On Tuesday, technology writer Patience Haggin claimed that in the US, “rural internet is still so bad, some states are turning to outer space.” The article referred to the growing number of states rolling out satellite subsidies “that could be a boon to Elon Musk’s Starlink and another nascent service from Amazon.” These subsidies include Louisiana, setting aside $28.7 million for satellite services, as well as Nevada’s commitment to spend $12.7 million for Amazon’s Project Kuiper to serve 4,400 rural addresses. Maine’s Working Internet ASAP program has provided Starlink terminals to 9,000 of its most remote locations, although residents will be responsible for monthly subscription fees.
The state initiatives are occurring despite—rather than because of—federal initiatives such as the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) Program. The viability of satellite connections in rural communities is well-proven both physically and financially. Already, over 14 percent of rural broadband subscribers in New Zealand—a country posing extreme geographic and population density challenges and an early test bed for Starlink—use satellite services. Yet the distribution of BEAD funds has been stubbornly biased towards a preference for fiber connections—which are very costly and will take years to deploy—because satellite speeds and service qualities (e.g., latency) don’t match those on fiber connections. Notwithstanding, a satellite connection provided today in rural Maine, capable of serving all currently popular internet applications adequately, even if not identically to fiber, is more valuable to a rural consumer with no internet than the promise of a fiber connection at some unknown time in the future.
Fortunately—albeit belatedly—action addressing the BEAD bias is occurring in Washington. Last month, Representative David Taylor introduced a bill to the House to amend the BEAD program to allow funds to be used for 50 percent of the cost of a satellite or fixed wireless receiver, with an additional $30 off the monthly bill for a year. Priority would be given to counties in the bottom 50 percent of a state’s per capita income. While acknowledging BEAD’s long-term fiber objective, his Bridging the Broadband Gap Act would ensure “no matter what technology is used,” rural Americans would get the internet access they need when they need it—now.
By way of contrast, the availability of satellite broadband provided by international firms has been a game-changer in other parts of the world where local terrestrial operators have struggled to finance and deploy state-of-the-art infrastructure, especially in rural areas that underpin a disproportionately large amount of economic activity. In Africa, for example, Elon Musk’s Starlink service has been licensed to provide services in Zimbabwe, Lesotho, Malawi, Botswana, Zambia, and Mozambique, among other places. An exception to date has been Musk’s country of birth, South Africa (India is another laggard).
The South African stumbling block has been the longstanding Electronic Communications Act obligation mandating that foreign-owned communications companies sell 30 percent of their local subsidiaries’ equity to historically disadvantaged groups. This requirement must be met to obtain an operating license, which is necessary to sell services to South African customers. This obligation is part of the Black Economic Empowerment (BEE) provisions intended to address historical injustices, and have been in place in various forms since the 1994 constitutional reforms. Musk has alleged the obligations are discriminatory and has refused to comply. The South African government has refused to issue a license to Starlink. Consequently, rural South Africans have been unable to access services available to citizens (including their commercial competitors) across the border in Zimbabwe, Lesotho, Botswana and Mozambique. The South African economy is ultimately the loser. This is no trivial matter: South Africa’s 2024 GDP growth was 0.6 percent—much smaller than its satellite-empowered neighbors.
Perhaps not as a coincidence, on May 24 (just after President Cyril Ramaphosa’s visit to Washington), Communications Minister Solly Malatsi proposed the recognition of so-called “equity equivalent” investment programs in the information and communication technology sector as an alternative to the 30 percent equity provision. The Minister is emphatic that South Africa is not watering down its BEE laws just to suit Elon Musk’s Starlink. Rather, he maintains the plans had always been intended, first emerging at the end of May of last year. They were needed to “accelerate broadband access and bring in multinationals who could not comply with local equity ownership rules.”
In both the US and South Africa, consumers will be the beneficiaries of the recent policy initiatives, but the question remains: How much better off would consumers have been if the new policies had been in place much sooner?
