ceased to operate |
| Blu Telecoms | 2021 |
| BusyInternet | 2022 (disconnection from ATC, due to debts) |
| Surfline Communications | 2023 (co-location tower pulled plug) |
| Zipnet | 2022 |
4. Deployment Focus
Starlink’s service isn’t limited to rural, underserved areas. Instead, its adoption is concentrated in urban centers with existing infrastructure, as seen in Nigeria and Ghana, where the “sold-out” zones are predominantly in major cities.
https://www.starlink.com/ng/map (search for Ghana and Nigeria)
5. Capacity Challenges
Satellite networks inherently face downstream RF link limitations. From experience designing mobile networks, initial users enjoy excellent service quality, but as adoption grows, limited capacity becomes an issue unless more spectrum is allocated or the network is densified.
6. Impact on Fiber Rollouts
Fiber operators are halting or delaying rollouts because they cannot achieve cost recovery in a market where prices are driven too low. This lack of new infrastructure development could harm consumers in the long term.
7. Industry Concerns
I’ve heard consistent dissatisfaction from operators, ISPs, and regulators regarding Starlink’s approach. The fear is that it might emerge as a significant market player, disrupting competition, and potentially raising prices over time (“boiling the frog”).
My recommendations:
1. Promote Symbiosis with Local Operators
Starlink’s direct-to-consumer strategy bypasses the local telecom value chain. While the product is innovative and impactful, integrating local operators into the service chain could foster mutual growth. Local partners shouldn’t just sell equipment—they should play an active role in delivering and managing the service.
2. Fair Regulatory Practices
I’m not advocating for over-regulation, but if Starlink becomes a significant market player, it should be subject to the same regulatory obligations as local operators. This includes adhering to universal service fees to support infrastructure deployment in underserved areas.
3. Sustainable Market Practices
We need competition and investment in terrestrial infrastructure. Starlink’s operations must ensure they complement—not replace—local operators’ efforts, allowing for healthy market dynamics and sustainable growth.
Final Thoughts
Starlink is a brilliant product with transformative potential, but its long-term success should align with the broader ecosystem. Collaboration with local operators, fair regulatory frameworks, and infrastructure development are key to creating a sustainable future for Africa’s connectivity landscape.
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