{"id":10327,"date":"2012-04-24T23:59:44","date_gmt":"2012-04-24T21:59:44","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=10327"},"modified":"2012-04-25T00:10:54","modified_gmt":"2012-04-24T22:10:54","slug":"vodacom-mtn-cell-c-and-8tas-biggest-threat","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/10327\/vodacom-mtn-cell-c-and-8tas-biggest-threat\/","title":{"rendered":"Vodacom, MTN, Cell C and 8ta’s biggest threat"},"content":{"rendered":"

Mobile voice over data (a.k.a. voice over IP \u2013 VoIP<\/a>) services offer consumers a more affordable way to make voice calls from their mobile phones. This poses a serious threat to the cellular operators\u2019 traditional voice revenue, and it is not clear how they will battle this threat.<\/p>\n

According to Cell C<\/a> CEO, Alan Knott-Craig<\/a>, it is simply a matter of time before voice over data becomes the standard on mobile networks. He added that consumers can expect significantly lower prices when this happens.<\/p>\n

Knott-Craig argues that the capacity on mobile networks remains a constraint to ensure high quality voice calls, but he added that this is changing. With new technologies like LTE<\/a>, which increases spectral efficiencies and boosts capacity, mobile broadband quality will improve.<\/p>\n

However, it is a conundrum for mobile operators: they have to strive for the best possible data network, but these high quality data networks make very good (and cheap) voice over data calls possible.<\/p>\n

Even if the quality of mobile VoIP calls is not as good as traditional mobile calls, Knott-Craig expects consumers to settle for slightly lower quality if the price is much lower. The use of Skype<\/a> for international calling is a good example.<\/p>\n

High mobile voice prices on borrowed time<\/strong><\/p>\n

Many mobile VoIP services are starting to emerge, promising to significantly reduce the price of making calls on mobile networks.<\/p>\n

AppChat<\/a>, a new company started by former ECN<\/a> CEO John Holdsworth<\/a>, is one such a service which sent a strong message to the mobile operators that the time of high-margin voice revenues are running out fast.<\/p>\n

AppChat plans to launch commercial VoIP services in South Africa using both smartphone applications and their own mobile virtual network operator (MVNO) SIM cards.<\/p>\n

Other significant telecoms players, including MWEB<\/a> and Internet Solutions<\/a>, are also increasing their focus on mobile VoIP products.<\/p>\n

\u201cUltimately, mobile prices will fall, mobile traffic will increase, subsidies will be cut to the bone and mobile dealer commissions will be reduced. New entrants will acquire market share and the large incumbent operators will have to up their game in order to compete,\u201d said Holdsworth.<\/p>\n

\u201cThe rapid rollout of IP-based networks; the explosive growth of data-based services and devices; ICASA\u2019s<\/a> plan to implement wholesale open access; and lower interconnect rates will see the biggest change in the mobile market for 15 years.\u201d<\/p>\n

Knott-Craig echoed Holdsworth\u2019s views, saying that mobile operators will have to adapt their business models to change from a voice-based environment with high margins, to a data-based environment which is a high-volume, low-margin business.<\/p>\n

How to respond?<\/strong><\/p>\n

To date, the cellular operators do not seem to have an answer to combat the threat of low-cost mobile voice over data services.<\/p>\n

One option, which the mobile operators do not like speaking about openly, is to charge significantly higher fees for VoIP traffic on their data network.<\/p>\n

Operators like Vodacom<\/a> and MTN<\/a> have already lodged pricing of R25 per MB for VoIP traffic with the Independent Communications Authority of South Africa (ICASA), but this rate is not enforced. However, charging higher rates for VoIP traffic is nothing more than putting a plaster on the problem.<\/p>\n

A more sustainable solution may be to launch their own VoIP services as part of a wider product basket, or even launch VoIP-specific data products with guaranteed service levels.<\/p>\n

According to Vodacom spokesperson Richard Boorman<\/a>, VoIP quality is inherently variable as it competes with other traffic and cannot always keep up – hence the breaks in conversation.<\/p>\n

\u201cWe envision a future approach whereby VoIP traffic is prioritised to ensure a decent service, and that a premium would be charged for this. This is more likely to happen once LTE<\/a> is up and running,\u201d said Boorman.<\/p>\n

It is not clear how mobile operators will overcome the attack on their lucrative voice revenue by mobile VoIP services, but what is certain is that they will have to adapt to a fast-changing telecoms world to survive.<\/p>\n

Related articles<\/strong><\/p>\n

Voice over data and lower mobile call prices<\/strong><\/a><\/p>\n

Business as usual at AppChat amid court battle<\/strong><\/a><\/p>\n

Reutnert trying to shut AppChat down \u2013 John Holdsworth<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Mobile voice over data services pose a massive risk to the cellular operators, and it is not clear how they will battle this threat<\/p>\n","protected":false},"author":2,"featured_media":10384,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[43,1878,42,26,66,28,1707],"class_list":["post-10327","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-alan-knott-craig","tag-appchat","tag-cell-c","tag-headline","tag-john-holdsworth","tag-mtn","tag-voip"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/10327","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=10327"}],"version-history":[{"count":12,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/10327\/revisions"}],"predecessor-version":[{"id":10469,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/10327\/revisions\/10469"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/10384"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=10327"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=10327"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=10327"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}