JSE-listed Spescom says a partnership between it and German company NewTelco will bring down the costs of calls in the sub-Saharan region.
The companies are set to launch NewTelco SA in the second quarter of this year, which will go head-to-head with Telkom when it comes to routing international calls.
NewTelco SA eliminates the need for telecoms companies to route calls between countries in the region all the way to London and back again, explains Thomas Makore, MD of Spescom's telecommunications unit.
Makore says the new telecoms hub will give operators a choice of a different interconnect service partner, and is the first of its kind on the continent. This should lead to price pressure, which will bring down costs.
However, Makore could not indicate how much these savings would be, saying call reductions would be market-driven, but “the savings will not be small”.
NewTelco SA, a carrier-neutral co-location services provider, has been established to take advantage of telecoms liberalisation in SA and offers local, regional and international carriers an independent telecoms 'hub', he explains.
Makore says “more than 80% of the voice traffic generated on the African continent goes through South Africa”.
The new facility will offer local, regional and international carriers a fast, cost-efficient, carrier-grade point of presence in SA to switch customer traffic in the region and provide a transparent connection to international destinations.
network providers; it offers a complementary value-added service”.
NewTelco SA will initially target regional and international carriers and second tier carriers that choose not to build their own networks. Spescom's Midrand premises will house the facility, which will be equipped with next-generation transmission equipment, as well as backup generators and air-conditioning.
The old way
Previously, carriers in SA were forced to make use of the services of the incumbent carrier. However, as Spescom has been awarded an ECNS licence, it can build a network infrastructure and carry third-parties' traffic. Spescom's licence will be used by NewTelco SA to provide the interconnect services.
Makore explains that carrier-neutral co-location essentially provides carriers with a telecoms hub or 'marketplace' where they interconnect with any other carrier that has a presence in that marketplace.
He adds that interconnections are unrestricted and incoming carriers are not compelled to make these interconnects through secondary, usually expensive, hubs as was previously the case. NewTelco SA leaves the negotiation of interconnect fees to the carriers.
Worldwide links
The partnership with German company NewTelco allows the local unit to benefit from the international company's five other carrier-neutral co-location hubs in major world capitals. These are in Frankfurt, London, New York, Vienna and Kiev.
NewTelco Germany's Matthias Hartman says “a carrier-independent telecoms hub or 'marketplace' will drive competitiveness, and give local and international carriers the flexibility to exploit the growing telecoms market”.
He adds that the partnership is in line with the company's goal of taking advantage of liberalisation. “The partnership offers NewTelco GmbH an opportunity to expand its offering to the African continent, while NewTelco SA customers can leverage the interconnectivity that the German company has already established across the globe with over 1 000 carriers.
“We believe the time is ripe for the establishment of this service. South Africa's delayed telecoms deregulation has put its telecoms market 10 to 15 years behind its European and US counterparts,” he adds.
Good for them
Frost & Sullivan ICT industry analyst Spiwe Chireka says “this is a very welcome move”. She explains that the cost of routing calls around Africa through the US and Europe makes the call two or three times more expensive than it should be.
Chireka adds that calls are sometimes routed more than once, as they sometimes have to be first routed to a country that has a connection in the US or Europe. “There definitely is a market for it,” she notes.
The partnership will also aid economic development in Africa, as it can reduce call costs, Chireka says. The high cost of telecommunications is hampering growth on the continent.
In addition, she says, the announcement bodes well for Spescom, as it gives the company a first mover advantage. Spescom has been on the turnaround path for the past year-and-a-half, Chireka adds.
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