Safaricom is Pushing CA Against Starlink Expansion

The Kenyan telecom landscape is at a critical juncture as Safaricom, one of the country’s leading telecom providers, is apparently petitioning the Communications Authority of Kenya (CA) to reconsider the regulatory framework governing satellite service providers like Starlink. An unverified document, dated July 5, 2024, that has been circulating on social media, reveals Safaricom’s concerns about the potential impact of Starlink’s aggressive expansion on the local telecom market. These concerns are echoed in a recent Business Daily article, which discusses the need for a new policy on satellite internet providers in Kenya.

Starlink’s Aggressive Market Strategy

Starlink has taken a bold approach to its expansion in Kenya, this aggressive marketing has been seen to – in due time – potentially significantly disrupt the market. Initially, the cost of a Starlink hardware kit was over KES 90,000, a price that placed the service out of reach for many potential users. However, Starlink has since slashed these prices dramatically, now offering a rental option that reduces the upfront cost to just over KES 2,700.

Additionally, Starlink has made its kits widely available, not only online but also in physical retail outlets such as Carrefour and Naivas supermarkets. This broad distribution strategy, combined with the promise of high-speed internet up to 200 Mbps, has made Starlink a formidable competitor to traditional telcos like Safaricom and Airtel.

Telcos’ Concerns and Lack of Innovation

Safaricom’s concerns, as outlined in the document, revolve around the threat that independent satellite providers pose to the local telecom industry. The company argues that satellite service providers should be required to partner with local licensees rather than operate independently. Safaricom’s reasoning is rooted in the substantial investments that local telcos have made in infrastructure and spectrum licenses. Allowing satellite providers like Starlink to operate without local partnerships could undermine these investments, potentially destabilizing the market.

This pushback from Safaricom also highlights a broader issue within the Kenyan telecom industry: the lack of innovation among local telcos. Despite the introduction of 5G technology, Kenyan consumers have been underwhelmed by the actual performance and value provided by these services. Safaricom’s 5G rollout, for example, came at high costs for routers, and subpar speeds, far below the expectations set by the initial 5G promises. In contrast, Starlink’s services have been seen to be favourable among consumers, particularly in underserved areas where traditional ISPs have struggled to provide reliable and affordable internet.

The Regulatory Ambiguity

A key issue in this unfolding situation is the regulatory ambiguity surrounding satellite service providers like Starlink. Unlike traditional telcos, which are heavily regulated by the CA, it remains unclear how satellite internet providers fit into the existing regulatory framework. Safaricom’s petition to the CA suggests that stricter regulations are necessary to level the playing field. If the CA sides with Safaricom, it could impose new regulations on Starlink, potentially slowing its rapid expansion. On the other hand, if the current regulatory framework remains unchanged, Starlink could continue to disrupt the market, forcing local telcos to rethink their strategies and improve their offerings.

The Road Ahead

The coming months will be crucial in determining how satellite companies operate locally. The outcome of this regulatory debate could reshape the Kenyan telecom market, with significant implications for both consumers and service providers.