Elon Musk’s entry resets Nigeria’s internet services map

By AYOOLA OLAOLUWA

After over two decades of total dominance and unrivaled competition, Global System for Mobile Communication (GSM) companies and Internet Service Providers (ISPs) vice grip on the nation’s data/internet market is about to be challenged, with the entry of Starlink, owned by the world richest man, Elon Musk, into the Nigerian internet market.

Musk, who is Chief Executive Officer of electric car maker, Tesla and SpaceX, manufacturer of advanced rockets and spacecraft, had on May 28, 2022, tweeted that the Federal Government had given Starlink a license to operate in Nigeria.

“Starlink approved by Nigeria, Musk had tweeted. He also outlined the advantages of Starlink’s expanding into Nigeria.
Business Hallmark reliably gathered that Starlink officials had been having online talks with the Nigerian Communications Commission (NCC) since 2020 on how to obtain a license to operate satellite internet in the country.

A memorandum of understanding (MoU) was signed between officials of the two bodies during the visit of Starlink’s Market Access Director for Africa, Ryan Goodnight and a SpaceX consultant, Levin Born, to the NCC Abuja office in May 2021.

The final deal, however, was signed in Barcelona, Spain, at the yearly Mobile World Congress (MWC) in February 2022, our correspondent learnt.

A source in NCC revealed that Starlink was awarded six licences, including Internet Service Provider (ISP) operational licence; International Data Access (IDA) operational licence; Full Gateway Operational licence; Sales and Installation Major (S&I- Major) licence; Gateway Earth Station (GES) Network Frequency licence per Gateway the company is to build; and Very Small Aperture Terminal (VSAT) Network Frequency licence.

With the ISP, International Data Access (IDA) and Full Gateway operational licences, Starlink will be squaring it out with the four GSM companies, MTN, Globacom, Airtel and 9Mobile, as well as ISPs operation in the country, especially market leaders like Spectranet, 21st Century, MainOne, Cyberspace Network, VDT, Spectrum, Tizeti, Radical Technology Network, IPNX, Suburban Broadband and Cobranet which presently control the market.

According to BH checks, while the quartet of MTN, Airtel, Globacom and 9mobile offer internet services through their Universal Access Service License (UASL), Spectranet, FibreOne, Spectrum and the other ISPs provide services like domain name registration, web hosting, internet access, usenet service, internet transit and colocation.

A recently published telecoms report by the National Bureau of Statistics (NBS) obtained by BH put the number of internet subscribers in Nigeria at the end of fourth quarter 2021 at 154.3 million.

Out of the number, GSM operators, Airtel, 9mobile, Glo and MTN, account for 153.948.143 million individual subscribers, with ISPs accounting for the remaining 351,817 customers who are mainly corporate organizations.

For instance, MTN Nigeria has the highest customer base among the GSM operators with 58.8 million subscribers, followed by Globacom with 39.53 million, Airtel 37.53 million and 9mobile 5.75 million internet subscribers.
Spectranet is undoubtedly the king of the ISP market, accounting for 249,179 out of the total 351,817 connected subscribers on ISPSs networks.

However, BH findings revealed that as at March 31st, 2022, the ISPs have only 119,612 active subscribers.

Virtually all the non-active subscribers, our correspondent learnt, had moved over to GSM networks due largely to their offering cheaper packages.

“The bulk of the 119,612 active subscribers still with the ISPs are businesses and commercial concerns such as banks, media houses, government agencies, gaming platforms, educational institutions and other businesses that require bigger and faster bandwiths”, said Bola Okedele, a telecoms engineer with an IT firm in Lagos.

Meanwhile, mobile network operators and internet service providers already in operation are bracing for a major disruption Starlink’s entry is expected bring, several industry stakeholders informed BH.

According to findings, the ISPs will be majorly affected by Starlink’s deployment of its more advanced satellites, numbering over 2,000 as of mid-January 2022, with over 1,500 of them in operational orbit, as against the traditional radio systems and fibre optics currently deployed by the ISPs and mobile network providers.

“With these massive technological edge, Starlink has the ability to deliver data faster than any other network. It also has the capability of enabling low-latency data transport over long distances.

“As if that is not already a mismatch, Starlink also has a big edge as its existing system has the capacity to support up to 4,408 satellites, almost trebling the current number”, declared Okedele.

However, BH findings revealed that while mobile network providers will not be immediately impacted by the expected loss of market and revenues, ISPs on the other hand, will feel the major brunt of the disruptions caused by Starlink’s entry.

Despite Starlink offering Nigerians better performance in thd area of faster data, its services come at a very steep cost and majority of individual subscribers would not be able to afford them, leaving them with no option than to stick with slower but cheaper products provided by mobile network providers.
For instance, a montly base plan for individuals on Starlink’s platform cost $110 (N66,000) at the black markef rate of N600/$1.

The monthly data plan is not inclusive of the equipment pack price of $599 (N300,000).
In other other words, a subscriber on the cheapest plan, apart from coughing out the initial N300,000 for equipment and installation, will need N66,000 monthly for subscription and a total of N792,000 in annual subscription fees.
On the other hand, Starlink service tier for businesses costs a whooping $500 (N300,000) every month, with the equipment costing another $2,500 (N1.8million).

The huge cost outlay, several business owners and executives who spoke with our correspondent in Lagos, won’t be a deterrence
According to the head of IT with a second generation bank, his establishment spends up to the amount, if not more of what Starlink is charging on not too dependable services rendered by existing internet providers.

“Most times that you see the ATM display “transaction cannot be completed, please contact your issuer”, there is definitely a network problem.

“The same applies to when you see long queues in banking halls and the tellers complain of slow network. Most often, the problem is from network providers and not banks equipment.

“In essence, the banks won’t even mind paying more for a better, faster and efficient internet service. On the long run, it would be a worthy investment”, the IT expert maintained.
Also speaking, a personal finance expert, Kalu Aja, said that Nigerians will have faster internet access with the coming of Starlink to Nigeria.
“The arrival of Starlink in Nigeria means that a child in Ohafia, Abia State will have the same or quicker internet connection than a child in Ikoyi, Lagos.

“A teacher or doctor from Ohafia, a local government in Abia State, can move back to Ohafia where the cost of living is cheaper, open a school or clinic, connect online, and create local jobs.

“A film crew in Jos can film and upload their videos direct from Plateau. A bank in Bama in Borno State can be online in real-time with banks in Lagos”, Aja noted, while listing some of the possibilities of high-speed internet services will bring.

Questioned on how a kid from Ohafia would be able to afford the $110 (N66,000) monthly subscription fees, Aja replied: “When Microsoft came to Nigeria, did kids in Ikoyi have $500 annual license for Windows? Patience!”
Apart from businesses, Starlink is expected to have an edge over other internet service providers with the deployment of its service via satellite, which can be accessed anywhere all over the country.

“That is where mobile network providers will feel the impact. Unlike a situation where subscribers can’t get network in remote areas like villages, on the seas and construction sites, the batteries of satellites Starlink has in outer space will ensure that a customer gets network where ever he or she is.

“It is like the old cellular phone. And you know what that implies? The rich and affluent would be able to do business like sending faxes and documents anywhere they are in the world, whether in their yatches on the deep sea or thousands of miles in the jungle constructing bridges or roads”, said Okedele.

He also predicted that a stiff competition in the market will force operators to crash their prices as they battle for customers.

“Should Starlink be willing to compete on the price front, this will be a big win for internet users in Nigeria”.

Existing operators are also expected to lose out in their bids to win massive government contracts to help provide access to 25 million Nigerians living in114 communities without telecoms services.

“I won’t be surprised if the Federal Government employs Starlink as the contractor to bridge the internet gap in rural areas.

“Starlink is a low latency broadband internet system created to meet the needs of consumers in rural areas with low internet penetration across the globe.

“In terms of speed, Starlink is capable of delivering 150Mbps internet speeds to any place on the planet. This will challenge other operators in the country to upgrade their broadband services to achieve competitive speed in the market”, said another telecoms expert who spoke on the condition of anonymity.

As part of the deal with the NCC, Starlink will be able to construct, own, operate, maintain and use an International Gateway for the provision and operation of international access and gateway services in Nigeria with its International Gateway licence.

With the International Gateway licence, the company will be providing such services as internet node, mobile radio services, global mobile personal communication by satellite, backbone and VSAT services.

Speaking on Starlink’s coming to Nigeria, the National Coordinator, Alliance for Affordable Internet (A4AI), Olusola Teniola, said satellite is used for many applications, incuding solving military to medical challenges in remote areas.

According to the former ATCON boss, Starlink offers another opportunity in addition to 5G and fibre to deliver hyper-fast broadband speeds to those that can afford to subscribe to the offerings being brought to market.

“Starlink will present a switching of customers from one technology to another at a price range that might exclude the low-income earners or those struggling to survive on a minimum wage,” he said.

Also speaking, the Group Managing Director/CEO, VDT Communications, an ISP operator, Biodun Omoniyi, said the arrival of the global provider will energise the Nigerian market like never before.

“Starlink will have significant competitive effect on the ISP sub-sector of the industry in the area of service quality and pricing.