Algeria opens up its voice market to VOIP but sets the bar high

Top Story

The Algerian regulator ARPT took the brave step of allowing 24 ISPs an experimental licence at the end of April 2004. After the revision its licensing framework, the first VoIP operator (EEPAD) was granted authorization to operate a year later in April 2005. Russell Southwood reports on how this legalisation has begun to transform the market.

The primary impetus behind the opening up of legal VoIP was a desire to increase phone penetration through increasing competition. Algeria’s incumbent Algerie Telecom now has an SNO competitor backed by Egypt’s Orascom. There are two mobile operators, Djezzy (the incumbent’s mobile brand) and Wataniya.

But the regulator wanted to push out competition much further and this has shaped its approach to the legalisation process. In addition to the provision of business plans and network maps showing roll-out, potential VoIP operators have to demonstrate that they have a capitalisation of DA40 million (around US$0.5 million), pay a DA30 million licence fee (about US$300,000) and pay 10% of their turnover to the regulator. The latter compares to the 2% paid by the major operators to the regulator.

In addition they have to commit to serving 5 Waliyas (regions) of their choice, the equivalent of “departments”. This allows them to serve major urban areas but commits them to choosing at least some under-serviced areas.

The terms and conditions of the licence stipulate that operators provide provide solutions for emergency calling numbers and special numbers are designated for VoIP calling: 0820 and 0822 It all also insists that all calling charges and costs are transparent and that operators must supply quarterly information.

The impact of these conditions has been that three original contenders (ICOSNET, VOCALFONE and LAST NET) have withdrawn their applications. Nevertheless, six applications have been approved: EEPAD, Smart Link Communications (SLC), WEBCOM, WebPhone Network and two other companies.

Four of these companies are associated with existing operators. Four more applications are under consideration and there are another ten in the pipeline. One of the operators, SLC, has just completed its network and EEPAD is in the test phase before roll-out. There are currently 100,000 VoIP customers and this is growing rapidly.

SLC is the fruit of a partnership (51/49%) between the French group Telemedia and the Algerian company SLC. The company has launched its service under the brand name Numidia and it has set itself the ambition of becoming the first of a new generation of operators in the fixed market offering wireless, using WiMAX. It is offering both a voice and data service on the national backbone and internationally, utilising its 14 nodes that cover most of the country. It will have a broadband Wi-MAX coverage of 92.7% of the population of the country by the end of April including: Algiers, Constantine, Oran, Blida, Setif and Bejaia with seven nodes in Algiers.

As a new competitor, SLC has entered the market with very competitive prices, giving free calling between all subscribers to the service and high calling quality. It has access to a block of numbers starting 0822. For “taxiphones”, a franchise system is being put in place. These include a WiMAX antenna and a “Numibox” that contains either four or eight phones, a small computer and billing software, with bandwidth of between 128 kbps to 4 mbps. It is also going to offer a similar package shortly to cyber-café partners called Chabaka.

The impact on prices has been considerable. The incumbent Algerie Telecom’s prices to the USA are currently DA47 (US64 cents) compared with prices from the VoIP operators that vary between DA15-30 (US20-41 cents). More significantly given the size of the Algerian diaspora in France, current fixed line rates are DA34 (US46 cents) compared to DA15-25 (US18-34 cents) from the VoIP operators. A similar range of reductions can be found on mobile phone destinations. Savings can be made on both inbound and outbound calls. One company is offering a pre-paid calling card that gives 60 minutes for DA950 (US$13) and another offers more time for DA1000 (US$14).

Most of the operators are offering pre-pay cards for international destinations but both SLC and EEPAD are also offering post-paid services and want to offer “double-play” (voice and broadband).

All this change has not been achieved without the usual high levels of confrontation over interconnection prices. According to ARPT’s Ahmed Bougadoum, there were no less than 14 disputes that went all the way to the Higher Court of Appeal before resolution. But as he noted philosophically:”This is inevitable if you open up virtual services and interconnectivity”.