VOIP Begins to Change the Landscape for Both Consumers and Business Users

London — The opening up of VoIP (Voice over Internet Protocol) in Africa's more liberalized territories over the last five years is beginning to make a small however increasing impact on the market. It is one way in which all voice will become data in the at once 5-10 years, which will have profound consequences for how telcos operate. Russell Southwood looks at a couple of early birds disrupting existing models.

The two South African examples that follow - one of a consumer ISP and the other of a corporate provider - are not but doing huge volumes of minutes however they provide clues as to how the telecoms business will change.

The services

They are both businesses built on providing things clients want on the services and applications layer and they have come into being because there is a functioning interconnect regime that allows so so anyone to break out into other operator's networks.

It's a multi-layered world in which different companies provide services at different levels. But, both of the examples are about how this new ecology throws up new business opportunities for companies focused on niche opportunities.

Johan Kruger started Safricom Telecommunications in Potchefstroom in 2006 to provide wireless internet services for farms, small businesses, and university students in the area. However it has built its business around providing for Potchefstroom's key market, students.

ThNorth West University has 20,000 students and Safricom has both provided connectivity to the University and into student housing: 18,000 of the students live off campus and many have no proper Internet connectivity: "We have 250 outdoor Wi-Fi hot-spots which we use as the primary means of Internet access and 3,000 students are currently accessing it this way." You either pay monthly on a credit card or purchase a pre-pay voucher.

It has as well signed an agreement with the University whereby students can get a discounted voucher that gives them access both on campus and in their accommodation. It as well gives Safricom access to the 1 Gbps connection that the University gets from TENET. However it's not just students yet also farmers and lodges that he offers connectivity to and form key cornerstones of his business. For instance. he has 250 farmer customers.

But the recent consumer-grade VoIP development is nearly as interesting. It competes head-on with Telkom and recently the company has stopped re-provisioning its fixed lines on the edge of town afterwards copper cable vandalism. So Safricom now provides a phone service in partnership with local VoIP provider ECN. Calls to existing clients on its network are free and calls across the network offer 30% savings over Telkom:"The fibre connection gives quality and this was the missing piece for doing proper IP-based voice."

Smartphone clients using a SIP client can access voice calling through any public hot-spot or decent broadband connection:"3G coverage is totally overloaded in our market and there is no voice coverage in some student housing." He is as well looking at solutions that connect out into the 3G networks on the same SIP client basis.

Broader level

At a broader level, it's clear both from South Africa and the more liberalized markets of South Africa that VoIP calling has been slow to take off. It's a combination of old habits die hard and that though SIP customers have become increasingly easy to use, there's on the whole something slightly techie about soft-phones. There needs to the equivalent of an Apple-like interface that allows for easy set-up and seamless operation.

Recently someone called me internationally on a mobile using a TelFree client and the call quality was after a fashion perfect. If you're a mobile operator, you can see where this is going. Clients will use local hot-spot providers to make calls over IP and only use the mobile network when it's thoroughly necessary. That's the logic and operators are currently protected by a lack of customer knowledge, a lack of easy Wi-Fi hot-spot roaming regimes and the natural conservatism people have for new things.

Connection Telecom started in 2005 when VoIP was legalized in South Africa. It started by doing Asterisk-based PBX (Private -Automatic- Branch Exchange)s and services built around them as so then as distributing equipment. It at the time introduced a multi-tenant, carrier grade platform which manages a whole set of services which it put out into the market pursuant to this agreement the label Telviva.

The platform

Corporate clients can register IP phones into the platform and use handsets like those from Polycom and SNOM. There are as well apps that will allow clients to use smartphones on their campus Wi-Fi. Nevertheless as Rob Lith, Connection Telecom points out:"You can as well use the phone as a SIP client when you have good enough coverage. At present 3G coverage is too variable yet things will change with LTE (Long Term Evolution, latest standard in the mobile network technology)."

The transition to VoIP of this kind will accelerate with the changing interconnect regime. Straightway year rates will come down to R40 a minute:"This is stil high however it changes things."

Currently the majority of calling goes through closed corporate networks however it has hit 1.9 million minutes going out through the public extensions platform. This is modest in the grander scheme of things yet both the improving interconnect regime and the lowering of installation costs will begin to move more into this market.

"The cost of extensions go to a point where it used to cost R150-160 for a customer to have a hosted PBX solution and this has dropped to R65 for entry level. VoIP handsets from Polycom and SNOM have come down from US$1,500 to US$750. The national fibre network is now in place. Local loop fibre is increasingly available, making it easier to get services off hosted platforms. Clients are realizing that they can use the central control of calling costs to monitor their expenditure, get the benefit of cheaper calling costs and have additional services like conference calling."

The large end include Euphoria Networks

Competitors in this space at the large end include Euphoria Networks, MTN Business and Internet Solutions with smaller players like Dial Networks as well in the market.

In Africa's more liberalized markets like Kenya all of the things described above have happened and will continue to grow. Liberalisation allows whole new categories of operators to come into the market with everyone from local loop fibre providers as so then as the service and application operators that ride on the networks.