On 1st February 2005, South Africa’s telecommunications arena was de-regulated with the legalization of Voice over Internet Protocol (VoIP). South Africans, like people in many other countries before, expected to see lower rates for their local and international calls, immediately. This did not happen.
The regulator licensed several new entrants for the market under the much touted ‘VANS’ license. Anyone with any interest in telecommunications, no matter how remote, wanted a slice of the telecommunication pie and so it seemed that a huge market shake up that would bring more affordable communication to South Africa was on the horizon. This did not happen.
Industry veterans and experienced people, more cautiously, expected change to happen within three years. This seemed entirely reasonable for a country as progressive as South Africa and which was, at that stage, leading the continent in the advancement of communication and access. It was hoped that liberalization would be relatively simple for a country that understood the crucial impact of communications on a growing and pressured economy? This did not happen.
It took six years, a change of telecommunication ministers, ICASA chairmen and Telkom CEOs plus the threat by parliament to regulate the retail call rates in the market before we saw any meaningful change.
Light at the end of the telecoms tunnel
The situation whereby the wholesale rate charged to terminate calls onto the networks of the incumbent operators was higher than the retail rate the very same incumbent operators provided in their shops, has now changed and prices have finally come down making true the meaning of the word ‘wholesale’. The government and regulating bodies have created an environment where market forces may prevail by enabling new entrants to play on a level playing field and begin to eat away from the incumbent networks’ market share.
The artificially high ‘wholesale’ rate also had a secondary effect on the South African market and presented an arbitrage opportunity for market players to make use of SIM farms or least-cost routers. While, for many years, this offered cheaper pricing options, it was to the severe detriment of voice quality, consumer choice and development of an efficient and competitive telecoms market in South Africa.
Again, while it is expected that the effects of the most recent changes will not be evident immediately, at least clients now hasve the means to request transparency for their communications requirements, have the choice of who to trust and have the right get out of a contract within days if not satisfied with the provider’s service.
The Sad Facts of the ‘Gold Rush’
The telecoms industry is used to taking advantage of their clients’ ignorance. How can consumers really check what a particular phone call costs and how many minutes they have actually used when the statement arrives over 30 days later once it is long forgotten? What are setup costs or kick back rates – and what is breakage? Why are you getting money from people who call you back? Has anybody told them about the premium rates they are being charged by just calling back a number allocated to a so-called ‘low-rate’ service?
The Big Networks
The big networks don’t need to reduce their rates, as long as there is no steep competition created by the action of the new operators entering the market forcing them to do so. The lower rates will only be for active and very informed users. That’s why the incumbent operators have already announced that they are not considering reductions in call rates for their average clients – and especially not for those who need it most, the prepaid customer.
There is another way
TelFree`s service is based on efficiency, convenience and transparency and aims to give clients best quality for the lowest rate. In 2005, TelFree established a carrier grade operator platform with full SS7 connections to all the incumbent network operators in South Africa and internationally in partnership with Telekom Austria.
Matching the capability of other incumbent operator in South Africa that can carry quality voice and SMS traffic, Telfree does so over its carrier-grade network and also delivers mobile, desktop applications and unified communications solutions – bundling voice, SMS, instant messaging/chat and email, among others, for most major platforms, including desktop computers, iPhone, Nokia, Windows Mobile and soon Android.
Telecommunications make up one of the most expensive line items on a company’s balance sheet but Telfree is able to redress this with its business packages which specifically provide significant cost savings through free inter-branch calls for business branches located locally and internationally; very competitive call rates to any destination worldwide with savings of up to 50%; enhanced corporate productivity thanks to a range of communication mediums, including call, chat, SMS and email; and, ultimately, communication freedom, by being able to select the most effective way to communicate in any given situation.
Telfree´s contracts are crucially only for a 30 day period. We believe that if our service offering is not the best for our clients at any time, then they should have the opportunity to leave us without hindrance or penalty.
by Walter Betschel, CEO of Telfree.