Overview:
As demand for faster and wider internet access grows in Palau, questions are mounting over why services like Starlink remain blocked. Leaders say the answer lies in protecting millions of dollars in national investment—and avoiding a financial burden that could fall on taxpayers.
Leaders warn opening market too soon could bankrupt state-owned providers and shift costs to taxpayers
By: L.N. Reklai
KOROR, Palau (April 8, 2026) — Questions over why Starlink is not allowed to operate in parts of Palau without internet access were raised, but national leaders say a temporary ban is necessary to protect the country’s telecommunications infrastructure and financial stability.
A law enacted by the Olbiil Era Kelulau (OEK) places a moratorium on new telecommunications operators entering the Palau market until 2028, a move President Surangel Whipps Jr. said is designed to safeguard state-owned corporations Belau Submarine Cable Corporation (BSCC) and Palau National Communications Corporation (PNCC).
The restriction comes as some areas remain without reliable internet service, prompting calls for alternatives such as Starlink to fill coverage gaps. However, Whipps warned that allowing new entrants—particularly companies with direct-to-consumer models—could destabilize Palau’s existing telecom system.
Before the country was connected to a submarine cable network, Palau relied on costly satellite services. To improve connectivity and reduce long-term costs, the government established BSCC, which secured loans to build the nation’s first submarine fiber-optic cable. The system became operational in December 2017.
In 2019, Palau pursued a second submarine cable to ensure redundancy. Financing agreements were signed in May 2020 with Export Finance Australia, the Australian Infrastructure Financing Facility for the Pacific (AIFFP), the Japan Bank for International Cooperation (JBIC) and Sumitomo Mitsui Banking Corporation (SMBC).
Whipps said BSCC has already begun repaying loans for the second cable, with PNCC as its largest customer. He cautioned that introducing new competitors such as Starlink could erode PNCC’s customer base and revenue, placing both companies at risk of insolvency.
“If both companies go bankrupt, we Palauans will bear the cost because they belong to us,” Whipps said. “If we don’t pay through service, we will pay as taxpayers because they are our debts. We provided a 100% guarantee.”
The president said Palau could face significant fiscal consequences if BSCC fails to meet its obligations, including the possibility of raising the Palau Goods and Services Tax (PGST) by 2% to cover an estimated $50 million loan.
Both BSCC and PNCC are fully Palauan-owned, while there is no Palauan ownership in Starlink, officials noted.
Whipps also pointed to ongoing infrastructure development, including PNCC’s 5G and Open Radio Access Network project funded by the United States. Once completed, alongside the activation of the second submarine cable, he said PNCC is expected to deliver high-quality service capable of competing globally.
“Ultimately, PNCC will have the best services and Starlink cannot compete,” he said.
Minister Charles Obichang, whose ministry regulates the communications sector, urged caution, saying Palau should learn from other Pacific nations and avoid decisions that could bring unintended long-term consequences.
The moratorium, officials say, is intended to provide time for Palau’s existing telecom investments to stabilize—balancing the urgent need for expanded internet access with the financial risks of opening the market too quickly.