Will Starlink Close the Digital Divide in New Zealand?
It’s been encouraging to see an increase in media coverage lately about satellite internet. Many people do not realise that the internet can be provided via satellite. If they’re outside 4G / Copper / Fibre coverage, they tend to think they have no other options. Satellite of course can be delivered to anywhere in the country, as long as there’s a good view of the sky. We’re also not talking about low data cap plans and ultra-low speeds, there is now a large variety of options available on satellite internet.
The new satellite player in the market and the one getting all the media attention is Elon Musk’s Starlink. Even without local support, it’s an impressive service when it’s working and at unlimited (conditions apply) data for about $1000 up-front and $159 per month it’s not an unreasonable price for what it provides.
Addressing the Digital Divide
There is a lot of fan talk about Starlink and Musk worship, however Starlink isn’t answering THE problem. It’s like offering caviar for sale to a household that is struggling to buy bread. There’s nothing wrong with offering that, but it’s not financially within reach of answering the problem the vast majority of unconnected rural and remote kiwis face. This problem is commonly referred to as the ‘Digital Divide’ or (lack of) ‘Digital Equity’. Generally, the Digital Divide is caused by a lack of internet availability and/or the lack of affordable internet connectivity.
At Gravity, we have a satellite plan that starts at $20 per week. Even this is a stretch for many. In fact, that price is previously unheard of in NZ, other satellite ISPs will say “but you can’t make money off that” and they’re right, we can’t and we’re not. We have to view it as an investment into rural New Zealand. Once an unconnected household becomes connected, the goal is to save them money in other areas and increase access to education and improve productivity — maybe so much so that one day they will outgrow the $20 plan.
The Starlink Price Barrier
The biggest barrier today though is the cost of setup. Starlink carries an initial setup fee of $913 based on a DIY installation. Gravity offers a $495 setup fee which includes professional installation. Gravity will subsidise an initial amount of around $1500 of that setup fee. Even then, $495 is still out of reach for the majority and this is where the government needs to step up. Gravity believes there are more than 10,000 houses needing satellite connectivity, so as an exercise let’s say 10,000 want to connect today, that’s a one-time investment of $20m by the government, a drop in the ocean compared to other internet rollout programmes but with a significant ROI.
Will the Government Tackle Digital Equity Issues?
The flaw in the Government’s strategy to date is they want to see how far out Fibre and 4G can be pushed (at great cost) then see who’s left. Our view is that the most remote are the most in need, so why not start from the furthest out by connecting with satellite, then push inwards toward 4G/Fibre. Debatably we are already at a point where 4G coverage has gone about as far as it economically and practically can — there are many in the industry who will admit to this. If we want to talk honestly about digital equity, how about we recognise the extensive investment and subsidies that urban kiwis have enjoyed with the fibre rollout — something that unconnected remote and rural kiwis have not received any benefit from — where is the equity in that?
In summary, let’s shift the focus from the luxury and fan talk of Starlink and address the real problem. Let’s be part of the solution by connecting the homes in rural and remote NZ who need the initial boost and help to get online. Satellite internet is their only option, so why wait? If the government can subsidise the initial setup costs, providers like Gravity can get to work on providing plans with affordable weekly payments.
