In January 2023, when Elon Musk’s SpaceX’s Starlink satellite internet began operation in Nigeria, the news sent a ripple of jittery and excitement across the country’s telecom market. For internet subscribers, it was exciting to have an alternative to local internet providers whose services have been judged as poor over the years.
Nigeria ranked 99th in the world for mobile speeds and 132nd for fixed broadband speeds in August 2024, with a mobile download speed of 20.19Mbps and 30ms Latency. The fixed broadband download speed was 21.59Mbps while its latency was 26ms. Against this backdrop, the launch of Starlink with a download speed between 25 and 220 Mbps and a latency range between 25 and 60ms, was a cause for concern for local internet providers, whose market share is believed to have come under threat.
More than a year after launch, Starlink has become Nigeria’s third largest Internet Service Provider (ISP) by subscriber number and is setting up ground stations across the country to secure more market share. This development has boosted the discussion around the influence of Starlink in Africa, especially Nigeria, the continent’s largest telecom market.
In this interview with Tekedia’s Samuel Nwite, Diseye Isoun, an African broadband development expert, offers valuable insights that enrich this subject.
Isoun was instrumental in introducing satellite connectivity to the Nigerian government and helped establish key components of the Ministry of Communications (et al.), including Galaxy Backbone and Nigcomsat. He works at Content Oasis, with a focus on delivering connectivity to underserved areas and securing a USTDA grant for broadband feasibility studies.
Among other things, Isoun believes that although Starlink has the upper hand, the road to being the dominant internet provider in Africa is littered with cramps – keeping the market open for everyone.
QUESTION 1: What are the potential implications of Starlink’s ground stations in Nigeria for the country’s internet connectivity, particularly in underserved regions?
ANSWER: In the case of the ground stations, the whole idea I think is that Starlink has seen an opportunity in Nigeria that I think that they are quite hopeful on and to that end now that they’ve started to provide service and gather data on the opportunity, they see and are able to attempt to forecast demand and also want to ensure that the users continue to get the best service possible. To that end, they’re deploying ground stations to ensure the quality of service and perhaps, over time, to ensure they can step up to demand.
QUESTION 2: Do you see the entry of Starlink, with its ground stations, impacting the market share of traditional ISPs like Spectranet and FibreOne in Nigeria?
ANSWER: Sure, I mean I had this conversation earlier with a friend and I think I used the cliché or the well-known framing to say that the ISP market is small in Nigeria as compared to the ways in which most Nigerians access the Internet. Most Nigerians access the Internet over mobile networks and by doing so mostly by phones.
Now by many definitions in the West or in developed countries, this would not be broadband but at the end of the day, it is the way most people can connect to the Internet whether that is at 1megabyte or 10megabyte or unreliable or reliable. 98% of folks connect to the Internet that way. MTN, Airtel, and Glo are basically their ISP. Now, traditional ISPs like Spectranet, Smile, and FibreOne make up about 2% or less of the total number of people accessing the Internet.
And yes, in some ways, that Internet access is better than what you get on your phone but at the end of the day, it’s 2%. So when you hear about Starlink being the third highest provider of Internet all of a sudden in Nigeria, it is the third highest of 1% to 2%. So they are a large fish in a small pond and they will probably go to number one within that small ISP quite quickly but once again they’ll be a big fish in a small pond and the opportunity still exists to deepen the penetration of broadband not necessarily taking from the mobile operators because they’re not providing true broadband anyway. True broadband does not truly exist and the opportunity is still there for some to take that with some strategies I have discussed and can discuss it again.
QUESTION 3: Starlink is collaborating with Equinix following the acquisition of MainOne, how significant is this partnership in strengthening Starlink’s position in Nigeria’s telecom industry?
ANSWER: It will continue strengthening and ensuring that they have a good presence and a good service in Nigeria but there are still quite a few unanswered questions about how this service will expand in Nigeria over the next 2 to 5 years. Regardless of these kinds of partnerships, we are more about ensuring service and providing service to the richest of Nigerians, that’s currently where we are.
QUESTION 4: What advantages do Starlink’s ground stations offer in terms of latency and overall internet performance compared to the existing infrastructure used by traditional ISPs?
ANSWER: Again, I think I would say not just ground stations. I would tilt the question a bit to simply say, what are the advantages of Starlink service over the traditional ISPs and the Telco internet? Indeed higher speed, low latency, increased reliability. Once again, Starlink reduces its reliability when there’s heavy rain just like we’re used to it through our DSTV and we’re watching the football and they are about to score and it will go off. But like I always make the distinction, downtime that you expect is much better than downtime that you cannot explain. So even though there will be moments when our heavy rain will affect the performance in general, it is far and beyond a better service from any number of variables than what exists today.
QUESTION 5: How might the construction of ground stations influence the pricing dynamics in the Nigerian ISP market, especially given Starlink’s premium pricing compared to local providers?
ANSWER: Again, I think that some of the little details are important, I mean Starlink’s one-time fee is about N456,000 including shipping fees. Smile or Spectranet may give you a module for N50,000. With MTN you can use your smartphone if you have one and you don’t have to pay for any equipment (quote on quote). You can buy a plan and you can tether that to your laptop and you’re on but the benefit that Starlink has over the traditional ISPs is ubiquitousness. Starlink is everywhere in Nigeria, just put up your dish and you’re on, whereas Smile and Spectranet and all these fiber-to-the-home folks like FibreOne are in only specific markets because their models don’t allow them to build out that way.
So the one-time fee is much more for Starlink but it’s everywhere in the country and then although MTN is kind of in a lot of places in the country, the speed cannot be compared to that of Starlink. The recurring fee of Starlink is competitive to the Smile and the Spectranet of the world, they are about on par. So in my own opinion, there’s really no price gain or change by virtue of Starlink’s entry because they’re quite in their own niche in that matrix of cost, quality of service, and availability across the country.
QUESTION 6: In what ways could Starlink’s local ground stations reduce Nigeria’s reliance on international data centers, and what are the potential benefits for end-users?
ANSWER: The reduction of reliance on international data centers will come from a few places but certainly to the extent that ground stations ensure that data stays local. I think that will assist and reduce the reliance on international data centers but in addition, increase the number of data centers locally, and improve intra-city fiber (middle mile as they call it) such as the 90,000-kilometer projects that have been discussed by the minister, etc. This will also have a lot of positive impact on that.
QUESTION 7: What challenges do you foresee for Starlink as it seeks to expand its presence in Nigeria, particularly in terms of regulatory hurdles or competition from established ISPs?
ANSWER: I think regulatory hurdles shouldn’t be a big issue because they’ve already gotten their licenses. They require a gateway license, ISP license, and installation license and they have done their homework there. They may eventually provide what we call backhaul to last mile folks or even Telcos ISPs. So they may need to have a little bit of consideration regulatory-wise that way. But I don’t see any major hurdle for them there and in terms of competition from established ISPs, again, I see Starlink coming into a niche where nobody is playing currently. So it’s not a question of competition.
The equipment for Starlink is currently 400-450,000 Naira. And it’s not going to go down, if it goes down they are subsidizing and our Naira is also not getting much better. So, let’s just assume that’s a pretty reasonable price, 400-450,000 Naira. Now, let’s put it this way – how many Nigerians are making 400,000 Naira a month? It is a low number and if they made 400,000 Naira a month how many of them would want to spend that one month’s salary on a Starlink kit?
So, you have to really think about the fact that there’s only a niche – I mean, there are some businesses, of course, that can also use it, but there is only a very small niche of Nigerians that can afford to buy a Starlink kit. And by the way, being good Nigerians, there’s a very healthy secondary market where a lot of people are buying the kits and reselling them at an even higher price than the official price.
So you may be talking about 100- 250,000 kits that can be ruled out at that price relatively easily after which the purchasing power of Nigerians is then challenged for growth above and beyond that. So in that context, if you are a Nigerian that cannot afford N400,000 up front, you then are looking at different ISPs that they’re not competing against anyway.
They are trying some credit rules and spreading out the costs in Kenya so that you can pay over a period of time. Regarding credit structure, although Kenya is not so great either, our credit structures here are not great too and people don’t have a culture of paying back. So you also have a system where they’re not paying, you have to be able to go and collect your Starlink kit without getting rabies from dog bites, so these are the realities on the ground.
QUESTION 8: Do you think Starlink’s satellite-based technology will address the connectivity challenges faced by rural and remote areas in Nigeria?
ANSWER: Yes, I think they can but they will need to address the high cost of the kits and that can be done through certain kinds of collaboration and additional value-added technologies that will allow their equipment to be used by multiple users. So, there are ways around or ways in which that can be done, but it will need to go via collaboration.
QUESTION 9: With Starlink rapidly gaining customers since its 2022 entry, how do you think the traditional ISPs can adapt to maintain their competitiveness in the evolving market?
ANSWER: Yes again, traditional ISPs are fine in the sense that they don’t charge 400,000 Naira for equipment, they charge 30 to 50,000 Naira. So they may lose the very high-end customers, but they can still target customers that cannot afford that while they can also partner ultimately, with Starlink, if Starlink will allow for that kind of model so that they can do certain kinds of point-to-multipoint services and leverage Starlink as a kind of backhaul. So, I think those are possibilities that may exist in the future.
QUESTION 10:The cost of Starlink is undoubtedly high and unaffordable for most underserved areas in Nigeria, do you see a possibility of subsidy from USTDA, or is the organization focused on ISPs when it comes to internet access?
ANSWER: Yeah. I mean I can simply bring to our attention, the Universal Service Provision Fund which is mandated to assist in connectivity in underserved areas, especially areas where telecommunication companies may not roll out due to the lack of economic viability. And yes, it is possible that certain kinds of agencies and initiatives like that may be subsidized. They come up with a program where they subsidize Starlink services in some ways so that at least the initial costs can be reduced, and ensure that the service can get out to underserved parts of the country.
QUESTION 11: Starlink just announced that its satellites will have an advanced Evolved Node B (eNodeB) modern onboard that will act like a cellphone tower in space, allowing network integration similar to that of a standard roaming partner. This “Direct to Cell” will handle the radio interface with mobile devices, connecting directly with ordinary, unmodified 4G LTE devices.
Do you think this will provide leverage for ISPs and foster sustainable growth for the telecom market given that Starlink will need to forge partnerships with existing telcos who will provide the needed LTE spectrum for satellite signals?
ANSWER: There definitely would be the structure as they try to play it out. In the US, it does indeed involve partnering with the equivalent of our MTN and Airtel – T-Mobile, AT&T, etc. But at this point, the revenues that come from that kind of service are quite low, because this direct-to-cell is simply for things like texting, emergency connectivity, and very low bandwidth so there’s not a lot of revenue. It is a nice to have service, not a need to have so I don’t see any major revenue benefits in the short to medium time on this.