Starlink Made Them Dance

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Every week, we post an opinion article on something we found Interesting. Here goes this week’s take:

Three ISPs walk into a bar. Safaricom, the seasoned regular, orders a drink and flashes a confident smile. "I'll take my usual," it says, knowing it's the most popular in town. Airtel, the underdog, chimes in, "I’ll have whatever he's having, but make it cheaper." The bartender nods knowingly. Just as the drinks are served, Starlink strides in, all shiny and new. "I'll take the best you’ve got," it says, pulling out a stack of cash. The room goes silent.

Then, in walks the GOK (Government of Kenya), looking stern. "Hold up," it says, pointing at Starlink. "You can’t just waltz in here without playing by our rules. How about you join forces with one of these two?" The bartender shrugs, sliding Starlink its drink anyway.

Safaricom and Airtel exchange glances, wondering if the rules are about to change, while Starlink just sips its drink, quietly planning its next move.

What You Should Know

• Safaricom, Kenya's leading telecommunications company, has long dominated the market with innovative products like M-PESA and extensive infrastructure.

• Recently, Starlink, a global satellite internet provider, entered the Kenyan market, offering high-speed internet and flexible payment options, challenging Safaricom's dominance.

• Safaricom, along with other local operators, is pushing for regulations that would force companies like Starlink to partner with existing telcos, a move that some view as stifling competition.

• Customer dissatisfaction with Safaricom has been growing, fueled by high fees, complex processes, and declining customer service.

• During recent anti-government protests, an internet outage linked to Safaricom fueled accusations that the company was complicit in government actions, further alienating the youth.

• Safaricom's strategy of using legal means to curb competition may backfire, as younger consumers tend to support companies that champion innovation and ethical practices.

Every once in a while, an invention comes along that forces us to reimagine how we live. The light bulb, the bicycle, the motor engine, the Internet, the Personal Computer, the iPhone—you name it. In tech, these inventions can make or break you. Most buckle under the pressure, bowing out as life as they knew it ends. They become a distant memory, one we revisit when we're nostalgic about the "good old days." The resilient ones fight back, innovate, return to the drawing board, and create even better inventions that push the human race forward—sometimes even putting a dent in the universe.

For decades, Safaricom has been the pride and joy of the Kenyan economy. Kenyans have watched in real time as the company leveraged excellent customer service, top-notch product marketing, heartwarming CSR initiatives, and a vibrant company culture. Most importantly, Safaricom remained the country’s unrivaled leader in innovation, with products that boosted the economy, created millions of jobs, invested heavily in the creative economy, and even set a benchmark in mobile banking through its magnum opus: M-PESA.

Through its success, Safaricom positioned Kenya as a lucrative destination for investors in the telecommunications industry. The company worked closely with small businesses by providing infrastructure to streamline payments through the Daraja API and invested heavily in the local tech scene. According to Forbes:

• 59% of Kenya's GDP flows through M-PESA.

• Safaricom controls 37.4% of the ISP market share in the country.

• Safaricom announced KShs 139.9 billion in earnings before interest and tax for the period ending March 31, 2024.

With these numbers, Safaricom is dangerously close to a monopoly, boasting a solid end-to-end approach in all its product offerings. Recently, however, a new global entrant has shaken Safaricom’s market position.

Starlink

Starlink set foot in Kenya in July 2023 and quickly gained popularity among locals, mainly due to its high speeds. At that time, the Starlink hardware kit was priced at KShs 89,500, covering hardware and installation costs. Being satellite-based, Starlink faces no risks of cable cuts that cause downtime for users.

For contrast, Safaricom’s packages start as low as KShs 2,500 for home fiber connections, with data bundles priced at just KShs 5. Safaricom's extensive infrastructure throughout the country makes it the preferred ISP for individuals, businesses, and households.

For many Kenyans, Starlink’s initial price was extremely high. However, Starlink took the time to incorporate feedback from users and returned with a better offering: flexible payment options to cater to the masses while still delivering high-speed internet.

What’s The Beef?

Recently, Starlink's website revealed that it now offers kit rentals across Kenya. You can rent the Starlink kit for KShs 1,950 per month or purchase it for KShs 45,500. There are no contracts, but they offer a 30-day trial, and the kit ships within just one week. Starlink also plans to bring internet and mobile services to consumers, with plans to include an advanced Evolved Node B (eNodeB) in its new satellites.

In a miscalculated move to curb competition, Safaricom and other operators have argued that companies like Starlink should only be allowed to operate in partnership with existing telcos.

The Dangers

Never in history has overregulation favored innovation. But the issue isn't just that Safaricom is evidently afraid of competition. Social media shows that many Kenyans believe Safaricom is no longer innovating. M-PESA’s absurd transaction fees have been under scrutiny for the longest time. Purchasing Safaricom data bundles has become a frustrating 10-step process, not to mention the random pop-up promotion messages every two seconds. Moreover, stellar customer service is hard to come by, and customers continue to report cases of fraud on M-PESA and data breaches.

June 25^th

Along with diminishing customer service and lack of innovation, Safaricom is clearly losing favor with the public. For non-Kenyan readers, Safaricom is a public limited company, meaning it is partially owned by the Kenyan government, which has faced heavy scrutiny for bad governance and corruption, especially from its younger population. During the anti-government protests in June led by Kenyan youth, there was a major internet outage affecting Safaricom’s services (WiFi and mobile). On the morning of June 26th, it was reported that there had been genocide in Githurai, where several Kenyan youth suspected to be part of the protests were found dead. The government was accused of perpetrating the murders, and Safaricom was accused of intentionally interfering with internet services to prevent the youth from sharing real-time updates.

In that moment, clear battle lines were drawn between the youth and entities like Safaricom, which had allegedly cozied up to the government. Much of the young population vowed to boycott Safaricom as payback for their complicity.

And Starlink just happened to be “The Better Option.” Lol.