NCC,STARLINK TARIFF FEUD AND TELECOM INDUSTRY

Within a short period, Starlink has become a big threat to other players in the industry, contends

Sonny Aragba-Akpore

An imminent feud is underway between telecommunications regulator, Nigerian Communications Commission (NCC) on one hand and Starlink and Mobile Network Operators ( MNOS) on the other.

On October 1, 2024,Starlink, an internet service provider (ISP) via satellite owned by Elon Musk, the world’s richest man, announced an increase in its monthly subscription prices in Nigeria.

The company, blaming inflation, increased its standard package for residential housing,monthly subscription to N75,000, from N38,000 per month — an increase of 97.37 percent.

The price for the mobile-regional roaming unlimited is now N167,000 while that of the mobile-global roaming service is N717,000.

The cost of the Starlink hardware was also increased from N440,000 to N590,000.

Sensing industry backlash,the Nigerian Communications Commission (NCC) came out with a statement on Tuesday,October 8,2024 saying Starlink had contravened sections 108 and 111 of the Nigerian Communications Act 2003 by unilaterally increasing tariffs without approval.

“The decision by Starlink to unilaterally review its subscription packages upwards did not receive the approval of the Nigerian Communications Commission (NCC),” NCC,s said in an initial statement adding that “We were surprised that the company jumped the gun by announcing price changes after filing a request to the Commission seeking approval for price adjustment for which the Commission was yet to communicate a decision.”

“The action of the company appears to be a contravention of Sections 108 and 111 of the Nigerian Communications Act (NCA) 2003, and Starlink’s Licence Conditions regarding tariffs.

“The Commission will, therefore, take appropriate enforcement measures against any action by a licensee that is capable of eroding the regulatory stability of the telecommunications industry.”

NCC statement said it was “surprised” when the company announced the price changes.

It said Starlink had filed a request with the commission for a price adjustment, but the regulator was yet to give approval adding that the commission would take enforcement measures against the satellite company.

The NCC said Starlink contravened section 108 of the NCA 2003 which gives the NCC authority to regulate telecom tariffs, stating that no licensee can impose charges for services without obtaining tariff approval from the commission.

Section 111 of the Act empowers the telecoms regulator to impose financial penalties on any licensee that exceeds approved tariffs, regardless of other legal provisions.

Mobile Network Operators (MNOS) in Nigeria have been agitating for tariff hikes based on rising inflation and several economic headwinds including high cost of diesel,rising cost of doing business,high foreign exchange rates among others saying their services were overdue for price increments as they have not raised rates in the last 11 years.

Strangely,a few hours after the NCC statement on Starlink,and in what appeared to be a face-saving move,the NCC came out with another statement to withdraw the earlier one saying “it was sent in error”.

It is however not clear if the regulator has capitulated on its laws and guidelines because industry players who have clamored for tariff raise for so long citing economic headwinds and high foreign exchange including spiraling cost of doing business are worried that should the NCC keep mum over the Starlink unilateral tariff hike, then Mobile Network Operators May resort to self help.

Although no reason was given for the withdrawal of that statement, analysts think the commission may have been complacent as a result of regulatory inactivities especially now that there is a lull in the industry due to dwindling fortunes of operators some of whom have declared losses due to the economic downturn.

Industry players frown at what is happening and have begun to criticize the NCC against the backdrop of the regulator’s unyielding stance on the clamor for an increase in tariffs by local telecom operators, especially in the last two years whereas, Starlink, an internet service provider that entered the market officially in January 2023,has been allegedly allowed to increase its tariffs by almost 100%.

An analyst quoted a major industry player as saying “Starlink only beams its satellite in Nigeria and acquired an ISP licence from the NCC to offer its service in the country. It currently has zero investment in the country.

“Many of us started since the liberalization of the telecom sector, putting in all our resources to deploy more infrastructure to get more Nigerians connected despite the various challenges in the operating environment.

“We have been appealing to the Commission to allow us to implement a tariff review for years now, but it said it had to carry out a cost-based study before any decision could be made. We are still waiting for the result of that study. Now, allowing Starlink to implement price increase in the same market shows the regulator’s double standard.”

The NCC may have lost steam over its regulatory oversight and demonstrate lack of capacity especially in addressing the issue of tariff increases by local players.

The operators believe the Commission simply woke up from its slumber by announcing a statement it could not sustain let alone justify.

“This is certainly not the NCC of our founding fathers,” one veteran player in of the industry lamented.

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

It obtained six licenses 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.

Space Exploration Technology Corporation (Space X ) owners of Starlink got six licenses in a roll 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.

SpaceX’s Starlink satellite internet service has more than four million global subscribers, achieving rapid growth despite mounting competition.

SpaceX confirmed the news recently after company President Gwynne Shotwell hinted earlier that the service would reach the mark within days. This represents a remarkable achievement for Starlink, which only crossed three million subscribers in May, highlighting the company’s accelerating growth in the satellite internet market.

Since its beta launch in October 2020, Starlink has rapidly scaled, growing from one million subscribers by December 2022, to two million by September 2023, and now four million just months later. The service operates through a vast constellation of nearly 6,000 satellites, providing satellite internet to users in almost 100 countries, including expanding into previously underserved regions like Africa and the Pacific islands. Starlink’s rapid growth reflects both its market dominance and the rising demand for satellite internet services, which offer coverage in areas lacking traditional broadband infrastructure.

Aragba-Akpore is a member of THISDAY Editorial Board