Elon Musk’s Starlink cannot launch in South Africa unless it has 30% black ownership

Elon Musk’s Starlink, the satellite internet service operated by SpaceX, is facing a regulatory roadblock in South Africa. Despite its potential to transform internet access, especially in rural areas, Starlink cannot operate in the country unless it meets a strict 30% black ownership requirement set by the Independent Communications Authority of South Africa (Icasa). This has sparked a heated debate among policymakers, businesses, and the public about the country’s regulatory framework and its impact on technological progress.

Starlink is a revolutionary satellite internet service that provides high-speed connectivity to over 100 countries worldwide. Unlike traditional satellite services, its low-orbit satellites ensure low latency, making online activities like video streaming, gaming, and remote work possible even in the most remote areas. With its easy-to-set-up terminals and unlimited data plans, Starlink could bridge the digital divide in South Africa’s underserved regions, promoting economic growth and development.

However, South Africans remain unable to access this service legally due to Icasa’s regulatory barriers.

To operate in South Africa, internet service providers must comply with the country’s Electronic Communications Act, tax laws, and other regulatory requirements. Among these is the stipulation that companies selling internet services nationally must be at least 30% owned by historically disadvantaged groups. A regulatory update in 2021 clarified that this must include black ownership specifically.

Starlink’s parent company, SpaceX, has made it clear that such a requirement is unfeasible for its global direct-to-consumer business model. The company stated in its submission to Icasa that it does not grant local ownership stakes in any country and instead follows a centralized global ownership structure. As a result, Starlink withdrew from regulatory hearings on South Africa’s new satellite licensing framework, effectively halting its entry into the market.

Many stakeholders, including business leaders and economists, have urged the South African government to reconsider its position. They argue that the black ownership requirement, while designed to promote economic inclusion, is misplaced when applied to foreign satellite operators. These companies do not function like traditional local telecom providers and cannot easily restructure their ownership models to comply.

A possible solution suggested by SpaceX and industry experts is the introduction of equity equivalent programs as an alternative to direct ownership. Such programs would allow foreign companies to invest in initiatives that directly benefit disadvantaged communities without requiring a local shareholding structure.

South Africa’s Minister of Communications, Solly Malatsi, has acknowledged these concerns and is currently in discussions with Icasa about potential regulatory changes. Malatsi has expressed willingness to explore alternative instruments beyond a policy directive to address the issue. However, until a clear decision is reached, Starlink remains out of reach for South Africans.

The debate over Starlink has taken a political turn, with the South African presidency openly criticizing Elon Musk. Presidential spokesperson Vincent Magwenya accused Musk of holding “unprogressive, racist views” in response to his opposition to the ownership regulations. This sharp rebuke has further strained negotiations between SpaceX and the South African government, making a resolution even more uncertain.

Meanwhile, South Africa risks falling behind its regional neighbors in satellite internet accessibility. Countries across Southern Africa, including Namibia, Botswana, and Mozambique, already benefit from Starlink’s services. If the regulatory deadlock persists, South Africans may be the only population in the region without legal access to Starlink by 2025.

The Broader Implications

The Starlink issue highlights a broader challenge in South Africa’s investment climate. While policies aimed at redressing historical inequalities are crucial, overly rigid regulations may deter much-needed foreign investment. In a digital economy, where high-speed internet is essential for education, business, and healthcare, restricting access to cutting-edge technologies could have long-term economic consequences.

South Africa stands to gain significantly from Starlink’s presence. Improved internet access could boost e-commerce, enable remote education, and expand job opportunities in rural areas. On the other hand, the absence of Starlink means continued reliance on expensive and often unreliable internet services, limiting the country’s digital potential.

What’s Next?

The coming months will be crucial in determining whether Starlink can enter South Africa. If Icasa and the government agree to regulatory adjustments, South Africans could soon benefit from one of the world’s most advanced internet services. However, if the current stance remains unchanged, the country risks missing out on a significant technological opportunity.

Ultimately, the question is whether South Africa’s regulatory framework can adapt to the realities of the modern digital economy. While promoting economic transformation is vital, it must be balanced with policies that attract innovation and investment. For now, South Africans can only wait and watch as the debate over Starlink’s future in the country continues to unfold.