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VOIP Is A Challenge For Telephone Firms


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Voip Is A Challenge For Telephone Firms

August 16, 2005

By Pauline Wangui

It is now official. The Communications Commission of Kenya last week issued guidelines for the provision of voice over internet protocol (VoiP).

Going by the Commission's definition, Voip is the transmission of voice as packets over traditional switched networks or over internet networks (a telecommunication service whereby voice messages are transmitted as packets over the internet or other telecommunications network).

This means that Voip is finally taking off and the prospect of internet telephony displacing traditional telephony is now a reality.

Voip kills distance, and is of great interest within the telecom industry. With Voip service, subscribers have an opportunity to significantly reduce their local and long-distance calling expenses, while long-distance carriers have an opportunity to possibly avoid sharing a large portion of their revenues with the local telephone companies for use of their access links.

Moreover, Voip enables a rich array of services ranging from web-like phone displays, information services, and data exchange.

This is a transformative technology, that will redefine the phone and the way people use it.

As more businesses and consumers adopt the lower-cost alternative of VoIP, the normal carriers will be forced to lower their wireline intercarrier tariffs in order to compete.

Already, large companies like Time Warner Cable have experimented Voip service within their various service territories over the past year.

Although regulation for Voip is still being defined, operators including incumbent Telkom Kenya and new entrants can now incorporate Voip as long as they have been licensed.

However there are key business issues to be addressed.

The bottom line is that for this or any technology to flourish, there must be a sustainable business model behind it. The door to the inner core of telecommunications has just been opened to innovators willing to expand on relatively simple technologies of digitizing and putting voice in packets.

This ability enables a new paradigm in the telecom sector that is really just beginning. But are the traditional voice carriers ready to deal with Voip at operational levels, are they prepared and are they capable of managing a successful migration?

Companies like Net2Phone and Vonage press ahead with new business models. New comers like Skype and Free World Dial-Up drive innovation and integration of new uses.

Collectively such consistently reshape their markets by adopting new business models that provide for layered services like voice, data, video, audio and internet. Such innovators can and will erode the revenue base that the telecom industry fights so hard to hang on to.

Corporate strategy will have to be reconsidered and decisions made about the new position in the new voice market.

Flexible and effective management information systems have to be put in place in the new environment. Migrations plans must be put in place to ensure that the migration to Voip is both operationally and financially successful.

Telcos must move fast to position themselves in the Voip value chain. They are used to focusing on maximizing returns from their current infrastructure.

However, with many new Voip entrants expected in the market, the traditional operators cannot afford to sit back as simple infrastructure providers but need to effect strategies that maintain their positions. They need to work out how best to position themselves in this new IP-driven value chain and assess the impact this will have on their already existing business.

They also need to know how they intend to deal with new alliances and partnership with applications and content providers as they maintain customer s during migration.

Among the main issues operators will face in the transition are costs and success of customer migration.

Extensive investment is required. Risks associated with migration need to be addressed.

VoiP-specific issues, such as voice quality and customer churn have to be looked into.

With VoiP, the market battle is expected to intensify. What IP services do consumers want? Who can best deliver them?

Who can build a sustainable business model, and who will continue the evolution by keeping the pressure on all the players to innovate.

These are just but few issues. In telecommunications, you lead, follow or get out of the way. You can be a steamroller, or you can become part of the pavement others walk on.

But if you are, innovative, and creative, you can outrun the telecom industry that is still slow in this region.



 
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†AK and HI residents pay $29.95 shipping. ††Limited time offer. Valid for residents of the United States (&DC), 18 years or older, who open new accounts. Offer good while supplies last and only on new account activations. One kit per account/household. Offer cannot be combined with any other discounts, promotions or plans and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.

1Unlimited calling and other services for all residential plans are based on normal residential, personal, non-commercial use. A combination of factors is used to determine abnormal use, including but not limited to: the number of unique numbers called, calls forwarded, minutes used and other factors. Subject to our Reasonable Use Policy and Terms of Service.

2Shipping and activation fees waived with 1-year agreement. An Early Termination Fee (with periodic pro-rated reductions) applies if service is terminated before the end of the first 12 months. Additional restrictions may apply. See Terms of Service for details.

HIGH SPEED INTERNET REQUIRED. †VALID FOR NEW LINES ONLY. RATES EXCLUDE INTERNET SERVICE, SURCHARGES, FEES AND TAXES. DEVICE MAY BE REFURBISHED. If you subscribe to plans with monthly minutes allotments, all call minutes placed from both from your home and registered ExtensionsTM phones will count toward your monthly minutes allotment. ExtensionsTM calls made from mobiles use airtime and may incur surcharges, depending on your mobile plan. Alarms, TTY and other systems may not be compatible. Vonage 911 service operates differently than traditional 911. See www.vonage.com/911 for details.

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