Appiah Adomako Asks: Can Starlink enhance competition in the data market in Ghana?

Starlink will become disruptive to the telecom market in Ghana. If it is finally allowed to enter the Ghanaian market and starts pricing lower than MTN or AT or Vodafone, it could change the market dynamics (market share/market power) in the telecom data market and the MTN status as SNP (significant market power) in the data market may be over in the medium to long term.

At that point, MTN should be allowed by the regulator, NCA to price competitively lower than what it is currently charging.

There may be competition and antitrust issues in the telecom sector. Starlink should not be allowed to price its data services lower in Ghana than it does in other countries. Pricing lower or pricing below marginal cost is predatory pricing and can affect other competitors in the market.

Predatory pricing is an offense under the proposed Competition and Fairtrade Practices Bill. When a firm sacrifices profit and prices below cost, it may in the short-term benefit consumers but in the long term, existing competitors who cannot compete on prices may decide to leave the market and this could lead to a monopoly situation.

When such a firm attains market power or monopoly, it will decide to increase prices and recover all the sacrificed profits. I do not think that the NCA or Ghana should place an entry barrier to prevent Starlink from entering the Ghanaian market.

I think they should be allowed to enter the market. However, should Starlink’s cost structure permit it to become an overly least-priced in the market, I think some form of regulatory measures must be deployed that it does not kill the operations of existing players.

It may call for a special tax on Starlink. The macroeconomic environment which the existing players are facing is different from what Starlink is facing. We must not allow Starlink to come and collapse existing players.
In the long run, the regulator must ensure efficiency and welfare maximization for both consumers and producers.