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Elon Musk’s satellite internet company, Starlink, will be contributing to New Zealand’s Telecommunications Development Levy (TDL) for the first time after surpassing the minimum revenue threshold of $10 million. The Commerce Commission announced the draft decision on the TDL payments for the year ending June 30, 2024, confirming that Starlink’s growing presence in the country has now made it eligible to contribute to this annual levy, which funds vital telecommunications infrastructure and services in underserved areas.
The Telecommunications Development Levy and Its Purpose
New Zealand’s TDL is a $12 million annual levy imposed on telecommunications companies that earn more than $10 million in gross revenue. The levy is primarily used to subsidise non-commercially viable services, including providing broadband to rural areas, maintaining a relay service for the hearing-impaired, and funding improvements to the 111 emergency service. Telecoms that meet the revenue threshold contribute to this fund, which is allocated based on their proportional revenue from telecommunications services.
The levy is crucial for ensuring equitable access to telecommunications services across the country, particularly in regions where private investment in infrastructure is not commercially feasible.
Starlink’s Revenue Growth Triggers Levy Contribution
Starlink, a subsidiary of Musk’s SpaceX, has rapidly expanded its customer base in New Zealand, increasing from 12,000 customers to more than 37,000 in just a year. With its satellite-based internet service providing high-speed broadband to remote and rural areas, Starlink’s revenue soared to NZD 74 million between July 2023 and June 2024, well above the NZD 10 million threshold.
As a result, Starlink is now responsible for paying a portion of the TDL for the first time. Its contribution is expected to amount to approximately NZD 182,000. Telecommunications Commissioner Tristan Gilbertson highlighted the significance of this move, stating, “For the first time, Starlink’s revenue has reached the threshold where it needs to join other telcos in contributing to the TDL and subsidising services in the public interest.”
Comparison with Other Telecom Contributors
While Starlink’s contribution marks its entry into the TDL, New Zealand’s established telecommunications providers continue to bear the bulk of the levy. The largest contributors remain Spark, One NZ, Chorus, and 2degrees, which collectively account for around 84% of the total levy. For the year ending June 2024, Spark is expected to pay NZD 3.4 million, while One NZ will contribute NZD 2.7 million, and 2degrees around NZD 2.2 million.
Although Starlink’s contribution is modest in comparison, its inclusion signals the growing importance of satellite-based internet services in New Zealand. Starlink’s entry into the levy system also brings more diversity into the pool of contributors, reflecting the evolving nature of the industry, with non-traditional providers like satellite operators joining the mix.
Implications for Telecommunications Development
Starlink’s participation in the TDL could have a notable impact on New Zealand’s telecommunications infrastructure, particularly in rural and underserved areas. With much of Starlink’s customer base located in remote regions, its contribution directly supports the same communities it serves by funding further development of rural broadband and essential services.
The inclusion of satellite services like Starlink in the levy system also highlights the increasing role of satellite internet as part of the mainstream telecommunications effort. As traditional networks struggle to reach New Zealand’s more isolated regions, satellite-based services are becoming a critical component of ensuring nationwide connectivity.
What’s Next?
Starlink’s contribution to the TDL marks a significant step up in its operations in New Zealand, reflecting both its revenue growth and its growing responsibility to support the country’s telecommunications infrastructure.
With submissions on the draft decision due by November 8, and a final decision expected by December, the next step will solidify Starlink’s ongoing contribution to New Zealand’s goal of providing equitable access to reliable internet services across the country.