Time to liberalise VoIP

Far from being a threat, VoIP offers mainstream operators an opportunity to drive broadband penetration and share in a bigger market for international calls

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By  Roger Field Published  April 14, 2009

While people around the world are generally accustomed to a trend of falling international calling costs, those in countries where VoIP services remain blocked are left cursing.

The situation is particularly tough for expatriates who are eager to keep in touch with family and friends overseas but are unable, or unwilling, to pay the high fees charged by certain fixed line and mobile operators.

It’s a problem familiar to people in a number of countries in the Middle East and Africa, where some governments and operators try to thwart the use of VoIP services, often with an ever increasing zeal.

The reason for trying to prevent people using such services seems obvious, with many operators terrified that they will lose a hefty slice of revenues from international calls if consumers have the choice to use VoIP.

But the experiences of countries that have liberalised VoIP markets prove these fears wrong. Indeed, many operators, including incumbents, have found that international voice traffic on their networks increases hugely when VoIP services are freely accessible.

The reason is simple. A healthy VoIP market drives the price of calls down by forcing mainstream operators to compete with lower international rates. And contrary to the fears of incumbent operators, many people continue to use mainstream services to make international calls, even when VoIP services are available. So while tariffs fall, usage increases.

Bahrain’s incumbent operator, Batelco, is just one operator to experience this trend. The company’s CEO, Peter Kaliaropoulos, said VoIP has played a key role in stimulating Bahrain’s international calling market, and has helped drive business for Batelco.

Despite VoIP services being available in Bahrain for many years, Batelco has experienced a doubling of International Direct Dialing (IDD) minutes in the past two years. “People think VoIP will be a substitute for all IDD, but it is going to co-exist as yet another product in a portfolio with many other products,” he told CommsMEA.

“I have worked in various markets and we have not seen that substitution. We have seen stimulation.”

Furthermore, people tend to spend a certain amount of money on international calls, and as prices fall, they will increase their talk time rather than save cash, according to Kaliaropoulos.

Where regulation permits, incumbent operators may also benefit by being able to offer their own VoIP services, to consumers and businesses, offering yet another revenue stream.

And of course, traditional operators are also likely to benefit from increased demand for broadband services, as VoIP is often a key driver of demand for reliable, high bandwidth internet connections.

Far from helping incumbent operators, a continued block on VoIP in countries throughout the Middle East and Africa is simply hindering progress and preventing the development of lucrative new markets.

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