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The future of voice in Africa

The future of voice in Africa. Russell Southwood, CEO, Balancing Act http://www.balancingact-africa.com Info@balancingact-africa.com. Grey markets as surrogate competition. Whatever view of grey market it provides competition Price arbitrage

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The future of voice in Africa

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  1. The future of voice in Africa Russell Southwood, CEO, Balancing Act http://www.balancingact-africa.com Info@balancingact-africa.com

  2. Grey markets as surrogate competition • Whatever view of grey market it provides competition • Price arbitrage • Considerable size: Lesotho (17%); Sierra Leone (47%); Cameroon (30%); Average: 20-30% • Fall in retail calling charges: • 2005: 47 out of 54 countries US$1 a minute or over. • 2006 19 countries charging US$1. 27 charging between US25-99 cents. 6 countries charging below US25 cents a minute • If legal, arbitrage shifts from international to national

  3. From no-go area to legalisation • Originally viewed as a criminal technology that challenged the existing order • Noisy advocacy by ISPs. Use of fibre networks by newer carriers • Incumbents deploy international VoIP gateways. • Tipping point 2004. No longer sustainable to protect existing interests. • Ernest Ndukwe, Executive Vice Chairman of the Nigerian Communications Commission (NCC): VoIP “the engine that will drive telephony in developing countries”.

  4. What is legal VoIP? • The number of international gateways for both voice and data • The existence of niche VoIP service operators • The existence of workable and equitable interconnect agreements • Longer-term: VoIP peering agreements • Legal in 7 out of 54: Algeria, Kenya, Mauritius, Somalia, South Africa, Tanzania and Uganda. Anomalies elsewhere. • Legal everywhere in five years or less

  5. Changes in market structure • Layered network model: VoIP in the service and apps layer • Intro of IP has uncoupled services from transport and infrastructure • New VoIP service providers “rent” the network like other operators through interconnect. From a small number of big players to big players plus many smaller players. Growth of local SMEs, owned and funded locally

  6. The birth of the African VoIP service provider • Living in the margin between wholesale and retail. Pressures to squeeze them out of existence. Got be more than a “briefcase” business • Delivering more cheaply in local loop. Seeking to gain some control over its revenues. • Increasing number of companies trading horizontally between each other.

  7. Transition to IP networks • Goes through four levels: international, national, local loop, user • 25% of incumbents have intl gateway and IP connections in all African countries • National trunking: About 20 carriers already doing. Further 10 in next 12 months. • Local loop: Laying the groundwork. MTN testing Wi-MAX. IP-enabled Abis. • User level: Cost of handset issues

  8. VoIP Futures • VoIP peering • eNUM • Mobile VoIP

  9. Thank You Russell Southwood CEO Balancing Act http://www.balancingact-africa.com Info@balancingact-africa.com

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