mega888 Vanuatu Business Review » STARLINK is coming to Vanuatu

STARLINK is coming to Vanuatu

What is Starlink

Starlink is a satellite-based internet service provider founded by SpaceX, the space exploration company founded by entrepreneur Elon Musk. The goal of Starlink is to provide high-speed, lowlatency internet access to remote and underserved areas of the world through a network of thousands of small satellites in low Earth orbit.

The idea for Starlink came from Musk’s desire to revolutionize the telecommunications industry by creating a global network of satellites that could provide internet access to anyone, anywhere in the world. He recognized that traditional internet service providers were limited by the physical infrastructure required to deliver internet access, such as fiber optic cables and cell towers. By using satellites instead, Musk believed that it would be possible to provide internet access to remote and underserved areas more quickly and at a lower cost.

In 2015, SpaceX filed an application with the Federal Communications Commission (FCC) to launch a network of over 4,000 satellites into low Earth orbit to provide global internet coverage. The FCC approved the application in 2018, and SpaceX launched the first batch of 60 Starlink satellites in May of that year.

Since then, SpaceX has continued to launch batches of satellites, with the ultimate goal of having tens of thousands of satellites in orbit. As of March 2023, there are over 1,800 Starlink satellites in orbit, with more launches planned in the coming months and years.

One of the key advantages of Starlink is its low latency, which is the delay between a user’s request for data and the response from the network. Traditional satellitebased internet services have high latency due to the long distance that data has to travel between the satellite and the ground. However, Starlink satellites are in low Earth orbit, which means that they are much closer to the ground and can provide low-latency internet access that is comparable to terrestrial internet services.

What are the Benefits of Using Starlink and how will it affect the Telecommunications Industry

Starlink is designed to be affordable, with the aim of providing internet access to rural and underserved areas at a lower cost than traditional providers. The company offers a subscription-based service that includes the necessary hardware, such as a small satellite dish and a modem, to access the network. The recent arrival of Starlink, to the Pacific, has the potential to revolutionize the telecommunications market for small Pacific Island countries like Vanuatu. These countries have long struggled with limited telecommunications infrastructure and high costs, making it difficult for their residents to access the internet and participate in the digital economy. The establishment of Starlink in these countries has the potential to change this, providing these countries with high-speed, affordable internet access for the first time. When the undersea volcano eruption in Tonga damaged the undersea cable, it was Elon Musk who offered to provide 50 Starlink Terminals. Tonga spent a week without internet. On social media, it sounded as if Musk had swooped in to save the day but in reality, it actually took longer for Starlink to arrive in the country than for the cable to be repaired. Nevertheless, Starlink has shown that it is a very viable and attractive alternative to ISPs who have been serving the Telecommunications Industry through Fibre Optic cables and Cell Towers.

The establishment of Starlink is also likely to increase competition in the local telecommunications market. Small Pacific Island countries typically have few service providers, which can lead to high prices and limited options for consumers. The entrance of a new player like Starlink could help to drive down prices and improve service quality, as existing providers are forced to compete with a new, technologically advanced competitor. In Vanuatu, the telecommunications market is set up with two sources of connectivity to the Global Internet.

The underseas submarine cable and satellite connections. Cable bandwidth is provided through Interchange Limited (ICL) and currently the satellite operators are Kacific and Aelansat. These are the wholesale providers of bandwidth. At the retail level, Digicel and Vodafone dominate the local market with WANTOK Communications and 3 Link also in the market.

Commentators have observed that the arrival of low earth orbit satellite providers will disrupt the market in terms of pricing and connectivity speeds and ultimately affect how ICL sells bandwidth to its retail clients. As an example, many larger organizations that currently have a fast fibre connection with DIGICEL or VODAFONE would still have a significantly more expensive and slower connection than a Starlink terminal.

In the face of this, many contracts between clients and their ISP, between ISPs and Interchange would have to be either be renegotiated or cancelled. It is unlikely that there will be much impact on the main revenue that local TELCOs like Digicel and Vodafone are currently enjoying through mobile phone usage. The monthly cost of approx. $100 and a one-off fee to pay for the terminals will be mainly taken up by businesses and higher earning individuals who can afford these costs. The grassroots users who have data on their mobile phones will continue as normal.

In 2021, the Revenue from Operations for ICL was U$7,378,952 with an Operating Profit of U$3,340,870 and Profit from continuing operations after financing costs of U$2,047,507. There will be no doubt that with cheaper options for bandwidth from Low Orbiting Satellite providers, like Starlink, pricing for supply of bandwidth will be renegotiated placing downward pressures on the profitability of ICL. However, the establishment of Starlink is not without it challenges. In February, before Cyclones Judy and Kevin devasted the country, the Telecommunications Regulator of Vanuatu, TRBR issued a statement.

It advised that Starlink has not been issued a licence to operate and that there were heavy penalties for noncompliance. Milroy Cainton on his Facebook page Vanuatu Dialogue Live had been actively promoting the merits of Starlink since February this year, but received some pushback when police, presumably under instructions from the TRBR, interviewed him when he was demonstrating his Starlink system on his facebook page. The police had allegedly asked him to stop misleading the public. Despite this, he allegedly continued to promote Starlink. On the second visit, it is alleged that the police confiscated his terminal.

In the aftermath of the two cyclones that hit Vanuatu early March, internet connectivity and general telecommunications were seriously affected. Without communications it was impossible for aid agencies to obtain accurate assessments of the damage that was caused by Judy and Kevin. Currently, telecommunications in Vanuatu has still not been 100% restored due to the damage in numerous towers around the country

A lot of pressure was applied on the regulator to allow exceptions to their initial stance as Aid Agencies were in crucial need of access to internet and a subsequent notice was published in the Media. In the notice the TRBR stressed that it is crucial that, service providers who wish to enter the Vanuatu Market must comply with the relevant laws of Vanuatu, that Section 12 (1) and (3) of the TRBR Act NO. 30 of 2009 as amended, entails the requirement to hold License.

1. A person must not provide a telecommunications service except under and by a license or exception. 3. A person must not import, offer for sale, sell, or use any equipment which may be prescribed by Regulation without a license.

At the time, Starlink had not been granted a licence, nor had it registered the Business Name or incorporated an entity under Starlink at the Vanuatu Financial Services Commission (VFSC). In addition to this, it still needed to comply with any approvals required through the Vanuatu Foreign Investment Promotion Agency, and also obtain a business licence to operate through the Department of Customs and Inland Revenue. Under the Law, 15% VAT is also payable on any billing for revenue earned in Vanuatu.

However, in the same notice that was published, the TRBR acknowledged the declaration of the State of Emergency (SOE) in the aftermath of Cyclone Judy and Kevin and the exceptions to this. Under the instruction of direction from the government under the SOE, Under this directive, the TRBR received and approved an application from Starlink to provide service during the recovery stage of TC Judy and Kevin to be used strictly for government agencies for a period of 6 months of the SOE. It further advised that;

Starlink is in the process to obtain its license in Vanuatu, and they are in contact with the relevant Government Agencies including VFSC, VIPA and the Department of Customers and Inland Revenue, to ensure it complies with all relevant laws of Vanuatu. Once these legal formalities are fulfilled by Starlink, TRBR will issue a license that will permit Starlink’s operations in Vanuatu.

It seems inevitable that Starlink will enter the telecommunications market in Vanuatu.

What are the downsides to Starlink

There is no doubt that the arrival of Starlink will be disruptive to the Telecommunications Industry. Existing Satellite providers like Kacific will be placed under a lot of pressure as Starlink will directly challenge their market. ICL will be forced to face the reality that the prices they charge to local ISPs will need to be renegotiated when faced with cheaper and faster options through these Low Earth Orbit satellite companies.

One of the challenges is the potential for internet infrastructure to become a target for natural disasters, which are common in many small Pacific Island countries. The damage to the Tonga cable is a good example. Satellites are more resilient to natural disasters than traditional infrastructure, but they are still vulnerable to solar flares and other space weather events. It is important that service providers like Starlink have robust disaster preparedness plans in place to ensure that their infrastructure can withstand natural disasters and continue to provide reliable service to their customers.

In addition, the establishment of Starlink could raise concerns around data privacy and security. The use of satellite internet means that data is being transmitted over a global network that is not subject to the same regulations as local telecommunications infrastructure. This could lead to concerns about data privacy and security, particularly in small Pacific Island countries that may have weaker data protection laws. It is important that service providers like Starlink are transparent about their data handling practices and work closely with local authorities to ensure that user data is protected.

Despite these challenges, the establishment of Starlink has the potential to be a game-changer for Vanuatu and other small Pacific Island countries. By providing high-speed, affordable internet access to even the most remote communities, Starlink can help to bridge the digital divide and create new opportunities for economic growth and development.