Technology
ISP VS Starlink
ISP competition: Starlink maintains price reductions in spite of protests from nearby businesses
Starlink, Elon Musk’s satellite internet company, has introduced new discounted prices for its customers in Kenya. This comes after the Competition Authority of Kenya (CAK) decided not to interfere with the company’s pricing strategy, which has stirred concerns among local competitors.
The latest promotion, running until December 14, offers a 20% discount on the hardware installation kit, reducing the price from Sh49,900 to Sh39,999. Additionally, the Mini kit is now 15% cheaper, dropping from Sh27,000 to Sh23,000.
This pricing strategy is expected to intensify tensions with local Internet Service Providers (ISPs), who have accused Starlink of engaging in unfair practices such as offering significant discounts and undercutting costs to attract customers from competitors.
Starlink’s pricing strategy has caused dissatisfaction among local market players such as Safaricom, Airtel Kenya, and Jamii Telecommunications Limited (JTL). These companies have submitted protest letters to the Communications Authority of Kenya (CA) to voice their concerns.
About two weeks ago, Jamii Telecommunications Limited (JTL), Kenya’s second-largest internet service provider (ISP) by subscribers after Safaricom, appealed to the communications industry regulator to look into alleged predatory pricing practices. JTL argued that such practices could undermine local players by making it difficult for them to compete on pricing and services, ultimately stifling competition and disadvantaging domestic businesses.
This move prompted the Communications Authority of Kenya (CAK), which is responsible for fostering and safeguarding fair competition in Kenya’s industries, to investigate JTL’s concerns, including claims of misleading marketing tactics.
Earlier in August, Safaricom, the market leader, had made a similar appeal to the CA. They urged the regulator to reevaluate its policy on licensing independent ISPs, citing fears that indiscriminate approvals could lead to illegal connections and disruptions to mobile networks.
However, Safaricom faced a setback when President William Ruto, during his September visit to the United States, expressed support for Starlink’s operations in Kenya. The President stated that Starlink’s activities aligned with the government’s goal of increasing internet access and fostering competition.
To counter Starlink’s market presence, Safaricom took steps to increase its home fiber internet speeds by up to five times in a bid to retain customers and safeguard revenues.
JTL’s efforts also hit a roadblock when the CAK, in a response shared with Business Daily, stated that Starlink’s small market share, currently at 0.5%, did not warrant regulatory action for predatory pricing. According to CAK, for such an accusation to hold, the firm in question must significantly influence the market or engage in behaviors that clearly fall under predatory pricing practices.
Currently, Starlink is running its second discount of the year, following a 30-day promotion between April and May, during which it reduced the price of its installation kit by 55.6%. The discounted kit was sold at KSh 89,900, down from its usual price.
Since launching in Kenya in July last year, Starlink has made several adjustments to its pricing structure as part of its strategy to attract a wider subscriber base.
Initially, the cost appeared prohibitive for many potential customers, as the total expense for setup reached KSh 110,000. This included the KSh 89,900 hardware kit and installation costs. Since then, the standard price of the kit has been lowered to KSh 149,900.
In June, Starlink introduced a 50 GB monthly data package priced at KSh 3,100, which is more affordable than a similar package offered by Airtel at KSh 3,000. In comparison, Safaricom offers a 47 GB package with 1,500 minutes and 5,000 SMS for KSh 5,000.
To further attract customers, Starlink introduced a rental plan in September for the installation kit. This plan allows users to pay a monthly rental fee of KSh 1,950 instead of the upfront KSh 45,500 purchase cost. Additionally, users can pay KSh 3,100 for 50 GB or opt for unlimited internet access for KSh 16,500 monthly.
Starlink also plans to launch new satellites to enable internet access directly on subscribers’ mobile devices, eliminating the need for hardware kits by early next year.
