GHANA TELECOM TRIES TO STRONG-ARM GISPA'S MEMBERS OUT OF THE MARKET WITH PREDATORY PRICING
It all seemed to be going so well. The ministerial advisers had arranged for Ghana's Internet Association GISPA to negotiate cheaper prices with Ghana Telecom on SAT3 and some of the internet bosses were praising the new climate of conciliation. New cheap prices would then be passed on to the SSP's customers, making everyone a winner. Then the negotiations broke down as Ghana Telecom's senior management made a "take-it-or-leave-it" offer in which the final price of the bandwidth on offer was not to be revealed until GISPA signed up to a set of conditions. Although its own ISP is a GISPA member, it will not be signing up to the deal. The breakdown was followed by Ghana Telecom launching its long-awaited DSL service with prices so low that they can only be described as predatory. To make it worse, the DSL launch was laced with "level playing field" platitudes. Russell Southwood reports on a row that shows how hard it is for an incumbent to change its spots.
On Wednesday 14 July GISPA members attended a meeting with Ghana Telecom's Bjorn Anderson (Ag. Manager Sales and Business). In advance of the meeting GISPA had been sent a list of special conditions which needed to be ment before any deal would be signed. According to Nana Yaa Owusu-Prempeh, President, GISPA:"Our intention was to negotiate with GT on those conditions and the price at this meeting but we met a strong stand from Bjorn Andersen. These were his exact words "this is a "special offer" with "special conditions" from Ghana Telecom to GISPA and it is not NEGOTIABLE so you either take the offer or LEAVE IT". According to him the meeting is to understand what the offer is and not to negotiate so he refused to listen to any issues we raised. First of all this is an unusual business practice that should not be accepted in this country. Business is negotiation".
Andersen was offering GISPA's members a full circuit at a "special price" that he could not tell those present until they signed an agreement incorporating the 8 special conditions. Although it did say that it was at "heavily discounted fees". It is hard to imagine any industry or indeed any circumstances in which someone would buy something without knowing the price. Ghana Telecom sets its own prices for the Accra-Lisbon stretch (unless there is some deep small print in the SAT3 agreement we've not yet heard about) and therefore should be able to negotiate price as it has been to our knowledge with other customers.
Those close to the negotiation say that the special conditions include:
- allowing Ghana Telecom to decide what bandwidth is available to the GISPA members at its discretion.
- binding the ISPs into using Ghana Telecom exclusively for backhaul to customers' premises.
- does not allow for wholesaling of the bandwidth. A perhaps understandable condition as the agreement was meant to generate direct benefits for customers.
Ghana Telecom also made the offer dependent on the ISPs agreeing to stop VoIP calling but as GISPA observed this is the job of the regulator, not the incumbent.
GISPA members asked at the meeting if Ghana Telecom's ISP Unit (also a member of GISPA) would be buying the same bandwidth deal and would be treated the same as all other GISPA members. Anderson's response was according to Owusu-Prempeh "we should not push that card as a requirement to take the deal and that GT ISP unit would not be part of the GISPA consortium".
On Tuesday last wee Ghana Telecom launched its new ADSL Internet service "Broadband4U". Potential users and subscribers would pay 195 dollars, 295 dollars and 395 dollars for the broadband4U residential, school, and business and business plus respectively as installation fees.
The Chief Executive Officer of GT, Oystein Bjorge said the company has now moved from the monopoly it had enjoyed for the past years into the competitive business market and would collaborate with the National Communication Authority (NCA) to ensure that there was fair play in the market. "GT believes that operating on a level playing field will greatly enhance the Internet service to the public. We welcome other competitors and partners into this market since we believe that healthy competition will create the most vibrant Internet services environment"
But as GISPA pointed out the cost of the service is USD95 for home users and USD245 for businesses. AS Owusu-Prempeh put it: "This is cheaper than for example the same service offered by Internet Ghana, one of our members. GT is offering USD5 below Internet Ghana in both cases but offering more bandwidth. Though this is good, Internet Ghana is unable to compete considering the price at which it gets SAT 3 access capacity". In other words Ghana Telecom is engaging in predatory pricing designed to knock other ISPs out of the market. As a monopoly provider of the only international fibre access capacity, it can now corner its ISP tormenters and control the market.
GISPA's Owusu-Prempheh demanded that the regulator, the NCA intervene:"For us the NCA must ensure that GT does not subsidize the broadband service and that it is treated in the same manner as all other ISP in bandwidth acquisition, access capacity, co-location, facility distribution etc".
Ghana Telecom were contacted to comment on events but so far have not responded. Every story has two sides. Step forward, Ghana Telecom.