Two major North African markets look set to become legal VoIP pioneers, says new report

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Although the Middle East has largely set its face firmly against the introduction of VoIP, two North African countries – Algeria and Egypt – look set to become the pioneers of legalisation. But whereas elsewhere, legal VoIP has not spurred IP network roll-out elsewhere, in Algeria it has been the impetus for new investment in wireless networks, according to a new report published by Balancing Act this month.

The five North African countries examined in the report – Algeria, Egypt, Lybia, Morocco and Tunisia – are the largest internet markets on the continent, with over 7 million individual users. Morocco has over 300,000 DSL broadband subscribers, making it the largest broadband market on the continent. Not surprisingly, Morocco currently has the cheapest DSL connection on the continent, starting at US$22 per month for a 128/64k uncapped broadband connection. A section of the report focuses on how legal VoIP and broadband take-up will drive the adoption of the new generation of IP(Internet-Protocol)-based networks.

According to one of the report’s author’s Russell Southwood:”The combination of VoIP and broadband is producing a new business model. This new breed of operators work on hybrid neworks with a large element of wireless delivery, particularly WiMAX. The new operators (or existing operators that are changing themselves) have the following characteristics: entering the market with very competitive prices, giving free calling between all subscribers to the service, offering high calling quality services, and simultaneously offering cheaper access to broadband”.

The impact of  legal VoIP 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).

The Egyptian regulator NTRA was due to launch a tender for two international VoIP gateways at the end of March 2006. It will reserve a range of special numbers for these new services. Until recently, the NTRA had only legalised VoIP for PC-to-PC calling and VPNs and this new move represents a major step forward.

At present NTRA filters traffic to try and catch grey market VoIP calling but admits that it’s hard and unnecessary work and that it needs to regulate to allow VoIP. Inevitably lower international VoIP prices – the regulator was unwilling to speculate how low – will trigger a rebalancing of domestic rates that at present are very low.

The grey market is currently worth around EG pounds 100 million ($17.5 million) despite harsh laws outlawing illegal use of VoIP that the Egyptian regulator currently sees as a criminal activity.

Morocco’s ANRT has, like Egypt has adopted a cautious approach to the legalisation of VoIP but despite the legal opportunities being available, none of the three licensed fixed line operators has yet offered a cheaper, retail VoIP service.

Balancing Act’s African Internet Country Market Profiles is published in four parts. Part 1: West Africa (22 countries) and  Part 2: East Africa (16 countries and territories) have already been published. Part 3: Southern and Central Africa is out now. Part 4: North Africa has just been published, completing the series that now gives details of the Internet sector for every country and territory on the continent.

Part 4 covers the following: Broadband and VoIP - Twin drivers of the new IP-networks; e-commerce in North Africa; Internet censorship – what price the information society? key statistics, country background data, number of ISPs, dial-up-subs, bandwidth and backbone, geographic coverage, cyber-cafes, local web content, current status of regulation, digital divide initiatives and landline and mobile data.