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Friday, June 14, 2024

Starlink may send Internet Service Providers (ISPs) packing as GSM did to CDMA

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By Sonny Aragba-Akpore

Apart from telecommunications companies (telcos) who provide ubiquitous internet services today, only few conventional internet service providers (ISPs) offer pockets of a semblance of service.

The situation now is akin to the advent of Global System of Mobile Communications (GSM) in 2001 when everyone migrated seamlessly to Digital Mobile Service. Before GSM, there were Time Division Multiple Access (TDMA),Code Division Multiple Access (CDMA) among others. But all that has now been confined to the dustbin of history.
No one, not even telecommunications regulators, the Nigerian Communications Commission (NCC) can volunteer reasons for the extinction of these once vibrant operators that provided services despite the threat of comatose Nigerian Telecommunications Limited (NITEL).

Industry players are also strangely silent about the fate of TDMA, CDMA and others.

If we saw the threat of GSM to TDMA and CDMA, are we seeing in clear terms the likely fate that will befall Internet Service Providers (ISPs) following the entry of Elon Musk’s Starlink in the Nigerian telecom environment?

Starlink came with disruptive technologies that are already making a world of difference for consumers and we look on as if nothing is happening.The company came prepared.

It obtained licences from the NCC and got various permits and approvals to flag off the business of internet services via satellite and equally signed Memorandum of Understanding (MoU) and distribution agreements with Nigerian companies including,Technology Distribution Africa (TD),a big distributor of major technology brands and promoted by a restless technology czar, Leo Stan Ekeh.

Starlink didn’t stop there, it has decided to take services to even the unserved and under served communities in Nigeria and parts of Africa for which TD boasts it’s ready for the long haul partnership.

Although, the Internet connectivity provider, Starlink has prohibitive entry level and subscription prices, it’s still going on with what it sees as an agenda for a potential captive market as a result of not very robust services by other ISPs and when it slashed the price of its hardware to N440,000 recently,the company thought it was doing a big favour to subscribers. This follows the recently increasing strengthening of the naira against the dollar. This accounted for 45 per cent reduction from the N800,000 cost of the hardware router earlier.

According to a new price update released by the company, the monthly subscription for the internet service remains unchanged at N38,000. “N440,000 new hardware price. Unlimited high-speed internet for N38,000 per month, by every standard is high and prohitive “but it is available everywhere in Nigeria,” the internet company said on its website.

As of February 2024, the Starlink router was sold for N378,000. An increment regime implemented in early March saw a price jump to N800,000. This was evidently in response to the rapidly declining value of the naira to as high as N1900 to a dollar.

But by Starlink’s aggressive marketing being deployed, can indigenous ISPs cope with this complex competition?
So far, both wireless and cable ISPs are jolted and returning to the drawing board to rejig their strategies for competition with Musk reputed to be one of the richest men in the world.
And with satellite infrastructure dotted around the globe, Starlink is ready to give local ISPs a run for their money?

Will Starlink push local ISPs into extinction and out of relevance like GSM did to CDMA?

Space Exploration Technology Corporation (Space X ), owners of Starlink got six licenses in a row from the NCC and is expected to deploy nearly $30b over time for the Nigerian operations alone.

The government is excited that with the entry of Starlink, it may achieve 70% broadband connectivity by 2025 as enshrined in the National Broadband Plan (NBP) 2020–2025.
But is the government just desperate to achieve this at the expense of low purchasing powers of subscribers Time will tell.

Starlink’s six licenses include that for ISP, Gateway Service Provider, International Data Access (IDA), Sales and Installation Major, Gateway Earth Station and Very Small Aperture Terminal (VSAT) thus making it a mega player and a big threat to other players in the industry.

Starlink officially announced its presence in Nigeria in January 2023. The company, which initially quoted its prices in dollars at $600 for the hardware and $43 for the subscription, changed to naira upon its official announcement.

According to Internet Service Providers (ISPs) data released by the Nigerian Communications Commission (NCC), Starlink is now one of the leading ISPs in Nigeria in terms of customer numbers. As of Q3 2023, Starlink Nigeria’s customer base stood at 11,207.

While cable cuts remain a nightmare, Starlink’s boasts of bridging the gap, with its potential impact extending far beyond addressing temporary outages. These include reaching Underserved Areas where traditional ISPs often struggle to reach remote regions due to the high cost of infrastructure deployment.

Starlink’s satellite-based approach can effectively bridge this gap, offering high-speed internet access to previously underserved communities by unlocking educational and economic opportunities for millions of Nigerians currently excluded from the digital world.

Starlink boosts Business Continuity by avoiding Frequent internet disruptions that can be detrimental to businesses, especially those reliant on online operations.

Starlink claims to be reliable with independent internet access that can provide much-needed resilience, ensuring business continuity even during cable outages.

The recent cable cuts hampered online learning and remote work arrangements. Starlink’s stable internet connection may have facilitated smoother online learning experiences for students and enable seamless remote work for professionals across the country. But that is where the beauty ends.

TD Africa, the major distributor for Starlink said, it plans to leverage Starlink’s unique selling points such as high speed, low latency, broad coverage and scalability to bridge the digital divide.

In 2023, Starlink’s global customer base rose to 2.3 million with a presence in over 70 countries
According to the agreement, TD Africa’s extensive distribution network and experience coupled with Starlink’s high-speed Internet aims to deliver innovative solutions and services that offer broadband connectivity, promoting economic development across Africa.

TD Africa, founded some 24 years ago, will distribute Starlink Internet Kits across Nigeria. It has over 27 global companies including Microsoft, IBM, Apple, Cisco, Hewlett Packard, Dell Technologies, Samsung, Huawei, Nokia, Lenovo, Asus, and many more on its distribution network.
TD Africa’s Coordinating Managing Director, Mrs. Chioma Chimere, highlighted the synergy between TD Africa’s experience as a leading distributor of technology and business solutions and Starlink’s commitment to transforming how the world accesses the internet.
She expressed excitement about the growth opportunities this agreement presents across the continent while emphasising TD Africa’s mission to provide accessible, affordable, and usable Internet solutions to individuals and businesses.
TD Africa boasts that” this transformative agreement signals a new era for Internet access in Africa, with Starlink and TD Africa leading the charge in providing innovative and reliable solutions to meet the evolving needs of the digital economy.”
As at March 2024,internet subscribers base stood at 164,368,292 .Of this figure,GSM accounts for 163,895,185.
ISPs accounted for 213,876 while Voice Over Internet Protocol (VoIP) accounted for 238,139 and fixed/ cable connections stood at 21,092.
By March 2024 too,the number of ISPs stood at 255 and these include the followings:
Spectranet Ltd, Astramix Ltd, VDT Comms Ltd, Cobranet Ltd, Ngcom Ltd, MainOne, an Equinix Company, Hyperia Ltd, I-World Networks Ltd.
There are Inq. Digital Nigeria Ltd (formerly Vodacom),Galaxy Backbone Limited, Dotmac Technologies Ltd, Radical Tech Network Ltd,Cyberspace Network Ltd, Suburban Broadband Ltd, IPNX, Tizeti Network Ltd among others.

Currently, Starlink does not offer truly unlimited data plans in Nigeria though there are reports of data prioritization being implemented in some regions during peak usage times. However, data caps are reportedly quite generous, exceeding the average data consumption of most Nigerian internet users.

Nonetheless, fiber optic internet offers the fastest and most reliable internet connection currently available. Speeds can reach up to 1 Gigabytes per second (Gbps) and are less susceptible to latency issues compared to satellite internet. In all, fiber optic infrastructure is expensive to deploy and maintain, limiting its availability in remote areas but it is more reliable. Starlink offers a faster and more consistent option than traditional satellite internet but may not match the raw speed of fiber.

Starlink offers a significant advantage over mobile data technologies like Long Term Evolution (LTE). While LTE offers average download speeds between 30-100 Mbps, Starlink’s current minimum download speed of 25 Mbps already surpasses baseline LTE speeds. With potential future upgrades, Starlink could significantly outpace even the fastest LTE connections available in Nigeria.

Nigeria is currently one of Africa’s largest consumer markets, and the way people shop has evolved significantly. The internet has influenced a shift in consumer spending behaviour. As more people gain internet access, they explore online options like subscriptions, selling used items, or venturing into rental services. It’s a situation of where convenience and adaptability reign supreme. For example, when Nigerians experienced a cash crunch earlier in the year, they quickly adapted to cashless systems.

However, changing landscape has resulted in substantial e-commerce spending in Nigeria, according to the international trade administration, the market generates approximately $13 billion yearly and is expected to hit $75 billion in revenue yearly by 2025.

So far this growth has been fueled by the increasing internet penetration. Now with even more people having internet presence connectivity, businesses have access to a vast pool of potential customers, creating economic growth, and attracting investments to the e-commerce sector.

The surge in internet users in Nigeria also means an abundance of valuable data for businesses to leverage. With a larger customer base and increased online activity, companies have access to a wealth of information about consumer behaviour, preferences, and purchase history. By understanding their customers better, companies can personalize their offers and make sure they’re giving people what they want. We saw this happen during the pandemic when many stores had to change how they did business and offer new services.”l

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