Telecoms regulator needed: Telconet
Africa lacks an abundance of good telecommunications infrastructure such as that commonly found in developed countries, he adds. There are two sides to that coin: Africa can leapfrog the investment in legacy infrastructure deployment and the need to amortise that expense that developed countries currently face.
On the flipside are often weak African industry regulators which determine the pace at which newer technologies can be deployed. The spectra that newer, wireless technologies use are a scarce resource. They need to be carefully managed and allocated, so deployment depends on how proactive regulators are.
One of the new technologies tipped as the de facto standard to be adopted in Africa is Worldwide Interoperability for Microwave Access (WiMAX), based on the IEEE 802.16 D and E standards. Officially, it is the “standards-based technology enabling the delivery of last mile wireless broadband access as an alternative to cable and DSL.”
But the incumbents tend to dominate the existing wireless spectra. Since regulators, in many cases, have been drawn from the incumbents, they have often allocated spectra to the incumbent across the board. Since wireless technologies are emerging that will use these spectra, the regulators need to be strong so that they can negotiate for its availability.
Besides the commercial spectra are the licence-free spectra, such as the 2,4GHz channel in SA, that could be used to increase available bandwidth. But in most African countries these spectra have been abused by the corporate world that sold services on them contrary to regulations. As a consequence, regulators often banned their use entirely.
But instead of barring these licence-free spectra, regulators need to look at where they can be used, such as for services into low population density, rural areas. There is a great deal of equipment available to operate on these frequencies, and they are cheaper technologies, which improves their cost amortisation prospects. They are quick to deploy, because skills around them are easy to find and it is a practical proposition for the service providers. Copper is impractical because it has lengthy deployment periods, is often stolen and is expensive.
But opening up licence-free spectra for low density, rural commercial services relies on strong regulators.
Probably fewer than five African countries are satisfactorily deregulated with a framework that allows different networking technologies to be used to carry voice and allows new players to fully participate. It could be argued that SA is deregulated with the SNO entering the market, but the environment still does not foster competition.
The problem is that the incumbent dominates the local loop, the copper cable going into each home. That remains a barrier to entry for other players because Telkom uses it to control the pricing in the country, and, as long as the local regulator fails to unbundle that local loop, new players will find it very difficult to compete.
Regulators also need to be strong enough to enforce a mandate that the incumbent in any market foster an interconnect regime and offer regulated pricing. Pricing is critical so that new entrants can competitively send calls to the incumbent’s network at wholesale, not retail, rates.
These factors inhibit VoIP services from new players in the market and all the benefits they could offer customers because they are too expensive or simply not allowed.
Traditional voice networks typically operate three tiers: international, long-distance and local. Local companies have used VoIP for international calls for some time. But that has developed since the deregulation of VoIP in February 2005. By the end of the year, about 70% of SA’s international voice traffic should be conducted as VoIP.
Many of the licensed operators have been carrying VoIP traffic between corporate branches and between cities using data networks. This has occurred during the past two to three years. Growth is steady and 68% of SA’s corporate long-distance traffic should be VoIP by the end of 2007.
Poor broadband bandwidth availability has limited VoIP adoption at the local level. Although Telkom has deployed 100k lines, lack of competition has kept prices high. Where broadband is available across all three tiers, it removes the tier distinction because the cost is the same, no matter where the call is terminated.
With sufficient investment, VoIP networks that rival Telkom could be built at the regional level in the next three to five years. The investment would be far less than that of Telkom because soft switches are cheaper than the incumbent’s legacy hardware systems. But it does require strong regulatory participation to ensure that interconnection is possible, plausible and feasible.
VoIP benefits and business opportunities that affect both consumer and corporate SA will only be realised once national policy is aligned to exploit them. Until positive national policy trickles down, the benefits will be limited to the affluent corporate and urban regions.
Proper socio-economic development of our emerging market cannot be achieved until the benefits of VoIP telecommunications infrastructure are brought to bear on the poorer communities. It is a key ingredient.
Deploying VoIP networks offers call cost benefits and it will bring about a radical change in the tariff structure. Telkom currently charges for usage, but the future is likely to see packages based on bi-annual costs. That is the way most mature markets operate. VoIP networks will also more readily support number portability. Once a customer is assigned a number, it follows them wherever they may be in the world. It affords roaming without the current cost and complexity associated with roaming.
Benefits will be realised in phases. At the moment, international call costs are the hotly contested arena. That will progress to the long-distance tier and then to the local tier. As these phases unfold, business opportunities will increase with multiplying network usage.
It will foster the emergence of new tiers in the telecommunications industry as wholesale operators, resellers, and agents sell bandwidth and an increasing number of services. The number of companies operating in each tier will initially proliferate but, as is typical of other markets, the number is expected to consolidate as viable smaller operators are bought by the bigger, established players in each segment.
The Nigerian market realised a staggering 700% growth rate as new players emerged, but there are many variables in each market and the same will not necessarily occur in this country.
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