GISPA Signs Agreement With GT For New, Low Prices On Sat-3

After a testy and rather acrimonious set of negotiations, Ghana's ISP association GISPA last week signed an agreement with telecom incumbent Ghana Telecom for cheaper international fibre access on the SAT-3 cable. It sets a precedent for opening up access to this monopoly-controlled fibre for a wider range of companies besides its original investors. Although GISPA is pleased to sign the agreement, it remains unhappy as it maintains that Ghana Telecom's ISP is offering retail broadband prices that are so low that the SAT-3 price could afford to come down again.

Although the agreement remains confidential, it is understood that Ghana Telecom will provide private leased circuit to Portugal (the part of the link it controls) or a dedicated internet port, either of which will have a capacity of 2 mbps. The backhaul link price will be set by Ghana Telecom but covered by connecting ISPs who will have to be in membership of GISPA. The agreement is understood to specifically forbid the use of the capacity for VoIP calls and will only available if the ISPs have paid their bills up-to-date. Ghana Telecom is understood to be waiting for the signature of a loan agreement with a Chinese equipment manufacturer before it implements the internet port option.

The monthly cost of the private leased circuit is understood to be USD8050 (inc VAT) with a set-up cost of USD1640 (inc VAT) The dedicated internet port equivalent is USD9085 monthly with a USD1725 set-up cost. Both of these prices are a considerable reduction on the USD12-15,000 a month that the original capacity was offered at.

But GISPA maintains that the price for this level of capacity should come down still further. Ghana Telecom's broadband offer is as follows: USD245 per month for 1 meg for businesses; USD95 for 512K for schools; and USD95 for home customers. GISPA members maintain that because these prices undercut them in the market - they offer more bandwidth for less money - that Ghana Telecom is still using its SAT-3 advantage to behave anti-competitively. They believe that the real price for the SAT-3 capacity they signed off on last week is closer to USD3750.

Ghana Telecom will spin its ISP off into a separate subsidiary in January 2005 (as directed by regulator the NCA) but as GISPA members observe it would still have opportunities to subsidise this subsidiary.

How did GISPA get a deal like this? It lobbied politically, putting its case to the Ministry, Parliament, the regulator the NCA and the media. Perhaps there's a lesson in that for other ISPs who are in countries where SAT-3 fibre access is available but remains at unaffordable, monopoly prices.