MTN in another VOIP spat

Johannesburg, 30 Jul 2007

A local voice over IP (VOIP) company is slamming the Independent Communications Authority of SA's (ICASA's) decision to allow MTN to apply differential tariffs.

The move effectively permits the cellphone giant to charge more for VOIP packets than data packets, explains Skaap MD Andrew Davies.

"Free or cheap VOIP calls are again under threat. It seems, in SA at least, that the big boys still rule, however hard competition authorities work. In fact, the competition authorities may eventually be called to adjudicate on this matter," he says.

It's not just Skaap that is affected by the move, adds Davies. Cape Town-based VOIP provider Yeigo, Pretoria-based software developer for cellphones Luuk, and even international VOIP player Skype could find the premise of their offerings - cheap calls - neutralised.

Although voice revenues are still the "Holy Grail" for cellular and fixed-line operators, trends point to voice becoming simply another Internet application, says Davies.

ICASA disappoints

He explains: "While the services offered by the cellular operators and Telkom still offer superior quality, particularly for national traffic, we believe that within the next few years VOIP will have increasing impact on the market share and margins of traditional fixed and mobile operators."

Davies also has harsh words for ICASA: "I'm disappointed; this decision threatens the impetus required to grow VOIP as it removes its most compelling benefit: its cost-effectiveness."

All the same, Davies says players such as Skaap and Yeigo are focusing on consumer marketing and education, as well as compatible handset penetration.

"We believe that, over time, as the service offerings of the bigger brands become more widely known and accessible, the success of smaller local companies will be dependent on their ability to provide quality local support. This is something Skype is particularly weak at. At the same time, we need to stay ahead of technology trends and diversify the range of services being offered," he concludes.