Thursday, May 06, 2004
If you can’t beat ‘em, licence ‘em
Steven Lang in Cairo
A workshop at Africa Telecom 2004 in Cairo decided that the best way of dealing with operators who used the Internet to make cheap phone calls is to licence them.
A four man panel was convened to lead a debate on Voice Over Internet Protocol (Voip), a simple technology that allows people to use the Internet to make phone calls, local or international, at almost no cost.
Voip uses the basic infrastructure of the incumbent national telephone operator to make an Internet connection and then uses that same connection to avoid paying the incumbent much higher telephone rates. Clearly this is one technology that national telephone companies (telcos) don’t like.
Voip was not even on the horizon when most countries drafted their telecommunications legislation, therefore it was not specifically outlawed. In South Africa, Voip is illegal because the current law says that only Telkom make offer a fixed line telephone service. This is sure to change significantly when the Second National Operator (SNO) is eventually licenced.
John Stowe, MD of Africa, Net2phone explained the three concerns of incumbent telcos:
Revenue is lost when people make much cheaper phone calls
Bi-lateral relationships with other national operators are damaged. In most cases national operators around the world have built up cosy relationships with each other for the settlement of costs and for technical reasons.
A fear of competition is a very real concern as the telcos have operated as monopolies for decades. They have never had to experience competition.
African countries have had two very different methods of dealing with Voip operators: ban them or legalise them. Michael Young, MD sales and operations of ITXC in the United Kingdom said, “In some countries you can be shot for using Voip.” He said that "if you have a licence to run a train service, you should not be allowed to fly planes".
Some participants argued that if the telecommunications legislation did not specifically provide for the legalization of Voip, then it must be illegal.
At the opposite end of the scale, a representative from Mauritius noted that in his island state they also experienced problems with small private operators who operated Voip cafes. The problem was the same, but the Mauritian solution was very different – government simply licenced any business that wished to operate on Voip. In this way, some of the more efficient operators became successful and offered consumers good service and cheap rates, while the fly-by-nights simply disappeared from the market because they could not face the competition.
In Mauritius there are two types of licences for operators – a fixed line operator and a Voip operator. The operators are allowed to charge different rates for the connection and users are often willing to pay premium rates for fixed line calls which are perceived to offer better audio quality.
The argument around whether to licence or not, drew attention to the exhorbitant rates charged by most incumbent telcos. They made their profits from high rates, whereas the new business model, that includes Voip, taps its profits from high volumes.
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Steven Lang in Cairo
A workshop at Africa Telecom 2004 in Cairo decided that the best way of dealing with operators who used the Internet to make cheap phone calls is to licence them.
A four man panel was convened to lead a debate on Voice Over Internet Protocol (Voip), a simple technology that allows people to use the Internet to make phone calls, local or international, at almost no cost.
Voip uses the basic infrastructure of the incumbent national telephone operator to make an Internet connection and then uses that same connection to avoid paying the incumbent much higher telephone rates. Clearly this is one technology that national telephone companies (telcos) don’t like.
Voip was not even on the horizon when most countries drafted their telecommunications legislation, therefore it was not specifically outlawed. In South Africa, Voip is illegal because the current law says that only Telkom make offer a fixed line telephone service. This is sure to change significantly when the Second National Operator (SNO) is eventually licenced.
John Stowe, MD of Africa, Net2phone explained the three concerns of incumbent telcos:
Revenue is lost when people make much cheaper phone calls
Bi-lateral relationships with other national operators are damaged. In most cases national operators around the world have built up cosy relationships with each other for the settlement of costs and for technical reasons.
A fear of competition is a very real concern as the telcos have operated as monopolies for decades. They have never had to experience competition.
African countries have had two very different methods of dealing with Voip operators: ban them or legalise them. Michael Young, MD sales and operations of ITXC in the United Kingdom said, “In some countries you can be shot for using Voip.” He said that "if you have a licence to run a train service, you should not be allowed to fly planes".
Some participants argued that if the telecommunications legislation did not specifically provide for the legalization of Voip, then it must be illegal.
At the opposite end of the scale, a representative from Mauritius noted that in his island state they also experienced problems with small private operators who operated Voip cafes. The problem was the same, but the Mauritian solution was very different – government simply licenced any business that wished to operate on Voip. In this way, some of the more efficient operators became successful and offered consumers good service and cheap rates, while the fly-by-nights simply disappeared from the market because they could not face the competition.
In Mauritius there are two types of licences for operators – a fixed line operator and a Voip operator. The operators are allowed to charge different rates for the connection and users are often willing to pay premium rates for fixed line calls which are perceived to offer better audio quality.
The argument around whether to licence or not, drew attention to the exhorbitant rates charged by most incumbent telcos. They made their profits from high rates, whereas the new business model, that includes Voip, taps its profits from high volumes.
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