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Category: Articles » Technology » VOIP » Article » Article Code

VoIP – Competing Providers need to Come Together

Voice of IP (VoIP) has changed the telecommunications playing field, but not only in the ways that we expected. We knew that national and international call costs would reduce, we knew that Telkom would not be happy with this, we knew that the line between voice and data provider would become blurred and we knew that it would get very competitive out there. What we didn't expect was that existing and potential VoIP providers would need to work together. It appears that, in an ironic twist of fate, the success of this technology relies on interconnects between networks ... read more

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Voice of IP (VoIP) has changed the telecommunications playing field, but not only in the ways that we expected. We knew that national and international call costs would reduce, we knew that Telkom would not be happy with this, we knew that the line between voice and data provider would become blurred and we knew that it would get very competitive out there. What we didn't expect was that existing and potential VoIP providers would need to work together. It appears that, in an ironic twist of fate, the success of this technology relies on interconnects between networks – networks owned by competing providers. 
The reason is simple – cost. Once a call is 'on-net', meaning that it starts and ends as a VoIP call, it never has to enter the traditional phone network, and this makes each call incredibly cost effective – one might even say – it's a negligible cost. Currently, on-net calls in South African can only happen between the customers on a single VoIP service provider's network or between the branch offices of a single company. To increase the opportunity for on-net calls, interconnect agreements between different VoIP providers need to be created. 
By removing the need to switch the phone call over the PSTN, VoIP service providers will be removing the most uncompetitive elements of a call – the cost of a local phone call. The cost of bandwidth will unfortunately remain a factor until the long awaited SNO and the opening up of international circuits into South Africa put downward pressure on prices. 
The challenge is to create and implement these interconnect agreements between traditionally competing network providers. Thankfully, the motivations behind these partnerships are in each provider's self interest. The first is that if the VoIP community doesn't work together to create a virtual über network, Telkom will always have the lion's share of the phone bill. The second is that unless VoIP providers can significantly lower the barriers to entry for smaller businesses VoIP will remain technology for the larger enterprise only. 
Let's hope that these two money based motivators are enough to off set the competitive spirit the telecommunications community is known for. The long term success of VoIP requires that there are no proprietary standards, no exclusive interconnect hegemonies and minimal bullying of smaller players through dominant market position. The rewards for working together are tangible – the VoIP market will increase, the dependence on the PSTN will diminish and everyone's – client and service provider – bottom line will grow. 
Trust is an intrinsic requirement for all business agreements – the less trust, the more lawyers required to draft a longer legal contract. While we expect that initially there will be some large and complex legal documents being emailed between service providers we believe that this idea of an interconnect-driven national network can and should be a reality. We are certainly working towards it. 
It could be that initially there will be some large and complex legal documents being emailed between service providers, but the positive consensus in the market place is that this idea of an interconnect-driven national network can and should be a reality.

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