Starlink has many Zimbabweans, myself included, all giddy. We feel like we have been getting terrible internet service for a few years. To make matters worse, we feel we are paying too much for that terrible service.
So, it is no wonder the country is smitten by Starlink, which is not even officially available yet. You know how obsessed people are though, they tend to overlook the red flags in their romantic pursuits. We don’t want to be those people.
Some of the reasons we are excited about Starlink are here: Tell your MP that this is why people are excited about Starlink – access, affordability, reliability.
Today, let’s talk about the drawbacks of Starlink entering the market.
I know, the relationship that local internet service providers (ISPs) have with Zimbabweans is probably the worst it’s ever been. In today’s talk, ISPs shall include Internet Access Providers (IAPs).
So, we find ourselves at a point where many would not mind Starlink domination if it came to it. Some actually hope for that, with some even wishing that would lead to at least one local ISP shutting down.
This is not to say Starlink is a death sentence for local ISPs. Far from it. However, the entrance of Starlink will likely affect their operations to a significant degree.
Why is this bad, if the local ISPs have been fleecing their compatriots? – the salty internet user asks. Well…
Think of the jobs
Local ISPs employ a good number of Zimbabweans. We have a high enough unemployment rate, we don’t need Starlink adding to that.
And if Starlink eventually leaves?
If we allow Starlink to kill our local ISPs, what would happen if Starlink decided to exit the market for whatever reason? We would not have local ISPs to fill that gap. That brings us to …
It is no secret that the Zimbabwean government has had EcoCash in its crosshairs for a while. Some of the reasons why they wanted (still want) to cripple it make sense.
Back when EcoCash was at its peak, then ICT Minister Supa Mandiwanzira, incidentally the same guy trying to block Starlink’s application today, talked about how if Ecocash goes down either because of system failure or intentionally for political purposes the impact would be huge.
His point was that such a critical service – mobile money – should not be in total control of a private entity. Even a private entity, founded and incorporated in the country.
Internet access is arguably more important, it is more critical in today’s economy, even mobile money requires it. You can see how it would be problematic for it to be in the hands of a private corporation. Worse still, an American one.
This is all assuming, or at least considering the worst-case scenario where Starlink dominates and some local ISPs pivot from that sector.
There are legitimate reasons why a government would not want that.
Of course, some of it has to do with the lack of control the government would have on Starlink. We have seen the Zimbabwean government order internet providers to shut down the internet before. The govt later denied this, claiming it was congestion but Strive Masiyiwa had already let the cat out of the bag,
The probability that Elon Musk would comply with such an order is low.
Empty Zimra coffers
Yes, if Starlink is granted a licence it would have to have a presence here and that would include payment of taxes. However, it would still mean less taxes paid to the government.
Starlink is cheaper than the fixed internet providers it would disrupt. It would collect less revenue and pay out less taxes. You could argue that would not be the case. However, when we consider the lower PAYE tax the govt would collect it would become the case.
That’s all small potatoes though. If some ISPs bow out that would mean they won’t pay licence fees come renewal time. You will remember that the government charges arms and legs for licences. Fewer players to licence would mean less revenue collected.
Our precious forex
We would be shipping out our scarce forex to Elon Musk if Starlink dominated. We do not have the forex to do this.
The question then becomes, would the govt force Starlink to accept the ZW$? It is the official currency of the land after all, they would have to.
At the very least, they would have to do that to create a level playing field. As much as I want Starlink to come, I would not support special treatment for Musk. He can’t demand USD whilst the likes of Econet are forced to accept the lovely ZW$.
If we decide to allow Starlink to refuse ZW$, we should allow our local ISPs to refuse it too. If not, Musk must accept ZW$.
Would Musk agree to that? I don’t think so. I suspect this may be one of the major factors delaying Starlink’s licence.
Why the above shouldn’t trouble us
I don’t think Starlink will dominate, something none of us want. We want competition, not to substitute one monopoly for another, however sweet the new would-be monopoly looks right now.
The local ISPs have been coasting and I believe the entrance of Starlink will force them to tweak things to survive. They know they are giving us a raw deal, even after considering the terrible economic conditions they are operating in.
Just last week we saw a Liquid Home promotion where they are offering 5 times the speeds they normally offer at no extra cost. They have always had this capacity, I would argue, they just didn’t have any reason to offer that.
There is much more that our resilient ISPs would do to compete with Starlink, I’m certain of it. Would they have to relook at their cost structures? Yes. Could that mean some layoffs? Probably, but they would survive.
The major reason – cost
Then there is the major reason that Starlink won’t mean the death of local ISPs. It is still too expensive for the vast majority of Zimbabwean internet users as we have discussed before.
It really is the tiny market of fixed internet users that is able to pay $37 for internet access per month. Let alone pay over $600 for the kit. Econet’s $1 WhatsApp bundles are not under much of a threat from Starlink.
There is a chance that some enterprising Zimbos will open internet cafes all over the country utilising Starlink. Imagine one at your local vegetable market with the entrepreneur collecting the $1 or $2 per week that would have gone to Econet from all the vendors there.
For unlimited internet, which would not be slower than mobile internet even after considering tens of people on the same router, the entrepreneur could charge even more than that. I believe there is a sizable group of people that would be able to pay.
Anyway, what do you think about all this? Do you think Starlink will disrupt the sector or do you think our ISPs will rise to the challenge?