A market of more than 100 million inhabitants, where only one-third of those over 25 have a bank or mobile finance account (compared to an average ... of 58.5% in sub-Saharan Africa and 79.5% in neighbouring Kenya). An economy where one public institution, Commercial Bank of Ethiopia (CBE), alone manages 55% of outstanding credit. A banking industry so inefficient that its costs absorb 56% of its revenues, but where the return on assets is four times higher than that of Moroccan banks…
Musk, who earned his first millions by creating and reselling the online payment service Paypal, shared other commercial leads. “Starlink can be a profitable solution for telecom operators backhaul networks (intermediate networks that allow a satellite radio signal to be routed to a relay antenna),” he said.
However, has the Pretoria-born CEO of the electric car manufacturer Tesla and the space flight company SpaceX forgotten his native continent’s economic realities?
A high-cost service
Musk (a Canadian since 1988 and a naturalised US citizen since 2002) is promoting the SpaceX service as a way to connect areas that are not covered by fibre optics or 3G and 4G frequencies.
“NGOs, which until now have used VSAT links (classic satellite connections) a lot, could also implement Elon Musk’s service in remote areas without 4G, 5G or fibre,” says a senior pan-African operator executive.
Musk said he is looking to invest $20-30bn in the project to continue launching satellites and that he is expecting to acquire half a million customers over the next 12 months.
However, the service seems to be out of economic reach for most Africans: a subscriber has to pay an initial $499 (about €420) to get the equipment (a satellite dish, a tripod, a power cable and a router) and then $99 every month as connection fees.
“Some individuals who do not want their internet access to be monitored by local authorities or have homes in areas without coverage will subscribe to Starlink so that they remain unknown to local operators,” he says, adding that the decision to apply the same pricing everywhere means that the satellite constellation won’t become a service for the general public.
A problem for hard-to-reach areas
To date, the satellite internet constellation launched in 2015 has more than 1,500 small satellites positioned in near-earth orbit (between 300 and 500km above our heads). According to the company based near Los Angeles, this provides a broadband connection of between 50 and 150 megabits per second (Mbit/s) for a latency of 20 to 40 milliseconds.
In comparison, a 4G connection provides 80-90 Mbps with an average latency of 50 milliseconds. The subscription can be cancelled at any time, provided that the equipment is returned within 30 days; however, this could pose a problem for Africa’s hard-to-reach areas.
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Despite these limitations, Starlink – which is chaired by Gwynne Shotwell, an aeronautical engineer and Musk’s long-time right-hand woman – has begun discussions with Nigerian and South African regulators to obtain local operator licences. In South Africa, pre-orders are already open and the service should be operational by 2022.
“In South Africa, Starlink will be considered an Internet Service Provider (ISP), whose main distinction is that it uses satellite as its access network,” says our telecom expert. According to him, this means that the service will be subjected to two different regimes: that of ISPs and that of satellite operators such as Eutelsat, Intelsat, Arabsat and others.
Furthermore, the International Telecommunications Union (ITU), rather than the local regulator, will be in charge of allocating frequencies. However, the regulator may make a request to do so, as was the case in the US in 2019.
Already operational in 12 countries including the US, Canada, Germany, Poland, New Zealand and Australia, Starlink boasts 500,000 pre-orders and 69,000 users. At the Mobile World Congress, Musk also said he is looking to invest $20-30bn in the project to continue launching satellites and that he is expecting to acquire half a million customers over the next 12 months.
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