Elon Musk-owned satellite internet firm Starlink has rolled out fresh discounted prices for its customers in Kenya even as the Competition Authority of Kenya (CAK) ruled out intervening in the company’s cost strategy that has rattled local rival service providers.
In its latest promotion that runs until December 14, Starlink has slashed 20 percent of the buying cost for its hardware installation kit to retail at Sh39,999, down from the standard price of Sh49,900 while the price of the Mini kit will cost 15 percent less from Sh27,000 to Sh23,000.
The move is set to aggravate the already-brewing feud between Starlink and local Internet Service Providers (ISPs) which accuse the American-born tech giant of practising predatory pricing maneuvers that include an extension of deep discounts and selling below cost to lure customers from rivals.
Starlink’s pricing strategy has unsettled local market players including Safaricom, Airtel Kenya, and Jamii Telecommunications Limited (JTL), all of whom have fired protest letters to the Communications Authority of Kenya (CA).
Slightly over a fortnight ago, JTL, Kenya’s second-largest ISP by subscriber base after Safaricom, petitioned the communications industry regulator to investigate the alleged predatory pricing, arguing that the practice would make it increasingly difficult for local players to compete on both price and service, ultimately killing competition by undermining the efforts of homegrown firms.
The JTL protest effectively dragged the CAK which is legally mandated to promote and protect effective competition across industries in the Kenyan market, as well as thwarting misleading marketing conduct throughout the country.
Earlier in August this year, market leader Safaricom had authored a similar protest letter to the CA, urging the regulator to review the policy of licensing independent ISPs, stating that indiscriminate permit approvals to such firms could give rise to illegal connections and harmful interference to mobile networks.
Safaricom’s petition was however dealt a blow after President William Ruto, while on a visit to the US in September, backed Starlink’s operations in the country saying that the firm’s conduct was in line with the State’s policy of deepening internet penetration and encouraging competition in the market.
In an attempt to dodge the price war with the multinational, Safaricom responded by increasing its home fibre internet speeds by up to five times as part of efforts to protect revenues and guard its customer base.
JTL’s outcry also suffered a setback last week after CAK, in an emailed response to the Business Daily, said it has no basis to act on complaints of predatory pricing against Starlink at the moment due to the firm’s tiny market share, currently pegged at 0.5 percent, according to the latest regulatory review.
“In order to investigate a case of predatory pricing under the Act, the law requires that the entity in question must either be dominant or possess market power in Kenya, and engage in conduct that would amount to an abuse such as predatory pricing,” said CAK.
“Since Starlink is a new entrant in the Kenyan market and currently lacks both dominance and market power in Kenya, the Authority has no basis to initiate an investigation against it for abuse of dominance through predatory pricing at the moment.”
Starlink’s current offer is the second within the year after another 30-day promotion between April and May where the firm announced a 55.6 percent cut in the price of the installation kit, at a time when the equipment was retailing at Sh89,000 during normal sales.
Since entering Kenya in late July last year, Starlink has seen its operations model undergo a raft of amends as part of its strategy to net a wider base of subscribers.
At the onset, the service had proved to be off-putting owing to its prohibitive cost after it emerged that one needed at least Sh100,000 for installation, the bulk of which was the purchase price of the hardware kit at Sh89,000.
The kit has since seen its standard cost cut down to Sh49,900.
In June this year, the multinational introduced a 50 gigabyte (GB) monthly data package for Sh1,300 which is less than half the asking price for Airtel which charges Sh3,000 for a similar package.
Safaricom, on the other hand, sells a 47GB data package that’s inclusive of 2,500 talk minutes and 5,000 SMS for Sh5,000.
In September, Starlink introduced a rental plan for the installation hardware kit that will see users pay a monthly rate of Sh1,950 as opposed to the one-off purchase at Sh45,500, in addition to the Sh1,300 charge for the 50GB data plan or Sh6,500 monthly service fee for an unlimited internet package.
The firm has also lined up plans to launch new satellites with capabilities to connect and deliver internet directly to subscribers’ mobile gadgets without the need for the hardware kit starting next year.
