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Africa’s regulatory framework has made VOIP a grubby, under-the-counter business carried on by places as diverse as cyber-cafes and barber shops. VOIP with its ability to deliver a range of services including voice, data and multimedia has to be a significant part of the future and can deliver savings for those using it. Nigeria’s NCC has licensed VOIP carriers provided they connect to the incumbent’s backbone. Russell Southwood looks at how the business model and the technology works.

With a growing domestic market of over 130 million people (the biggest in Africa), Nigeria has one of the least developed telecoms networks on the continent. Nitel’s current fixed line network does not adequately address the needs of either the expanding business market or demand in the retail sector. Out of its 700,000 installed lines, only 492,000 are operational. And the vast majority of these are concentrated in a few major cities.

In May 2002, Nigeria’s regulator, the NCC granted 13 licences for fixed wireless access services and shortly thereafter granted Globacom a licence as the SNO. The increased competition has forced NITEL (now managed by Pentascope) to start upgrading its network. It is currently implementing a fibre optic backbone and has announced ambitious plans to reach 3 million lines this year, rising to 8 million lines by 2008. Despite these moves, there remains considerable demand: NCC boss Ernest Ndukwe has described Nigeria as "the last untapped market".

Launched in August 2000, Adesemi Nigeria has invested USD7-8 million (raised locally through bank loans) to set up a VOIP-based telephone and internet services company. It chose to focus its first phase of coverage in eastern Nigeria, opening POPs in Aba, Owerri, Port Harcourt and Calabar. It now has six cities and will roll out in two more (Abuja and Onitsha) in the next 2-3 months. It wants to control 60% of the southern Nigerian market for telecoms and internet services. Its long-term plan is to have a presence in all 37 state capital cities within 5-10 years and it would like to create its own fibre and wireless backbone.

These expansion plans have been slowed up by the speed with which NITEL will interconnect them. As Adasemi Nigeria’s’s COO Ndukwe Kalu told us:" We’ve had approvals now on some locations and destinations for some time but it’s taken us a year to get practical interconnection."

It sells its services through resellers and has five product streams. The two key product services are Komclick (its cyber-café franchise) and Komtone (its VOIP calling product). With Komtone it offers calling cards, VOIP payphones and VOIP gateways. It has just finished testing its first 150 payphones and has plans to roll out 20,000 across its targeted territories. It has added solar power packs to some that will allow it to operate in remote locations. It currently has 19 cyber-café franchisees.

It has interconnect agreements with all the major network operators: Nitel, MTN and Econet. Ndukwe Kalu says:"On most of the long distance trunk routes for telephone calls we’re the same as NITEL and on some routes we’re lower, between 15-20% lower."

It chose its technology option to meet market demand. As Ndukwe Kalu puts it:"To support its business model, Adesemi sought a solution that would enable it to reach the large masses of the population, mainly in urban areas, that do not have basic telephone service. Adesemi, like most competitive carriers in emerging economies, requires a low budget solution enabling the provision of basic telephony services in the shortest possible timeframe. We have unlimited scaleability, allowing us to start small with low entry costs and grow over time".

It chose a solution based on the VOIP protocol, integrated with a wireless local loop and VSAT infrastructure. Technology partners include: OSR as project managers; DIN as integrators; CISCO; Wiman for advanced network solutions; VocalTec which provides the software and switches for both prepaid platform and dialup internet access while SMC handles ournetworking solutions.

VocalTec’s VOIP platform allows Adesemi to offer pre-paid calling cards and has a central billing function to ensure revenue collection. The initial network roll-out took only 6-8 weeks. It is a circuit-based TDM infrastructure that requires point-to-point connection between each last mile exchange, while each point requires its own power source for back-up. Using VOIP over the wireless backbone, the most time-consuming thing is the antennae set-up. Both data and voice can be transmitted via the wireless IP backbone immediately. VocalTec CPE gateways can support either 4 or 8 analog lines. The VSAT network supports interconnection between POPs (and the NOC in Aba) and enables Adesemi to connect directly to international networks.