Africa makes progress on VOIP

African countries are gradually opening up to legalizing VOIP (voice over Internet Protocol) services, with both consumers and businesses benefitting from the trend.

For example, Telkom Kenya Ltd. last month launched a VOIP service that allows telephone users to make cheaper international calls, after the country’s Communications Commission released policy guidelines for the provision of VOIP services. In February, South Africa allowed holders of value-added network services and or enhanced-service licences to carry voice on their networks. Mauritius has also legalized the provision of VOIP services.

Although the bulk of the regulators on the continent have been reluctant to license operators other than their incumbent telecom providers, the incumbent operators are signing agreements with VOIP service providers to bring in traffic lost to the grey market. There is no data on users of the VOIP grey market, but analysts consider it substantial.

African regulators have been reluctant to legalize VOIP, based on a largely misguided attempt to protect the revenue base of the incumbent fixed-line, and in some cases, mobile telcos, according to Tracey Cohen, co-author of a report commissioned by the Commonwealth Telecommunications Organisation (CTO). The report is titled “An overview of VoIP regulation in Africa: policy responses and proposals.”

“So whilst many of the incumbents complain loudly of the impact of the technology, a significant number have adopted a ‘if you can’t beat them, join them’ attitude,” according to the report.

“In some cases they have passed on part of the savings made by lowering international rates but in other cases they have simply kept the savings,” the report elaborates.

The report estimates that somewhere between a fifth and a quarter of the African telco incumbents have signed agreements with VOIP carriers.

Meanwhile, more and more users on the African continent are turning to VOIP. Insight Research Corp. estimates that in 2011, 76 percent of all outbound traffic on the continent will be VOIP. This year, for example, Insight estimates that of the 8.2 billion minutes of outbound calling, 4.7 billion will ride over a VOIP network.

“Fifty percent of all African inbound is being lost to VoIP in 2005, and 57 percent of all outbound traffic in being lost to VoIP. Clearly VOIP is causing serious erosion to the traditional telephony market,” said Patti-Jean Conger, director of marketing and sales at Insight, via e-mail.

The CTO-sponsored report on VOIP stressed that “VoIP is a tool that African governments and regulators could use in a number of ways to address a wide range of pressing issues and it is therefore something that needs to be understood rather than feared.”

In the report, the authors reason that African countries can deploy VOIP to meet a number of different objectives, both social and economic.

The report cited two countries — Mauritius and South Africa — that are using VOIP to realize economic and social objectives.

VOIP is part of Mauritius’s strategy to drive a competitive regime in international calling and make the country an attractive BPO (business process outsourcing) destination.

The government has allowed a number of organizations to compete with the incumbent telco, Mauritius Telecom. An element of this competition has come from licensed VOIP services.

South Africa, on the other hand, is using VOIP to deliver cheaper voice services to rural and under-served communities. In a 2001 amendment to the Telecommunications Act, the South African government introduced a class of licenses to operate in geographic areas where teledensity is less than 5 percent. The licensees are limited to small-business enterprises, precluding established operators from accessing this market segment.

These licensees are mandated to provide telecom services including VOIP, fixed-mobile and public telephone services.

In addition, the terms and conditions for VANS (value-added network service) licensees were revised and now include the right of a VANS provider to apply for numbering resources, spectrum and interconnection with any operator.

“Restrictions lifted suggest that VANS may also self-provide telecom facilities and no longer have to obtain them solely from Telkom and the Second Network Operator, when licensed,” Cohen said.

There are companies also targeting the corporate user. For instance, Internet Solutions, a subsidiary of Dimension Data Holdings PLC, is offering a VOIS (Voice over Internet Solutions) package, billed as a full portfolio of converged voice and data services, including calling between branches of the same company; calls to customers of other ISPs (Internet service providers); national long distance calls; call to cellular phones; and international calling.

Meanwhile, Kenya’s new provisions allow registered telecom centers and cyber caf

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Jim Love, Chief Content Officer, IT World Canada

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