Flood of VOIP competitors expected

A host of new companies will enter the voice over Internet protocol (VOIP) market following last week`s announcement that it would be legalised in February.

JLC Computing, one of the South African companies planning to unveil a local VOIP service, will implement the roll-out stage for two wireless networks over the coming months. JLC Gauteng IT manager Kowie Jacobs acknowledges there will be a host of competitors emerging, but adds that quality of service will be key to long-term success.

"I think we will see it expanding everywhere, because it is very cost-effective. But you will have to offer a decent service and grow with your user base. If you don`t, you will fall out of the market."

Storm director Tim Parsonson says last week`s announcement will make the barrier to entry into the VOIP market seem relatively low. "I think we will see absolute mayhem, as we will likely see a plethora of new offerings becoming available. There will be a lot of small and fly-by-night companies coming in.

"But offering a good quality service over a long time is not that easy. In terms of that, the barrier to entry is actually quite high."

Although there could be a host of new offerings, consumers should be selective, as Parsonson believes a number of companies could make costly mistakes in this regard. Users should pay close attention to a company`s background, and whether it can offer decent customer relationship management, he says.

Avaya EMEA MD Alain Schram agrees that users should take a cautious approach when choosing a VOIP service. "It`s great to go with the new little guy, but as more people get on board, he might find he can`t afford to expand, and the service will start dropping off. That is just speculative, but it highlights the need for caution."

Because cellular networks and Internet service providers no longer have to get bandwidth from Telkom, Schram believes the door is open for foreign investment. However, certain legislative issues must be resolved before this can happen, he says.

While VOIP is functional, affordability will play a key role in its adoption, says Jacobs. "The prices will come down more as people come on board. Prices are already dropping significantly. Not long ago, an IP phone cost around R3 500, now you can get them for well under R1 000. As a result, we are expecting a flood of users."

Schram believes Telkom will be a key VOIP player. "Telkom won`t just disappear. In fact, it will probably make use of its existing market share and be right at the forefront. It`s an opportunity for them to take a new lead, but, importantly, they will have to try and do it with competition."

He believes last week`s announcement creates new potential. "We now have new possibilities, new services, and new doors opening up.

"I think we can expect to see some interesting announcements when VOIP becomes legal in February. I expect to hear some interesting things from the cellular providers."