VOIP raises challenges as well as opportunities

Last year`s announcement by the minister of communications that value-added network services (VANS) operators will be allowed in February to carry voice traffic using any protocol creates enormous opportunities - as well as enormous challenges.

Until now, regulation has prevented SA`s VANS operators from taking advantage of the technical advances that have effectively eliminated the differences between voice and data traffic. This year the picture will be dramatically different. From this month, VANS operators will be able legally to offer voice over IP (VOIP) services, allowing their clients to take advantage of the packet-switching technology that makes the Internet distance-independent.

In principle, this means the end of distance-based charging for voice calls. While this has obvious benefits for consumers, two groups of corporate users are likely to see the first fruits of this long-delayed opening of the market.

The first group is call centres. A recent survey of call centres in Cape Town by Deloitte & Touche and Calling the Cape found that respondents were paying on average R295 000 per month for voice services and R80 000 a month for data services. With the new regulations, operators can realise massive savings by paying the same rate for both voice and data.

The end of distance-based charging may also create opportunities for new investment and job creation in some of SA`s smaller cities. At present, with most of SA`s consumers located in the major cities of Gauteng and the Western Cape, there is a cost incentive for call centres serving those consumers to be located in the same places. This applies even to call centres using 0860 Sharecall numbers, which allocate long-distance costs to the recipient rather than the caller. With this incentive removed, smaller cities such as Port Elizabeth and Durban - which tend to offer lower costs for labour, office space and services - will be able to compete more equally.

The second major group of beneficiaries will be corporates with existing data networks (LAN or WAN) who will now be able to add voice to the package of services delivered, effectively bypassing Telkom at least for all intra-company voice traffic. Remote sites and remote workers can be linked easily, making the concept of virtual offices a reality for the first time in SA. Soft phones and PABXs are already available, providing full telephony services without installing a single telephone or hardware card - and substantially reducing the scope for error in the process.

None of these concepts is new, but the legality of their application in the South African market is - which means the existing skills necessary to make VOIP installations a success are thin on the ground. This will be a major challenge for VANS operators in the coming months.

The skill set required to run a traditional switched voice network is very different from that required to run an IP network. The transition to carrying voice over data networks will make new demands - for example, a suite of new protocols and standards may be necessary, along with new requirements for special test equipment and higher quality of service.

Most data networks, for example, have large buffers built into them; but voice traffic is uniquely time-sensitive, and extensive buffering dramatically reduces the quality of voice transmission. The quality requirements for voice traffic are uniquely demanding and will require specialist skills and expertise.

Corporates that want to move voice traffic onto their WAN at least retain control over their networks; for those who must rely on the Internet, the constraints will be even greater. The distributed nature of the Internet and its reliance on third-parties, often unknown, create substantial service quality issues for VOIP providers. While pioneering applications like Skype have enjoyed early success, they are for not always suitable for corporate use.

The technical issues are, however, surmountable. VOIP technology has developed rapidly in recent years and clear standards are emerging. The challenge for most enterprises will be not only to ensure they have the right skills in place, but also that their physical infrastructure is appropriate. In many cases, getting VOIP to work might require substantial new investment - even in such mundane things as additional power supply to service VOIP handsets, which unlike traditional phones do not have a built-in power supply.

For those who can meet these challenges, VOIP promises substantial cost savings. Not only will telephony charges be reduced, but the lower requirement for physical equipment means smaller hardware budgets and less scope for faults. Finally, there is an opportunity to save on labour costs as companies will no longer need two separate teams of people to deal with voice and data networks.