NZ wireless internet provider warns of Starlink's rural broadband monopoly risk

A regional wireless broadband provider wants the government to heed the warning that rural New Zealand risks relying too heavily on one satellite internet provider.

Rural New Zealanders fed up with poor yet expensive connectivity lead the rapid uptake of Starlink's high-speed satellite internet, since its entry into New Zealand in 2021.

Starlink - the company owned by Elon Musk's SpaceX - now accounts for at least a fifth of New Zealand's rural broadband market, being found in many rural schools, farms, households and also used by Civil Defence emergency services.

The rise in its global Low-Earth Orbit (LEO) satellite service came as New Zealand's copper network was set to be retired by 2030.

WISPs warn local providers at risk

Small, locally-owned wireless internet service provider (WISP) WombatNET serviced the Wellington region with its land-based broadband, competing with Starlink.

Founder Alex Stewart said the government was warned about a rural broadband monopoly risk due to Starlink's fast growth by both industry and experts.

"If Starlink were to be switched off today, that probably would be quite bad for New Zealand," he said.

"What I'm warning about is that there is evidence that we are heading towards a situation where New Zealand will essentially lose its alternatives, domestic optionality.

"That's a risk that hasn't been analysed and I would like government to look into further."

The Commerce Commission commissioned an independent report into recommendations for telecommunications regulation in October.

Author Richard Feasey said fibre network deployment in rural areas was important for reasons of social regulation and inclusion, as well as economic regulation and competition.

"I think there is otherwise a material risk that Starlink would win the competition 'for the market' and become the dominant if not monopoly supplier of broadband services in rural areas," he said in the report.

"If this situation were to arise then I think it would be very difficult for the [Commerce] Commission to regulate Starlink or otherwise to ensure competition in the provision of rural broadband services."

Shortly after the report, Bay of Plenty WISP Evolution Networks went into liquidation.

Stewart said at this rate, more local providers will disappear.

"And that was just four days after the expert warned that was what was going to happen more and more, and what industry have been warning about for four years.

"So that's happened October last year and still nothing has been done about it."

He said while he was a direct competitor with Starlink, he believed it was important to have mature conversations early and develop future plans on the issue.

"The main concern that I have here is for the risk that this presents to rural New Zealand," she said.

"And at the moment, it feels to me as though rural New Zealand has sort of been put on the back burner a bit."

From next month, Starlink was going to increase some consumer prices.

Meanwhile, competitor Amazon was expected to launch a satellite internet service known as Leo in New Zealand.

The technology giant told RNZ it was planning to launch into New Zealand and other markets after first launching in the United States around August.

Farm internet mostly wireless broadband but satellite growing

A Federated Farmers survey from September showed most of the 600 farms surveyed were connected to wireless broadband internet (44 percent), but that share was dropping while satellite's was increasing (36 percent).

The group's telecommunications spokesperson Mark Hooper said the service was a "lifesaver" for rural customers with limited options individually, but it was concerned about its rise as an overseas entity.

"From a national perspective, there are a whole lot of issues at stake, even our sovereignty as a nation."

Hooper said the company was not "solving" the rural connectivity problem affecting farmers and people living outside urban areas.

"Even if Amazon brings its Leo to New Zealand as a competitor, we've just got a duopoly. It doesn't solve the problem."

He said locally-owned WISPs were part of thriving rural communities, but they were under pressure.

"We're really concerned they are getting squeezed and we're going to lose that personalised service."

Government 'monitoring' for competition and resilience risks

The Government has invested about $770 million on rural connectivity programmes over the past decade.

Ministry for Business Innovation and Employment (MBIE) spokesperson Deborah Crawford said programmes like the Rural Broadband Initiative, the Mobile Blackspot Fund and the Rural Capacity Upgrade improved broadband service for about 86,000 rural households and businesses.

"The growth of low Earth orbit services such as Starlink reflects demand and has had a positive impact on competition, with evidence of lower prices and better speeds."

MBIE managed radio spectrum allocations and was considering opening up 3G to more providers.

Crawford said the Telecommunications and Other Matters Amendment Bill was being progressed through Parliament, and was currently at second reading.

"[The Bill] will ensure offshore providers are subject to appropriate regulatory obligations in New Zealand. This is intended to create a more level playing field across providers, including requirements relating to service quality, dispute resolution, and security."

"MBIE will also continue to monitor developments, including competition and resilience risks, and will consider whether further regulatory responses are needed as the market evolves."

Meanwhile, a spokesperson for the Commerce Commission said LEO satellite broadband had increased choice and connectivity for many rural customers.

"At present, Starlink is the only LEO provider offering residential broadband services in New Zealand, and looking to make the most out of its first mover advantage, which is common in competitive markets."

They said Amazon's entry would provide further options for rural consumers, whom its surveys showed were often happier with customer service from local companies than Starlink customers.

"As with any emerging technology, there can also be trade-offs and longer term risks that need to be understood as markets develop," they said.

"We would be cautious about forecasting market structure too early. Our focus is to ensure we're well positioned to respond if evidence indicates competition or consumer harms are emerging."

Starlink and SpaceX were approached for comment multiple times.

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