Lower interconnect rates may be wreaking havoc on many least-cost routing (LCR) companies, but some have evolved their business models to meet the demands of a new industry environment.
Last year, the industry voluntary cut mobile interconnect rates from R1.25 a minute to 89c. At the time, analysts predicted the lower termination rates could push down margins at LCR companies, as they would have to migrate to different models to remain viable.
Frost & Sullivan ICT industry analyst Protea Hirschel explained that the lower interconnect rate could cut down on business for the LCR sector, as it may no longer make sense for companies and consumers to redirect their fixed-to-mobile traffic.
Vox Telecom has felt the brunt of this prediction and has since written down its LCR business, Orion, by R809 million on the back of lower mobile termination rates. Nashua Mobile and Altech's Autopage have also reported losses due to lower termination rates.
However, Vox Telecom remains confident its changing business model will keep it relevant, including the evolution of its Cristal Vox offering.
Cristal Vox allows the listed telco to offer a range of voice communications services instead of only competing on outbound calls, which accounts for a third of all voice traffic.
He notes that to date, the company has converted just under 40% of its customer base on LCR over voice over IP. Du Toit explains that, while initially lower termination rates were seen to be the demise LCR companies, Vox Orion has adapted to the new challenges and has catalysed its ambitions of offering fully converged offerings.
He points out that the Vox Orion is not only offering voice termination on GSM networks any longer, but now also local, national, international and inter-branch calls. “LCR is now really blossoming,” he states.
Du Toit explains that the company's new data provides an interconnect data pipe that can enable converged telecommunication offerings.
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