VOIP wars - Skype hits Africa and Telkom Kenya disconnects Sema cards

Top Story

Legal VoIP services are now becoming available in Kenya and South Africa. Their existence can only speed up the collapse of over-priced international services. If wholesale minutes are available for US1 cent a minute what is the justification for charging USD1 a minute? So now real competition is beginning and it will put the telco incumbents under pressure. This week's top story from Kenya shows the near-bankrupt Telkom Kenya trying all its old tricks and disconnecting its service competitors. It has not yet understood the new world it's in. It needs to provide equal access to all users if it is not to find itself challenged as a monopoly while there are currently no alternatives. The sensible business strategy would be to stop trying to be a service provider and seek to be the primary infrastructure provider. It could trade the 80-90% of service market income (which will be lost under the new competition rules) for the majority of service users paying it a proportion of revenues for access to its infrastructure.

Meanwhile the water keeps rising around Africa's telco incumbents. A recent consultation document from the Kenya regulator CCK suggested making use of PCs to make phone calls legal. The number of users across the continent already doing this is not massive but they are are likely to be those that make a significant proportion of international calls. Therefore the steady spread of the Skype VoIP service is an incumbent nightmare that dare not speak its name. As various ISPs are already doing in Europe (for example, yahoo.fr), Skype is offering international phone calls for just the cost of your connection to other Skype users. Those using it in Africa have told us that the quality varies from crystal-clear to the frankly unusable. You can even buy SkypeOut minutes that allow you to connect to non-skype users with ordinary phones. Like all pioneer services, they will be things that follow that are easier to use (just as Napster was succeeded by iTunes) but the tipping point will happen soon in Africa: a large proportion of the continent's PC users will "get it" soon. Mapara Syed and Russell Southwood explore its possible impact on Africa.