South African VOIP: Evolution not revolution

Von Samantha Perry

The hype is hyping, and everyone is hopping onto the VOIP bandwagon. Truth be told, however, the deregulation of VOIP on Feb. 1 is just the first step on a long road that will culminate in a totally deregulated telecoms market in SA.

Says BMI-TechKnowledge Group research director, Brian Nielson: ?The latest round of announcements (by the Minister of Communications) promises to introduce a fresh wave of competition into the market and, like any change, to bring opportunities for those who can successfully identify and exploit them. VANS and ISPs are poised to benefit significantly, being at the cutting-edge of no fewer than three of the new competition enablers.

?A major impact of the new regulations -- and the future horizontal licensing framework -- will be enhanced services-based competition," Nielson said. "In the spirit of convergence, new partnerships will emerge between service providers in different sectors of the market, e.g. between VANS, cellular service providers, LCR players and call-back operators. Most, however, may elect to simply expand their range services to include a wider range of the above types of services.

"Innovative new partnerships will emerge between these players and others focused on supplying customer premises equipment, especially emerging voice technology platforms. All of these players will increasingly partner with a wider range of infrastructure players at both the access and backbone network levels

?Many questions remain unanswered, however, including the finer details of the minister?s announcements, which will unfold over the weeks and months ahead. Other questions remain as to what the players in each sector will actually choose to do, once they are certain what they are allowed to do -- for example, in terms of self-provisioning, is it likely that some ISPs and VANS could also start building their own access infrastructure -- digging trenches and erecting masts? What will the emerging outdoor hotspot operators do, in this regard? What will be the impact of Voice over IP on the corporate, SME and consumer sectors, taking all factors into consideration? How will VANS and ISPs -- and wireless operators building 3G networks -- position themselves in this market??

The as yet unresolved issues around the number plan (such as allocating dialling codes to providers) and interconnect rates (sooner or later users will want to break out of the network onto Telkom SA Ltd."s or the mobile operators? networks) mean that, while VOIP has been deregulated, it is not, as yet, going to allow companies to break away from Telkom completely.

Says MTN Network Solutions (MTN NS) CEO, Mike Brierley: ?The interconnect rates between Telkom, Vodacom, MTN and Cell C have evolved over a number of years. The basis for the rates is pretty weird, and not necessarily easy to pin down. In many cases, these interconnect rates will mean that the cost savings achieved by going the VOIP route will be slim.?

Only once the interconnect rates have been bedded down will providers be able to provide a full service to clients without needing to connect to Telkom at all, he says.

?Until the numbering plan is established,? says Internet Solutions (IS) VOIP GM, Greg Hatfield, ?service providers will not have their own dialling extensions, and inbound calls will have to be routed via Telkom?s network.?

So what can VOIP do in the meantime? In a nutshell, facilitate significantly cheaper inter-branch communication, provide cost-savings on outbound international calls, and, where companies are on the same VPN, provide cheaper on-net calls.

So what will be available come Feb. 1? Pretty much the services described above, but with different variations being provided by the different players.

The initial line-up

T-Systems Telecommunication Services division, for example, has begun offering a fax over IP solution. It has not made its VOIP plans public yet, but has promised to do so by the end of Q1.

MTN NS, says Brierley, will initially be offering inter-branch VOIP services to its existing VPN client base. ?This is simple to do, because we have an MPLS network, which enables the Quality of Service needed to effectively carry voice over an IP network. All we will basically be doing is connect a client?s PABX up to a data link that will be able to carry data to data and voice to voice traffic. Customers going this route may need to increase their bandwidth capacity.? The company will be billing purely for the extra bandwidth, Brierley says, there will be no per second or per minute call charges.

IS, says Hatfield, is going to market with a small subset of solutions on Feb. 1 as the tight deadlines meant that the company has not had time to do a full analysis, or implement the infrastructure it needs to offer a full solution. ?We will be offering inter-branch voice connectivity, outbound international voice for the enterprise and services specifically aimed at the call center market,? he adds.

The latter will be facilitated by the agreements IS has in place with international Tier 1 carriers. Basically, users in the Europe, U.K. or U.S. will make a local call, which will then be routed into SA via IS network, and into the local call center operation.

MWeb Business will be offering a similar solution set. Roman Hogh, product development manager at MWeb Business, says his company is targeting the SME sector. ?We will be offering services to companies with branches across a variety of locations, basically putting unobtrusive LCR devices onto the network to route calls via an IP connection. This will be part of a VPN service, Voice over Internet does not work due to quality issues, so customers looking to go this route will have to have dedicated bandwidth.?

?The LCR offering also extends to cellular traffic, as our research has shown that a large percentage of calls made by SMEs are to cellular phones,? he says. ?The third leg of our offering is international termination,? he says. ?While we do not see a huge percentage of international calls from SMEs, this is part of the value-add we aim to offer.?

Storm?s offering, says Storm joint-CEO, Tim Wyatt-Gunning, comprises the international call-back service it established some years ago, its existing LCR cellular product, national calls to the major metropolitan areas, which offers some savings, as the customer only pays for the cost of the local call once it goes off Storm?s network, and inter-branch calls via VPN. The latter will be expanded to include an on-net rate -- in other words, Storm customers calling Storm customers will benefit from additional discounts.

Colin Pinkham, senior manager -- Business Development at UUNet, says his company is offering a bundle of services under one umbrella, called UUNet Advantage. In terms of the solution, customers can migrate to VOIP using their existing PABXs on their current infrastructure, or be able them to plug directly into UUNet, he says. Services offered include inter-branch VOIP, LCR and international outbound connectivity.

All of the providers are quick to caution that VOIP may not be suitable for every customer. The high cost of bandwidth is an inhibitor, as is the time taken to order dedicated bandwidth from Telkom, and many providers are focusing on existing VPN customers as a result. Wyatt-Gunning notes that companies that make less than R5,000 (US$842) worth of national and international calls per month probably will not see much benefit in going the VOIP route.

Quality of Service is another major issue. Customers need to ensure that their networks can handle the extra traffic effortlessly. Both Storm and IS are advising customers to retain their existing Telkom links to handle overflow during peak periods, and as a back-up in case of failures. This, again, will have cost implications.

All in all, VOIP has a lot to offer, in the right circumstances, and if implemented sensibly. It is not the be all and end all, it will not revolutionize anything overnight, and the decision to migrate a company?s voice traffic onto a data network needs to be a business one, and not made on the basis that companies have had enough of Telkom, for example, and want out.

Telkom was not prepared to comment on its VOIP plans at the time of going to print.