The policy announcement by the minister of communications late last year regarding the liberalisation of the telecommunications industry sent the industry into a whirl of excitement. VOIP was declared legal and VANS operators would be allowed to obtain telecommunications facilities from operators other than Telkom. This would result in VANS licence-holders providing bandwidth at much lower costs.
It would appear from all the hype and advertising that many VANS operators and other providers are now making VOIP available over their network infrastructures and that VOIP is achieving what the minister set out to achieve in terms of lowering the costs of telecommunications, specifically in terms of telephone calls.
"Not so," says Bidvest Network Solutions director, Julian Liebenberg. "VOIP is not really cheaper. Telkom currently charges 35c per minute for local telephone calls. If you use VOIP, you would need to use a Telkom leased-line service to connect your branches to each other or to your network service provider. In a scenario where you only have two branches, the call would cost you 10c per minute, in costs paid to Telkom for the leased-line. If, however, you connect your two branches to a network service provider, you would pay double this as each branch would need a line to the service provider, thereby increasing the telephone call cost to 20c per minute, excluding the charges levied by the network service provider. And that`s before you add the cost of capital expenditure."
Liebenberg explains that if the network service provider was allowed to obtain bandwidth at a lower cost, these costs could be reduced, in other words genuine self-provision. In a scenario like this, Telkom would charge R11 000 per month for connecting two sites 15km apart. Equipment required to self-provide this connection would cost an upfront investment of approximately R75 000. Network service providers would then be able to show a return on investment within seven months.
"The BIDVest Group occupies many campuses where they have five to 10 branches concentrated in the same area. The return on investment for self-providing bandwidth in these areas would also be within 12 months but service levels and service quality would be vastly improved," says Liebenberg.
So how can the cost be lowered? "We can only reduce the costs significantly if we self-provide in various ways, including wireless technologies like radio or laser. The problem with those two technologies is that it is illegal to self-provide or employ those technologies without a licence and this licence is not available. So the net effect is we still have to use Telkom as they are the sole licensee."
Liebenberg believes the legislation is still there to protect Telkom. He adds: "VANS providers such as BIDVest Network Solutions are prohibited by law to self-provide. In spite of the leniency shown towards VAN providers by the authorities, BIDVest Network Solutions will not self-provide bandwidth while it is currently illegal for us to do so.
"The minister`s words to `Go forth and do VOIP` are meaningless. She might as well have said nothing. VOIP can currently only be used as a toll bypass mechanism as current legislation only allows Telkom to assign telephone numbers."
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