This article first appeared in The Edge Malaysia Weekly on July 31, 2023 - August 6, 2023

IN the same week that US billionaire tech maverick Elon Musk swapped Twitter Inc’s little blue bird logo with a “temporary” black-and-white letter “X”, Starlink, a unit of his aerospace company SpaceX, made headlines in Malaysia for being allowed to fully own a company licensed to offer satellite internet service in the country using its low-earth orbit satellites.

Not only has Malaysia procured 40 Starlink satellite devices for use in schools and universities, but after Musk’s 25-minute virtual meeting on July 14 with Prime Minister Datuk Seri Anwar Ibrahim, Starlink Internet Services Malaysia Sdn Bhd — which is fully owned by Starlink Holdings Netherlands BV — was given 10-year Network Facilities Provider (NFP) and Network Service Provider (NSP) licences effective from July 17, 2023, according to the individual licence register on the Malaysian Communications and Multimedia Commission’s (MCMC) website. The 100% foreign equity is a departure from MCMC’s NFP and NSP licensing norm that requires at least 30% bumiputera equity participation.

“The 100% foreign ownership could be among the concessions that Musk and others want [on top of] tax-related incentives,” says an observer, noting how completely built-up (CBU) units of Musk’s Tesla will be cheaper in Malaysia than in Thailand and Indonesia.

It is not immediately known whether the Starlink concession was a sweetener from Putrajaya for Tesla’s being the first applicant under the Ministry of Investment, Trade and Industry’s (Miti) Battery Electric Vehicles (BEV) Global Leaders initiative, under which Tesla has agreed to set up a Malaysian head office, an experience and service centre, as well as a Supercharger network (a portion of which has to be available for use by other EV cars).

Some observers have raised questions, however, as to whether those Starlink units were necessary, given that schools and universities are priority areas for broadband coverage under the Jendela initiative as well as 5G. For one thing, the Starlink units’ official monthly subscription price of RM220 for up to 100Mbps is easily RM100 more than the price of Telekom Malaysia Bhd’s Unifi packages and requires at least another RM2,300 (standard) or RM11,613 (high performance) for hardware equipment, along with RM100 for shipping and handling.

In addition, billionaire Ananda Krishnan-controlled Measat Global Bhd, owner of Malaysia’s sole licensed regional satellite system, already uses its MEASAT-3d satellite — which also supports Astro Malaysia Bhd’s direct-to-home satellite pay-TV service — to offer ConnectMe Now satellite broadband to underserved areas or the “remaining 3%” in Peninsular Malaysia, Sabah and Sarawak.

Some observers have gone a step further, asking whether Putrajaya — in its earnestness in welcoming investments from Musk — has put in place “necessary guardrails” and legislation in areas such as data security, data residency and data sovereignty — which, among other things, determine where certain types of data must reside. The Tesla CEO is being courted by several countries in the region as they vie to become “China’s plus one”, with Tesla looking to build another “gigafactory” in Asia, on top of the one in Shanghai. Tesla, which has three gigafactories in the US and one in Germany, recently announced plans to build another in Mexico.

Tesla was among the big international names mentioned by Anwar in his speech on July 27 as “companies that have announced investment commitments” in Malaysia as the prime minister outlined the Madani Economy framework with seven key missions (see story on Pages 58 and 59).

At the time of writing, Minister of Communications and Digital Fahmi Fadzil had yet to respond to queries from The Edge seeking comment on questions that have arisen over the Starlink procurement.

On July 27, Fahmi told the media that the Starlink units for Universiti Teknologi Mara (UiTM) were a “temporary solution” that was immediately available until a “more permanent” solution is found, noting that the prime minister was responding to requests from varsity students seeking better broadband connectivity.

Fahmi, in a Facebook post on July 20, noted how Starlink’s satellite internet services could play a role in achieving 100% coverage of populated areas, especially in rural and remote areas where the construction of a traditional network infrastructure to cover the “remaining 3%” of populated areas is a challenge.

The “unity government’s earnestness in bridging the digital divide” was also emphasised by Fahmi in a separate media statement on July 28, the morning after Anwar presented the first of the 10 Starlink satellite devices earmarked for UiTM to its vice-chancellor Prof Datuk Roziah Janor in Kuala Pilah, Negeri Sembilan.

It is not immediately certain how many people will benefit from the 40 Starlink units or how much Putrajaya paid for them (RM2,300 x 40 = RM92,000 or RM11,613 x 40 = RM464,520) and whether the government is also paying the monthly fees (RM220 x 40 = RM8,800).

It is understood that any payment is likely to come from the Universal Service Provision (USP) fund managed by MCMC to bridge the digital divide. This could not be officially confirmed at press time.

Apart from Starlink’s headline prices currently being higher than similar fibre and mobile broadband packages, there is no stopping anyone in a well-covered area, such as Kuala Lumpur or other parts of the Klang Valley, from choosing to subscribe to Starlink satellite broadband over packages offered by any of the local players.

While the Starlink service is often marketed to policymakers as a fast way to bring connectivity to underserved remote and rural areas with limited internet coverage, extending coverage to far-flung locations may not necessarily be for bridging the digital divide for the poor but for bringing high-speed satellite broadband service to the well-heeled in remote places such as international waters or the interior of the Amazon rainforest.

Those familiar with Starlink or who closely track Musk would know that the billionaire had previously proclaimed on Twitter that “buying a Starlink with global roaming [subscription] allows you to travel almost everywhere” and that Starlink was already available on “all seven continents, including Antarctica” (albeit not all countries on the planet yet) since last September. Others might remember Musk’s tweet late last year (which he later walked back on) that SpaceX could no longer fund Starlink dishes providing internet connection to the Ukrainian military.

According to the coverage map on Starlink’s website, Malaysia is one of four Asia-Pacific countries in which Starlink services are already available, alongside Australia, Japan and the Philippines, with South Korea expected to come online in 4Q2023 and Indonesia in 2024.

Telstra Group is the first telecommunications company in the world to sign a mobile service agreement with Starlink, with plans to offer voice and broadband services to customers in the more remote parts of Australia.

In Japan, where the military has been reportedly testing Starlink services since last year, KDDI Corp not only has a Starlink-powered mobile tower in Hatsushima (a remote island in Sagami Bay) but has also reportedly joined hands with Starlink for a drone delivery service, apart from acting as “an authorised Starlink integrator” for customers in rural and remote areas.

In the Philippines, Starlink’s local connectivity partner is Data Lake Inc, led by tycoon Henry Sy Jr, whose late father topped the country’s Forbes billionaires list until his demise in 2019.

At the time of writing, the size of investments by Musk-related companies in Malaysia had not been publicly disclosed. It is also not immediately known how many high-value jobs stand to be created and how much technology training will come about for the local economy.

“Would Putrajaya be ready to grant 100% equity ownership if other big names were to seek similar exemptions in return for their investments in Malaysia? The rules and guidelines on these exemptions should be consistent and made clear,” says an observer.

Another observer agrees that benefits to the local economy should be better articulated, noting that, even at RM200,000, a Tesla car is not for the man in the street for whom the government wants to provide better opportunities and raise the quality of life. “There may well be an X-factor that you and I don’t know about, [but] time will bear witness to who benefits most from the deal,” he says. 

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