The hype surrounding voice over IP (VOIP) or perhaps more appropriately, voice over any protocol, just may be starting to subside after the September 2004 announcement from the Minister of Communications. The announcement removed the restrictions on VANS and ISPs, allowing them to offer VOIP from 1 February 2005. Now, the various players are starting to jostle for position in this emerging market.
A caveat is that currently VOIP is a small slice of the overall voice revenues in South Africa - the majority of which go to Telkom. As an early prediction, VOIP revenues are expected to grow from R30 million in 2005 to R630 million by 2009 representing 3% of all fixed line voice revenues or, alternatively stated, only 0.8% of total voice - fixed and mobile combined. A major wildcard in respect of the VOIP market is expected to be the SNO, which by virtue of its NGN (next generation network), all of its traffic will be IP based. This raises the question of a definition of VOIP traffic. For forecasting purposes BMI-T considers the way the telephony is conducted at the user end and how the billing takes place, rather than just the physical transportation of IP packets over long distance trunks.
Fixed line voice revenues have been flat over the past two years growing from R17.1 billion in 2001 to R20.1 billion in 2004. Growth in voice calling revenues has in fact been negative in recent years, if the positive impact of dial-up Internet call charges is eliminated.
South Africa is expected to follow a similar pattern to that of Australia, where the majority of VOIP services are expected to be in the corporate sector with the residential market contribution remaining small. In South Africa, the low penetration rate of broadband in homes and the high cost of VOIP terminals (currently between R500 and R2 000) may be cited as one of the reasons for the disproportionate market. We are likely to see some uptake of the PC to PC and Skype type of applications in the near future but the impact will be small. It will also have very limited direct revenue potential, since these are generally very inexpensive (if not free) services.
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When discussing alternative voice services in the corporate environment, alternative forms of telephony are already in place, such as traditional Least Cost Routing (LCR) via PBXs, with cell routers for fixed to mobile traffic and call back operators. The largest companies also have their own international private leased circuits (IPLCs). These represent large chunks of expenditure and are likely to be key targets for emerging VOIP services to erode. The benefits of VOIP will initially be focused on cost savings, but over time the potential functional benefits of IP telephony will become the more important switching criteria. Both cost savings and the integration of converged voice and data communications into business processes will motivate customers. At this stage, the only significant example of the integration of VOIP in the business process locally, has been the contact centre industry. In time, other industries will latch on to the ability to use Web browser interfaces for multimedia information sharing. Other functional features of IP telephony will include advanced communication and telephony features, such as unified messaging (including voice being treated like any other messaging service such as e-mail) and follow-me / find-me type features.
This leads to the question of which players are likely to be the winners in the corporate alternative voice scenario. System integrators will have the most to gain initially, by providing voice optimisation consulting; and supplying and commissioning next generation voice systems. These will include a healthy dose of data network upgrades. Those that have a mixture of network savvy with system integration know-how with local and international expertise will do well in the corporate environment. Operators of various descriptions, by contrast, will most often be playing in this space only because they have to - either as a defensive strategy, or as a source of differentiation for competitive advantage when providing a managed VPN service.
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