VoIP Blocking: MTN and Vodacom clarify their positions

Recent media reports indicated that MTN may increase the price for VoIP traffic on its network or even block it all together. MTN and Vodacom clarify their positions on VoIP traffic and software like Skype.

In an ITWeb article MTN General Data Manager Brian Seligman is quoted as saying that “We [MTN] have filed for a tariff of R25 per megabyte with ICASA for VoIP and have the right to either block VoIP or charge the R25 per megabyte tariff.”

Seligman told MyADSL that it is highly unlikely that MTN will block all VoIP traffic, but that they are considering various alternatives when it comes to VoIP on its network.

He said that MTN has the technical ability to either block VoIP traffic or charge certain rates for this kind of traffic, and that MTN is looking strategically at this issue.

The cellular company said that VoIP can not be ignored and that the company must look at issues related to profitability, but that the current VoIP discussions are also focusing on the quality of service of voice traffic on its network and the protection of its current data users.

Seligman said that their network has a finite capacity, and that they have to look at the types of traffic on its network to ensure everybody can enjoy a good experience when using MTN’s data services.

Seligman pointed out that VoIP is not seen as a threat but rather as an opportunity to MTN, and that it will be treated as such.

VoIP saves consumers money

VoIP software like Skype and Google Talk are widely seen as a threat to the revenues of traditional voice operators like Telkom, Vodacom, MTN and CellC as it bypasses the per-minute billing from traditional voice carriers.

These VoIP programs are available free of charge and enable users to make free VoIP calls when they are connected to the Internet.

In a bandwidth rich environment calls effectively become free, and even in a bandwidth starved environment like South Africa VoIP can save broadband users a great deal of money.

With a 1 GB HSDPA package from MTN the charge for bandwidth is just under 50c per Megabyte.

VoIP programs like Skype use in the region of 500 KB per minute, which means that call costs to other Internet and Skype connected mobile phones can be as low as 25c per minute.

With the new range of 3G and HSDPA enabled mobile phones set to hit the market the use of VoIP can have a negative impact on the voice revenue of the mobile operators.

The higher speeds and lower latency of HSDPA makes VoIP a particularly attractive option for cellular subscribers, and MTN’s strategic discussions may be related to the increased availability of 3G and HSDPA phones and services.

Vodacom leaves options open

Vodacom stands to lose far more than MTN when it comes to VoIP usage, mainly because of their superior 3G/HSDPA coverage and larger number of subscribers using these services on its network.

Vodacom has also indicated that they may consider charging ‘mobile VoIP tariffs’ for the use of programs like Skype for voice calls.

“Vodacom customers can download and use VoIP clients such as Skype but will experience the typical “bursty” nature of the internet leading to poor voice quality and could be charged mobile VoIP tariffs,” Vodacom said.

Vodacom has however indicated that it has no intention to launch its own VoIP service.

“Vodacom does not currently provide VoIP services as the technology does not yet lend itself to the quality carrier-grade voice solutions our customers have come to expect from Vodacom,” Vodacom said.

“Both in-house and independent tests have confirmed that VoIP solutions today suffer from unpredictable and unacceptable delays and bottlenecks, making it a best-effort service,” said Vodacom spokesperson Dot Field.

Backlash from broadband users

The possibility of MNT charging for VoIP calls on their network has drawn sharp criticism from broadband users.

“This is really pathetic – instead of adapting to the market they try to prop up their money making empire” said one MyADSL forumite. “Quickest way to alienate users if you ask me,” said another.

The blocking of VoIP traffic as a revenue protection measure is nothing new in the telecoms arena.

In 2005 Vodafone Germany announced that it would block VoIP traffic from programs like Skype from July 2007. Expectedly this announcement created a backlash and the company said that it may reverse this decision.

In the United Arab Emirates VoIP is blocked completely as a revenue protection device for its telecoms operator, and users in that country can not even access the Skype website.

While the quality of service argument is used by telecoms firms worldwide who are tampering with VoIP traffic or blocking it, this is simply a politically correct replacement for the term ‘revenue protection’.

Quality of service is relevant in various aspects of Internet usage, including online gaming, video streaming or online radio, but these operators are focus only on VoIP which can impact their traditional voice revenue stream.

Broadband users are however unlikely to just sit back and take it on the chin, especially in the wireless broadband arena where competition is fierce. A decision to block VoIP or charge excess tariffs on this service may result in mass migration to a cellular provider that is less heavy-handed with their network.

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VoIP Blocking: MTN and Vodacom clarify their positions