Sunday, Mar 01, 2009
Gulf News
There's an old saying - why join the navy when you can be a pirate? In the same way, why pay long distance phone calls when there is voice over IP (VoIP) technology that offers the same service at a fraction of the price.
The sooner Gulf telecom operators accept this technology as the future, the quicker they can avail of its benefits.
At the moment, most countries in the Middle East, including the UAE, restrict the use of the telephony on the grounds of network security issues. With a number of countries including Algeria, Morocco, Tunisia, Jordan and Iraq all putting telecom licences up for bidding this year the situation becomes even more pertinent as further liberalisation and more competition may make the move to VoIP less attractive, especially in these uncertain economic times.
However, operators, instead of doing what they are currently doing, which is delaying the introduction of VoIP, would be better served embracing the technology now as it would give them first-mover advantage on a service that is sweeping the world.
Founded in August 2003, Skype, as any computer user that hasn't been under a rock recently will know, is at the forefront of the internet-based telecommunications revolution. At the end of 2008, it had a staggering 405 million users, which represented an increase of 47 per cent from the previous year, and calls on its services accounted for eight per cent of the world's international calling minutes, according to preliminary data released by TeleGeography Research. Skype now boasts that it attracts 380,000 new users a day.
Another, and perhaps a more important reason for deregulation of VoIP, is the fact that companies, incumbent operators and IP-based players, will both be able to create profitable business models.
During the early days of IP telephony, people assumed the technology would spell bad news for operators but by embracing the technology, they could benefit from significant cost savings - maintenance on legacy technology can be up as much as 20 per cent of the original capital value. By offering VoIP services, incumbent operators can take advantage of their existing large customer base and also gain by using less labour intensive technology, allowing them to pass some of the savings on their customers.
While discussion about unrestricting the technology rumbles on in the UAE, operators and the regulator here are keeping a watchful eye on Bahrain, where VoIP is allowed.
Bahrain Telecommunications Company (Batelco) recently completed the migration of its legacy fixed-line infrastructure to a next generation network (NGN), which will allow IP Telephony, amongst others services, over a single line. Besides, of course, the many benefits to its customers Batelco reported a 2.7 per cent rise in consolidated full-year group net profit to $276.4 million for 2008, on net revenues that climbed 10.1 per cent to $666.8 million.
Despite these positive results, the transition to VoIP, even more so in a market that has been restricted, is fraught with challenges. Understandably, telecoms companies fear heavy losses from revenue on international calls and some even on domestic.
However, over the long-term large operators can benefit with their experienced marketing departments and deep pockets to develop brand loyalty across a package of services, including IP telephony. Furthermore, in comparison to small VoIP providers, they have the capability to enhance infrastructure, reliability and customer service for the needs of sophisticated corporate customers, who are willing to pay a premium.
Mohammad Al Qamzi, CEO of etisalat, told Oxford Business Group (OBG), "The time will come when VoIP will be used in the UAE, but this involves the regulatory authorities and having a suitable secure network. We cannot provide this service to our customers without ensuring the network is secure."
He went to say, "I think that in the coming two or three years it will be more likely, but this type of technology takes time to develop."
We may have to wait a bit longer for VoIP here in the UAE but the global phenomenon of internet telecommunications is certainly on its way, and operators should face the inevitable and ready themselves now.
- Trevor McFarlane is editorial manager of Oxford Business Group, Abu Dhabi.
Gulf News 2009. All rights reserved.
