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Local ISPs now feel the heat as Starlink doubles market share

 

Starlink satelite dish. [Getty Images]

Elon Musk’s satellite internet firm Starlink doubled its market share in three months to September last year, new data shows.

The firm, which was licensed to start operations in Kenya in July 2023, has made incremental steps over the year and a half it has been in Kenya and appears set to surge ahead of older players in the coming quarters.

According to the latest industry data by the Communications Authority of Kenya (CA), the firm commanded a 1.1 per cent share of the fixed data market as of September last year, up from 0.5 per cent in June.

It has also leapfrogged Liquid Telecommunications, which had a one per cent market share in the quarter to September.

The firm entered Kenya in July 2023, initially requiring customers to buy its equipment, which presented a barrier to entry because of the high initial cost but later offered an option to rent its equipment.

The rent-a-kit option has contributed to the firm’s growth. 

Unsettled local players 

Starlink’s entry has seen the number of satellite internet subscriptions surge, which has unsettled some of the players offering internet services locally. 

READ: Starlink now struggles to keep up pace

“Satellite internet subscriptions recorded a significant increase of 104.7 per cent during the reference period attributed to a customer acquisition campaign run by Starlink Internet Services Kenya that introduced an option to rent satellite equipment at a reduced cost,” said CA in the report on the telecommunications industry. 

In renting equipment, subscribers pay a Sh2,700 one-off activation fee and a Sh1,950 monthly rental charge.

They pay a further Sh1,3000 for a limited 50GB package or Sh6,300 for the unlimited package, Significantly lower than packages by the firm’s competitors.

“Utilised satellite internet capacity grew significantly by 152.8 per cent. This growth corresponds to the growth in satellite subscriptions following some customer acquisition initiatives by Starlink Internet Services Kenya,” said CA. The quarterly report showed that Safaricom retained its market leadership, growing to 36.6 per cent from 36.4 per cent.

Although Wananchi remained the third largest provider, it dropped to 16.8 per cent from 17.5 per cent over the quarter to June and 21.6 per cent a year earlier in 2023. 

“Safaricom Plc recorded the highest market share in fixed data subscriptions, followed by Jamii Telecommunications Ltd, Wananchi Group (Kenya) Ltd, and Poa Internet Kenya Ltd, with market shares of 36.6, 24.4, 16.8 and 12.6 per cent, respectively,” said CA.

Starlink’s rapid growth has already begun to disrupt the local internet market, leaving traditional providers to keep pace with the growing demand for reliable internet access.

Some of the providers were last year reported to have been lobbying the government to impose stricter regulations on Starlink’s operations, arguing that the satellite provider’s tax-exempt status and ability to undercut local pricing threatens the country’s digital development efforts.

Whether a result of lobbying or reacting to market realities, CA has proposed an increased licence costs for satellite internet service providers to Sh15 million, a steep increase from Sh1.6 million for a 15-year operating licence.

The firms will also be required to pay a new annual fee of Sh4 million or 0.4 per cent of their gross turnover, whichever is higher.

ALSO READ: Competition watchdog intervenes as Starlink suspends new client sign-ups

Starlink’s satellite system is capable of delivering speeds up to 200 Mbps virtually anywhere on the planet, provided users have a clear view of the sky.

Since its initial rollout in 2020, it has garnered positive feedback globally, particularly from those in remote regions.

SpaceX, which backs Starlink, aims to launch as many as 40,000 satellites in the coming years to ensure global coverage without service interruptions.

However, the company currently faces the challenge of needing more satellites in orbit to boost network capacity.

The firm has in the past said it would double the number of Starlink satellites within the next year.

Starlink uses low-orbit satellites to deliver broadband to users, but each satellite can only serve a limited number of users at any given time.

While observers have noted that Starlink’s technology holds transformative potential for internet access in Kenya, it has experienced bottlenecks owing to a limited number of satellites that saw it put on hold onboarding new subscribers at some point last year.

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