In spite of the recent tariff hike approval for telecom operators which is being trailed by controversies among stakeholders, there are indications that many subscribers may dumb their respective networks for Starlink, a global satellite service provider.
The telcos’ uneasiness is linked to the push by Starlink to deploy its Direct-To-Phone service which will potentially snatch existing and prospective subscribers of telcos, reports Daily Independent.
Last week, January 27, Starlink started beta testing its direct-to-mobile service, a project that has the potential to revolutionise the worldwide telecom sector. SpaceX has direct-to-mobile capability on 13 of the 20 satellites it put into orbit.
Users in even the most remote locations can make phone calls and access broadband internet services from the sky thanks to direct-to-mobile connectivity, which enables satellites to function as cellular towers in space.
This development is poised to challenge legacy telcos like MTN and Airtel, with the aim of closing the digital divide in Nigeria.
While the Nigerian Communications Commission’s (NCC) approval of a 50% tariff increase marks a pivotal moment for the telecom sector, with the potential to reshape the financial outlook of key industry players, there are also concerns that subscribers may opt for cost-saving strategies such as exploration of social media services such as WhatsApp for communication, and ultimately, to migrate to Starlink.
Acknowledging the potential economic threat Starlink poses to the telecom and internet service operators in the country, stakeholders in the Nigerian telecommunications industry had expressed their worries over the possible dominance of Starlink in Nigeria’s Internet Service Providers (ISPs) market.
Speaking recently at a forum with the theme: “Starlink: A Threat or Prospect to the Sustainability of Nigeria ISPs, MNOs and Infracos” held in Lagos, stakeholders acknowledged the fact that the emergence of Starlink has re-introduced satellite internet technology to the market space. They, however, noted that the telecoms regulator needs to address the business model to protect local players and create healthy competition.
Speaking on the development, the Chief Executive Officer, eStream Network, Muyiwa Ogungboye said that Starlink can be a threat to the local ISPs and telcos if the gaps found with the solutions are treated.
According to him, if the objective of the NCC with Starlink’s introduction is to provide high-speed internet access to underserved and rural areas in the country, this solution will not serve the purpose.
On his part, the Head of Operations, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbolahan Awonuga, said the licences given to Starlink to operate in the country might lead to the extinction of ISPs and stagnation of telcos as it will dominate the industry’s market space if not checkmated.
Awonuga brought to remembrance the extinction of Code Division Multiple Access (CDMA) in the Nigerian telecoms market, urging NCC to create a level playing field for operators to survive and thrive.
Beyond the prospective advantages Starlink will have over existing operators in the country, it is believed that Nigerians will experience a wide range of benefits from its deployment, as many underserved and unreached areas will be able to access the services in the operator’s suite.
Azeez Amida, the Chief Executive Officer, Pan African Towers, said Starlink might both be a threat and a prospect but the wide adoption of the 5G network in Nigeria will pose a greater challenge to the solution.
Starlink launched its operations in Nigeria in December 2022, becoming the first African country to receive the satellite-based internet service. While it has been praised for providing internet access to remote and underserved areas, the company has faced criticism for its pricing model, which some argue is beyond the reach of the average Nigerian.
With the potential to completely transform the global telecom industry, Starlink has begun beta-testing its direct-to-mobile service. From the skies, users can access broadband internet services and make phone calls, even in the most remote regions SpaceX launched a number of its low-Earth orbit satellites in 2024 to prime its constellation for a direct-to-mobile offering.
“Starlink direct from satellite to cell phone internet connection starts a beta test in 3 days,” Musk said in an X post. In 2024, SpaceX prepared its constellation for a direct-to-mobile offering by launching several of its low-Earth orbit satellites.
For instance, SpaceX has direct-to-mobile capability on 13 of the 20 satellites it put into orbit in June 2024. Thirteen of the 20 additional satellites that were deployed to the constellation ten days later could also establish direct connections with mobile phones.
Starlink’s ambitious plans for Nigeria and indeed Africa have drawn criticism from local telcos and internet service providers, who argue that the global company has an unfair advantage due to its limited investment in local network infrastructure.
It is generally believed that the introduction of Elon Musk’s satellite internet service, Starlink, will widen competition in the Nigerian internet market while disrupting the internet market.
“We have a foreign company coming in, doing the bare minimum, and then taking market share from companies that have invested heavily in the continent and are providing jobs for thousands of people,” said Temidayo Oniosun, CEO of Space in Africa, a Lagos-based media and analytics company focusing on the African space and satellite industry.
Steve Song, a policy advisor at the Mozilla Foundation and internet access advocate, contends that Starlink satellites are “economically lopsided, extracting value without contributing to local economies”.
“Starlink will not even invest in ground stations in countries where they don’t see enough revenue. We need to talk about space and its regulation,” Song explained.
Starlink was included alongside 37 other Internet Service Providers, increasing the number of ISPs issued licenses to operate in Nigeria to 255 as of September 2022, up from the 187 reported in December 2021.
Major concerns of telcos are the capacity of Starlink to extend networks in rural and isolated locations, where infrastructure rollout is more costly and less profitable. Also, satellite service providers like Starlink gain from being able to reach a wider audience globally without having to make investments in systems that interact with customers.
Industry observers believe that the recent 50 percent tariff increase for telecom operators would cause a drop in subscriber base because of the economic challenges in the country.
Moreover, they also posit that some existing customers of the telcos, especially corporate organisations, will migrate to Starlink because of the internet speed and reliable value of the service it offers.
The greater concern is the deployment of its Direct-To-Phone Service which will definitely snatch existing and prospective subscribers of telcos.
