1. INTUG Nairobi 25-6 March 2004 www.intug.net Voice over IP as an Enabler of Cost- Effective Telephony Mike van den Bergh Vice Chairman : Africa International Telecommunications Users Group

2. INTUG Nairobi 25-6 March 2004 www.intug.net contents INTUG - Background Challenges facing policy makers / regulators / carriers VoIP - An international perspective VoIP – Efficiency / effectiveness Opportunities and drivers Recommendations Conclusion

3. INTUG Nairobi 25-6 March 2004 www.intug.net What is INTUG? Members –National associations (Africa is lacking!) –Corporations –Individuals activities –ITU and WTO –OECD –CTO –ICC –CITEL / APECTEL / ATU?

4. INTUG Nairobi 25-6 March 2004 www.intug.net Our Aims Real and effective competition Genuine choice for users Lower prices Higher quality More innovative services Constructive co-operation with –International bodies –Governments –Regulators

5. INTUG Nairobi 25-6 March 2004 www.intug.net INTUG Priorities 1.Open access to global mobile networks 2.Regulatory best practice 3.Liberalization 4.Universal access 5.Broadband 6.Leased lines 7.IP telephony / VoIP 8.Numbering

6. INTUG Nairobi 25-6 March 2004 www.intug.net Challenges Facing Policy Makers and Regulators Reducing the cost of telephony services Increasing the range and the reach of telecommunications services –Bridging the Digital Divide –Achieving Universal Access Protecting (state-owned) PSTN revenues and foreign exchange earnings Growing the economy / attracting foreign investment – using telecoms as an enabler Overcoming fixed opinions!

7. INTUG Nairobi 25-6 March 2004 www.intug.net Challenges facing Traditional Carriers High fixed costs –IPLCs, long-term bi-laterals, accounting rates etc. Lowering of barriers to entry –Emerging carriers with lower cost structures Shortage of capital to effect changes Lack of resources / skills Grey market traffic eroding margins Billing and settlement issues

8. INTUG Nairobi 25-6 March 2004 www.intug.net ITU Views on VoIP and IP Telephony "IP Telephony", MPLS (Multi-Protocol Label Switching),... and other alternative access technologies are rapidly reaching the top of the agenda for the telecommunications industry world-wide. The possibility of transmitting voice over IP-based networks, with all its challenges and associated opportunities, such as voice and data integration, constitutes a milestone in the convergence of the ICT sector. International Telecommunications Union (ITU), World Telecommunication Policy Forum, 2001

9. INTUG Nairobi 25-6 March 2004 www.intug.net ITU Views on VoIP and IP Telephony IP-based applications are likely to become more readily available at cost-effective prices, for the benefit of all users and industries, particularly when supplied under competitive market conditions in which multiple, alternative sources or means are available to address user and industry needs International Telecommunications Union (ITU), World Telecommunication Policy Forum, 2001

10. INTUG Nairobi 25-6 March 2004 www.intug.net ITU on developing countries “While some developing countries have policies prohibiting IP Telephony, others have policies embracing it. Some do not regulate IP Telephony at all, while others have chosen to include it in a positive manner within their telecommunications regulatory framework.” 3nd Experts Group Meeting on Opinion D Part 3 (ITU-D) Document IPTel-3/X-E

11. INTUG Nairobi 25-6 March 2004 www.intug.net VoIP Efficiency VoIP technology is based on packet-switching Advantages of VoIP over circuit switching: –Packet switching allows several telephone calls to occupy the amount of space occupied by only one in a circuit-switched network –More efficient overall use of the network infrastructure –Routing approach further improves resilience –Data compression adds to overall efficiency

12. INTUG Nairobi 25-6 March 2004 www.intug.net Maximizing efficiency / increasing revenue Key benefits of VoIP as a technology –Cost effective IP compression equipment is about 25% of the cost of TDM equipment Lower support and maintenance costs Interoperability Wide spread use Centralized management Scalability Rapid deployment

13. INTUG Nairobi 25-6 March 2004 www.intug.net Network Infrastructure Voice over IP / Voice over the Internet Managed network with quality guarantees –vs. Low cost shared network with no quality guarantees –Different applications / target markets

14. INTUG Nairobi 25-6 March 2004 www.intug.net Opportunities and Drivers “VoIP offers MEA – a region with some of the lowest teledensity in the world – an opportunity to extend basic telephony to more of its inhabitants. “The chief drivers are VoIP's potential to extend access to telephony services to more people and its reduced costs for international interconnection and international telephony. “The inhibitors are more to do with regulations and fixed opinions than with quality and cost.” Gartner Dataquest, October 2002

15. INTUG Nairobi 25-6 March 2004 www.intug.net Recommendations “Incumbents and other traditional voice-service providers in the Middle East and Africa (MEA) should add voice over Internet Protocol (VoIP) services to their retail portfolios to target more of the region's inhabitants. VoIP services such as prepaid and postpaid calling cards could increase their market share and give them vital experience of retail VoIP” Gartner Dataquest, October 2002

16. INTUG Nairobi 25-6 March 2004 www.intug.net Recommendations “Incumbent operators and other traditional voice-service providers in MEA should interconnect with VoIP wholesalers that can offer lower interconnect costs without compromising voice quality. Doing so will also give them limited opportunities to increase their operational and profit margins, and so to strengthen their competitive positions” Gartner Dataquest, October 2002

17. INTUG Nairobi 25-6 March 2004 www.intug.net Recommendations “Any provider that wants to launch VoIP services in MEA should work with the local telecom regulator or communications ministry (or both). These providers should also consider lobbying collectively for regulations that are more conducive to the development of VoIP: a slice of a shared VoIP market would be better than none at all” Gartner Dataquest, October 2002

18. INTUG Nairobi 25-6 March 2004 www.intug.net Recommendations “Internet service providers should consider offering VoIP services to increase both their revenue and the loyalty of their subscribers. Bundled packages of voice and Internet access may prove appealing “Providers of IP virtual private networks should evaluate what additional revenue they can make by adding voice services to their basic offerings. They may be able to charge a premium for a specific class of service that meets the time- sensitive needs of voice calls” Gartner Dataquest, October 2002

19. INTUG Nairobi 25-6 March 2004 www.intug.net Conclusion VoIP and IP Telephony offer real benefits –For operators –For new market entrants –For users / consumers Regulatory and policy issues need resolution ITU and other international bodies favour large-scale deployment Wholesale carriers offer quick start opportunities A massive opportunity to achieve universal access across the African continent!

20. INTUG Nairobi 25-6 March 2004 www.intug.net Thank you Mike van den Bergh Vice Chairman: Africa International Telecommunications Users Group PO Box 3818 Randburg 2125 South Africa +27 11 322 5495 mvdbergh@gatewaycomms.co.za http://www.intug.net Ewan Sutherland Executive Director International Telecommunications Users Group Reyerslaan 80 B-1030 Brussels Belgium +32.2.706.8255 ewan@intug.net http://www.intug.net/ewan.html