Mainstream and social media platforms are flooded with commentaries and opinions about how the entry of Starlink, a satellite internet constellation operated by SpaceX, spells doom for local internet service providers (ISPs). While the entry portends market disruption to some extent, as this feature argues, this situation presents a watershed moment for local ISPs. To remain competitive, there is indeed a pressing need, now more than ever, to recalibrate their strategies.

Kenya’s internet infrastructure has exponentially grown over the past decade. Data from the Communications Authority of Kenya (CA) indicates that the country boasts a 90% internet penetration rate, with over 46 million users as of 2023. This surge has been largely driven by mobile internet services, bolstered by investments in fibre optic networks. Key market players, including Safaricom, Liquid Telecom and Jamii Telecommunications, among others, have been able so far to drive the numbers, offering high-speed broadband services primarily through fibre connections in urban areas.

The next frontier, as evinced by the Last Mile Connectivity proposition, is improving internet connectivity in rural areas. Internet connectivity in rural areas is still fraught with challenges, particularly due to the high cost of fibre deployment and maintenance, leaving them dependent on often slower and less reliable mobile internet options. The increasing appreciation of satellite internet service, therefore, arrives at a critical juncture, offering a potential solution to bridge the digital divide in Kenya’s rural areas.

Distinguishing Satellite-Based Internet and Fibre Technology

Fibre optic technology uses glass or plastic fibres to transmit data as light signals. This method allows for extremely high-speed data transfer rates, low latency, and high reliability. Fibre networks are capable of handling large amounts of data simultaneously, making them ideal for bandwidth-intensive applications such as streaming, online gaming, and cloud computing.

The downside to fibre technology is the high cost and complexity of installation, especially in remote or difficult-to-access areas. Additionally, fibre networks can be vulnerable to physical damage from construction or natural disasters.

In contrast, satellite internet uses satellites in orbit to provide internet access. Data is transmitted via radio waves between a satellite dish on the ground and a satellite in space. For instance, Starlink’s constellation of low earth orbit (LEO) satellites would mean faster speeds and lower latency compared to traditional geostationary satellites. Satellite internet is advantageous in that it can reach virtually any location, overcoming the geographical limitations of fibre and other terrestrial technologies.

However, satellite internet can be affected by weather conditions, and the initial setup costs for users, including satellite dishes and modems, can be relatively high.

Feasibility of Satellite-Based Internet in Kenya

The feasibility of satellite-based internet in Kenya is contingent on several factors, as below:

• First, the density of satellite coverage is crucial. Even with reliance on constellations, as Starlink is doing to expand coverage, there may still be areas with limited or no service.
• Second, the terrain and geography of Kenya can impact signal reception. Urban areas with tall buildings may experience signal obstruction.
• Third, the cost of satellite internet equipment and subscription fees can be a barrier for some users. This is, however, time bound as with increased competition as well as economies of scale kicking in, prices are likely to decline.  

What Next? How Local ISPs Can Ride the Wave

The entry of Starlink presents a formidable challenge to Kenya’s established ISPs. While fibre optic networks offer superior performance in densely populated areas, they are costly to deploy and maintain, particularly in rural regions. Satellite-based internet’s ability to assure access in remote and underserved areas could attract a significant customer base. To counter this threat, ISPs must differentiate their offerings and target specific market segments.  

1.         Diversification of Services

To remain competitive, local ISPs need to diversify their services beyond traditional internet connectivity. This could include offering value-added services such as cloud computing, cybersecurity solutions, and Internet of Things (IoT) connectivity. By expanding their service portfolio, local ISPs can tap into new revenue streams and cater to the evolving needs of their customers.

This could also mean leveraging their existing fibre infrastructure to provide bundled services, such as television, telephony, and digital content. This can create a more compelling value proposition for customers.

1. Investment in Infrastructure and Technology

Continued investment in infrastructure and technology is critical for local ISPs to maintain a competitive edge. This includes upgrading existing networks to support higher speeds and lower latency, as well as investing in new technologies such as 5G and fibre-to-the-home (FTTH) solutions.

By enhancing the quality and reliability of their services, local ISPs can attract and retain customers in a competitive market.

1. Customer-Centric Approach

Adopting a customer-centric approach is essential for local ISPs to differentiate themselves from competitors. This includes providing excellent customer service, offering flexible and affordable pricing plans, and addressing the specific needs and preferences of their customers. By focusing on customer satisfaction, local ISPs can build loyalty and reduce churn rates.

Conclusion

Starlink’s entry into the Kenyan market marks a significant development in the country’s telecommunications sector. While it presents challenges for local ISPs, it also offers opportunities for innovation and growth. By embracing new technologies, diversifying their services, and adopting a customer-centric approach, local ISPs can sustain their competitiveness in the face of increased competition.

At the same time, the Kenyan government has a crucial role to play in fostering a conducive environment for the growth and sustainability of the local ISP sector, ensuring that all Kenyans have access to high-quality, affordable internet services.