FREE AT LAST: 1ST AFRICAN VoIP FORUM HELD IN NAIROBI

Telecoms

With the announcement of competition frameworks in Kenya and elsewhere, there was a palpable sense of excitement amongst the hundred plus participants from across the continent at the First African VoIP Forum in Nairobi last week.

It all hardly seemed possible for as Brian Longwe of AfrISPA remarked in the opening session:”Three years ago who would have thought that VoIP could be mentioned in public, let alone that we would be talking about the business implications of it?” But Sammy Kirui of the Kenyan regulator signalled the end of the beginning:”We have come from a regulatory environment that was dictated by – consciously or unconsciously – the protection of the incumbent’s revenue. That obsession – even though its revenues fell anyway – was like trying to hold on to an illogical scenario...If you have restrictive clauses in your licences, bring them to us and we will delete them.”

This previously forbidden topic attracted a strangely mixed group of people including regulators, incumbents, potential new service operators and grey market operators coming out of the shadows for the first time. Taide Network MD Stefano Vittor revealed during his presentation that he had 30-40 VoIP customers in East Africa and there were several cyber-cafes offering VoIP calls doing business publicly for the first time. There was talk of the mobile operators becoming “the new incumbents” and as one SNO participant remarked during a coffee break: ”It’s looking like we’re an endangered species here.”

Several speakers were trying to figure out what the new business model might be. Badru Ntege of Ugandan ISP One2Net talked about ISPs being currently in the “dead zone” in business terms, chasing low-value, static markets. He thought they should become X-service providers and that the internet would only be half of their business. The rest? Voice-enabled services and multi-media consumer services.

Ntege was also a strong protagonist for open-source VoIP platform Asterisk which set up a lively debate with both proprietary vendors and back-office platform providers. Whilst Asterisk is a free software platform, it obviously takes skills and expertise to develop it. Tomar Treves of Delta Three made the point that if you wanted an operation “off-the-shelf” it was easier to buy from him or one of his competitors whose names he rather generously offered to provide.

The Forum provided good news for Kenyan consumers. Safaricom CEO Michael Joseph told a panel session:” When we get access to VoIP capacity…costs will come down and you will see a 90% reduction in international call costs… It will have an enormous impact on competitive rates. You will see calls at 10 cents a minute to the USA.” The current rate is 90 cents a minute. The likely impact of these changes? A Telkom South Africa participant revealed that it lost 7% of its international traffic to Sentech when the latter got its carrier of carriers licence.

Carrier of carriers were the words on many incumbents lips although they do not yet seem to be fully understood. The incumbent would fall back on its single biggest asset, its infrastructure. It would then sell to a multitude of smaller service providers. So far, so simple. The complication for the incumbents is that they are reluctant to give up their existing service businesses. So what we are seeing is a market in transition from a position where the incumbent had a vertical stranglehold over large parts of the market to one where the unprepared incumbents look strangely vulnerable for the first time.

All this uncertainty perhaps points up the limits of the regulation-based approach alone. Outside of South Africa, there is no competition law in place and perhaps that’s where the discussion will move now the obsession with protecting the incumbent is gone: who has significant market power in any area?