Telecoms regulation has not affected retail rates in SA and telephony remains one of the biggest expenses in business.
This is according to Rob Lith, director at Connection Telecom.
In a study titled 'SA voice services market forecasts', research and advisory firm BMI-TechKnowledge forecasts that during the period 2009 to 2014, fixed and mobile revenues for SA will grow at CAGRs of 3% and 7% respectively.
Lith points out that the majority of the costs are related to the charges of terminating voice minutes, adding that the actual cost for a local or national voice minute is around 5c or less.
To a UK mobile number on O2, for example, it costs 54c per minute, says Lith. “This is paying for an infrastructure engineered on Telkom's network, which already includes a margin.”
He adds that while there have been attempts to reduce rates in SA, these have not brought about any significant changes regarding the exorbitant telephony rates.
“While we have seen rates going down, the question is how much further? At least another 50% is possible soon, judging by the Independent Communications Authority of SA's announcement regarding mobile interconnect rates. But what about Telkom?
“And how much of the mobile players' retail rates that you or I pay will reduce by 50%? If it does reduce by 50%, then gross margins would be 82% and 60% respectively - is this more reasonable?” asks Lith.
Voices in the cloud
According to Lith, moving voice services to a non-rated environment such as Internet protocol (IP) and switching them via the cloud can deliver immediate and significant cost savings as the optimal least cost route is pushed down to the IP network.
“It's not enough to just do this with landline calls. Around 60% of companies' telecoms spending is on the high-cost global system for mobile communications (GSM) side, with only 10% of spending on the low-cost on-net calls side,” he argues.
To curtail costs, Lith notes, calls from the expensive GSM network must move to a managed IP layer to bring voice-over-IP to cellullar telephony and mobile voice-over-IP to fixed telephony, giving operators the opportunity to grow on a unified voice and multimedia service experience.
He adds that cloud computing will be a major disruptor to traditional charging models. “It challenges the by-the-minute and by-the-distance approach with a flat rate and death-of-distance.”
Massive economics of scale come into play when telephony services are delivered from the cloud, according to Lith.
“The bulk purchasing power of bandwidth brings down the cost of calls and can ultimately zero-rate them, enabling voice service providers to base revenue just on subscription and value-added services,” says Lith, who urges operators to rapidly adapt their business models.
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