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3 Ways Starlink is an Extractive ICT Company in LMICs

By Nadia Andrada on December 28, 2023

starlink extractive industry

Starlink is now the big favorite for Internet access across low- and middle-income countries (LMICs) around the world. Every technologist in developing countries is wishing for a Starlink connection to a low Earth orbit (LEO) satellite constellation for fast Internet bandwidth. Starlink is not in my country yet, but even I want it.

However, Starlink is bringing serious issues to the information and communication technologies for development (ICT4D) community. For example, Steve Song’s blog post asks a big question: Will Starlink Help Magnify Global Inequality? After reading his thoughts, I believe there are three ways that Starlink is an extractive company in LMICs.

Extractive Industry Characteristics

Starlink is not a traditional extractive company, but international technology companies and the natural resource extraction industry have many similarities despite being in very different sectors.

Both industries have a big influence on global markets and economies, often having a lot of power in shaping economic trends and policies. At their heart, both industries are about taking resources: either taking minerals and oil that causes environmental problems and community displacement, or taking digital data that affects privacy and reduces personal security.

Finally, both industries work on regulatory capture to make sure governments are okay with market structures that lead to a few big and dominant international companies. I am not okay with either extractives or monopolists.

Starlink as an Extractive ICT Company

Let’s look at the three areas where Starlink is like an extractive industry company by extracting resources, ignoring local economies, and  resource extraction, local :

1. Cash Resource Extraction

Starlink made $1.4 billion last year. Its goal is to earn $12 billion a year from $650 Starlink terminals and $100 monthly subscription fees. This means millions of people are paying billions a year to a US-based global Internet service provider started by the world’s richest man.

Like Steve says, when you connect that Starlink dish, it is not just data beaming up into the sky, it is cold hard cash. You can think of every Starlink terminal as beaming dollars into Elon Musk’s pocket.

2. Local Ecosystem Starvation

The massive cash extraction would be okay if there was a big investment in the local technology ecosystem. Governments are right to want strategies that make thriving economies in their country that create jobs, companies, and economic development.

But, Starlink invests very little in the countries it operates in. There are only a few Starlink staff outside of the USA, much less in the developing world or on the African continent. Starlink also tells you to buy terminals directly from them, competing with their local resellers.

3. National Sovereignty Loss

Starlink, only follows the rules and regulations of its home country, like most Internet-based technology companies. Its parent company SpaceX gets in trouble with the US Government for not following domestic laws. The US does not have strong national data privacy regulations either, meaning Starlink can make its own data security rules.

Starlink does need to get permission from national governments to operate its terminals legally in that country. South Africa is holding out, requiring that Starlink follow existing telecommunications law and have at least 30% local ownership by blacks, women, and people living with disabilities. Kenya’s similar requirement was relaxed for Starlink.

Not All Satellite Internet is Extractive

Not all satellite Internet technologies are extractive. LEO satellite Internet can be offered to the wholesale market to empower local companies and build complementary economic and technological ecosystems. Steve mentions LEO initiatives like OneWeb, Telesat Lightspeed, the EU’s planned IRIS2 constellation that are more likely to support local companies.

Wholesale Internet suppliers depend on domestic ISPs to manage relationships on the ground – with government, other companies, and retail or business customers. Domestic ISPs also hire local staff, train employees, and spin-off new companies to support a strong digital ecosystem.

Robust Preexisting Alternative: Fiber

While we all look to the sky, there is already an existing alternative below our feet: fiber optic technology. Wired connectivity is stronger, has higher bandwidth and throughput, and is often less expensive to deploy and maintain than a fleet of satellites.

Installing and maintaining fiber optic technology also creates local economic activity with companies digging trenches, technicians splicing fiber in the field, and companies manufacturing fiber optic cables – a whole ecosystem of businesses that work together.

In fact, 97% of the Rwandan population live within 25km of a fiber optic point of presence. The country could use existing infrastructure to invest in Internet access and push local economic development.

However, hype won out. The Rwandan government announced that they would offer Starlink connections to 50 schools. Then Mozambique announced Starlink connections for 300 schools. Neither action truly supports local ecosystems or national economic development.

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Written by
Nadia Andrada has decades of experience deploying technology solutions around the world with a focus on working with communities in the Global South.
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8 Comments to “3 Ways Starlink is an Extractive ICT Company in LMICs”

  1. John Smith says:

    This is a very simplistic analysis. You think all the multinational MNOs pulling far far greater amounts of profits out of developing countries is not extractive? And don’t ignore the comments to Steves article…

  2. Please guide us how to get engaged and proceed further.

  3. Mike Dawson says:

    I would agree that Starlink is often hyped, and many times there are already easier and cheaper ways to do things (e.g. if a school is within 25 km of an existing fiber optic cable). Much could be done to reduce bandwidth requirements (and cost) via smart caching etc.

    Starlink provides out-of-country bandwidth, and I think most of the critiques the author makes here would apply to both international fiber optic cables (under ocean / out of country by definition) or other satellite providers. Individual governments can’t regulate space alone, but they can and do regulate imports (including terminals and dishes). Starlink also has resellers, and many tech companies sell both directly and via resellers. Any government can decide what they want to allow in their country and enforce it by controlling the import and use of equipment within their country.

    More people connecting at a lower cost grows the entire digital ecosystem: that’s more users for local apps, content, etc. I think the best antidote to any shortcomings of Starlink is alternatives and competition, which as the author mentions, is around.

  4. Michelle says:

    Thank you for sharing. I spent last year at NDU analyzing the space industry and we spent quite a lot of time on satellites and the comercialización of space so this analysis is especially interesting. Are you aware of any research on the starlink licenses or agreements for each country? In this piece you intimate the company could be capturing data—do you have more information about that?

  5. Wayan Vota says:

    One reason I’ve heard for going with Starlink is that it offers a counterbalance to local ISP business practices. As a US-based company, Starlink’s digital technology and data policies are presumed to advance democratic values and human rights, while local ISPs often utilize hardware and software that has dubious security and privacy controls.

    • Mike Dawson says:

      Not sure about that reason either way. Practically all data these days is encrypted, so man-in-the-middle attacks don’t work well anymore. Starlink or any local ISP cannot just intercept any data in transit. All they can do is block things and get basic statistics on traffic volume, assuming the user isn’t using a VPN.

      A hostile actor couldn’t feasibly use a compromised ISP switch to intercept the content of customer traffic. They could try to shutdown infrastructure and block things, but getting at the content would require compromising the user’s device or the servers running the app/service.

  6. John says:

    Is it really extractive when the economic arrangement in internet service provision is that each subscription is initiated by an individual, organization or enterprise making its own decision on the net benefit of connectivity despite the cost? Calling it extractive negatives the agency and rationality of those entities.

  7. Dennis N. Mwighusa says:

    Tanzania has still remained stagnant towards welcoming starlink invest in the country. I’m moved that some of the reasons for not allowing it are mentioned in this article.
    Thanks for sharing such insights. May be we also need to hear from Starlink