How Amazon gained the upper hand over Starlink in SA

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JEREMY MAGGS: Amazon has found a route into South Africa’s satellite internet market, while Elon Musk’s Starlink remains stuck outside it, it seems. Through a partnership with local operator, Herotel, Amazon Leo plans to offer high speed satellite broadband from next year, 2027, particularly targeting communities beyond traditional fibre networks.

So here’s the big question, I guess, has Amazon outsmarted Starlink or merely secured an early regulatory advantage? Someone who has been watching this unfold, I imagine, with a great deal of interest, is the chief executive officer of the consultancy World Wide Worx, Arthur Goldstuck. A very warm welcome to you. So did Amazon beat Starlink because it has better technology? Or maybe it just understood South Africa’s rules a little bit better.

ARTHUR GOLDSTUCK: Thank you, Jeremy. It’s very much the second part of that, because I think few people would argue that Amazon has a better satellite network for connectivity than Starlink. Starlink has literally tens of thousands of satellites in low-Earth orbit (LEO), which gives it an advantage over the old satellite networks that used to have tremendous lag.

We’ve had satellite for a long time in terms of internet connectivity, but because they were in what they were called geostationary orbit, it meant that the lag was really poor and the cost was really high.

Low-Earth orbit satellites bring down the cost of the satellites and the lag in that connection. So you can actually get a fairly quick connection in terms of download speeds. There’s still a lag between sending the signal and getting it back, but when the download starts, it’s pretty fast.

So that’s the background to the story. The foreground is that Amazon a few years ago already began what was called Project Kuiper. Kuiper, named after the Kuiper Belt in space. But now it’s been renamed Amazon Leo, and Leo for low-Earth orbit, of course. So Amazon Leo is now functional and is now offering its services.

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It’s still a much smaller network than Starlink, but the difference is that it’s here and it’s here through firstly, Vodacom, which has been using its services for filling gaps in its own network connectivity over the last few years, not for the consumer, but in terms of its own backhaul, the back end of its connection between towers and the like.

Now it’s going to be accessible to consumers through Herotel, which will sell its satellite broadband to households and small businesses. The speeds it will offer will be up to 300 megabytes per second, starting from next year, 2027.

JEREMY MAGGS: Arthur, the Herotel partnership then, has it allowed Amazon to sidestep the regulatory obstacles which have faced Starlink and, as we all know, have been very well documented?

ARTHUR GOLDSTUCK: Yes, exactly that. In fact, Starlink has always had that option of coming in through a local partner. In some countries in Africa and in Zimbabwe, for example, it has done exactly that.

But Elon Musk seems adamant that he wants to be in South Africa in his own right, or at least Starlink in its own right. That’s become almost a battle of egos and a battle of wills rather than of a technology.

While that argument has been going on, Amazon has just got on with doing the job in the best way and the most efficient way that was available.

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JEREMY MAGGS: So is it doing the job or maybe just clever compliance, inasmuch as Amazon has maybe exposed a loophole in the current licensing system, and something that South Africa needs to look at.

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ARTHUR GOLDSTUCK: It’s not a loophole at all. In fact, it’s something that’s always been available. It’s always been available to Starlink as well. Starlink just didn’t want to go that route. I did an interview with a gentleman by the name of Kyle Whitehill, he’s CEO of Avanti Communications, and they describe themselves as a leading provider of agile satellite technology across Europe, Middle East and Africa, and they’ve been offering this service for quite some time.

They’ve got a very small network of satellites. But for the past eight years they’ve been operating geostationary satellites and not-low Earth satellites, and 75% of its network capacity is over sub-Saharan Africa. It’s got gateway earth stations in South Africa, Nigeria and Senegal, but offering its services through other providers.

So they are, you could almost say, symbolic of the fact that you could have been in here all along if you were willing to work with the system.

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JEREMY MAGGS: If that’s the case, then, as far as Starlink is concerned, Arthur, could it maybe adopt the same partnership model and in so doing, erase Amazon’s advantage almost overnight? If Elon Musk has a change of heart.

ARTHUR GOLDSTUCK: It certainly could to some extent. But the question is who they partner with. With Amazon partnering with Vodacom and Herotel, which, by the way, is part owned by Vodacom because Herotel is owned by Maziv, the fibre network provider, and Vodacom has a 30% shareholding in Maziv.

So what you have there is a really powerful partnership between Vodacom, Herotel and Amazon, and it’s that business partnership that is really the key to the success.

It’s not about moving in and taking over. It’s about finding the right partners and being able to compete in the marketplace rather than purely with technology.

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JEREMY MAGGS: Let’s talk practicality. Inevitably satellite internet will materially improve rural connectivity. But Arthur, would it still remain too expensive for most households within that demographic?

ARTHUR GOLDSTUCK: This is exactly the issue that I keep arguing, regarding Starlink resolving the issue of rural connectivity. It will not resolve that issue in terms of households being able to afford internet access in rural areas. It’s far too expensive for the ordinary household.

Where it could make a big impact is if there were resellers that were getting a signal down to the ground and then distributing it locally. So, for example, an internet cafe equivalent in a very small rural town would then aim to redistribute that signal to local households at a fraction of the cost of the single connection, and they would carry the cost of that connection. So there it becomes feasible.

But as a direct selling option, which is the way they operate in most places, it’s simply not viable to fill the gap in rural connectivity for the under-connected.

JEREMY MAGGS: Well, let’s wait and see what happens in 2027. Arthur Goldstuck, as always, thank you very much for the explanation and the analysis. He’s the chief executive officer of World Wide Worx.

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