SA voip Industry Analysis

Industry Analysis

The South African voice over Internet protocol (VoIP) market was set up in 2005 and is still in the growth phase of the development lifecycle. Considering market age and the relatively low penetration of broadband infrastructure – only 60,000 users of VoIP services in 2008 – there exists a large opportunity for growth. The fiscal crisis has exerted direct pressure on margins in the financial services and retail sector. “Historically, the South African telecommunications market was dogged by high pricing owing to a lack of true competition in the industry,” notes the analyst of this research service. “VoIP offers a low cost alternative to traditional fixed line calls; this is the technology’s most compelling feature, particularly in the light of the economic meltdown.” With authorities expected to introduce regulatory measures such as geographic number portability, carrier preset and local loop unbundling that will allow users to retain their existing numbers and control costs far more effectively, greater adoption of VoIP services by corporates can be expected.

Significant improvements in voice quality are slowly giving VoIP the edge over traditional voice services. Circumstances such as the concerted network infrastructure roll out of tier-I operators in South Africa and the realization that VoIP services are best offered over access media such as asymmetric digital subscriber line (ADSL) as opposed to WiFi have led to a dramatic increase in the quality of these products. Thus, organizations that rely on high-quality voice communications are now able to consider VoIP as a viable option. Awareness initiatives launched by service providers have also begun to pay off, but much needs to be done.

Under-serviced markets also exude potential, but they are long-term prospects that are in the early rungs of the evolutionary ladder, so it will be a while before these synergies can be capitalized upon. For now, service providers are forced to differentiate in terms of the way in which they approach different market segments. While the financial services sector will most likely adopt the same services as the fast moving consumer goods (FMCG) market, the manner in which these are used can differ vastly. Increased workforce mobility is vital, and the operator that brings it to the market in the shortest period of time can expect to register significant gains. Overall, service providers must identify the best areas for the deployment and partner with suitable infrastructure vendors to facilitate business progression.

Looking at the Business climate of the Western Cape, one can say that it shows many prospects for the Technology Industry. This is supported by the Western Cape Government’s Broadband Plan to give internet access freely to its citizens in support of it Smart City expansion plan. In having this implementation plan as a promise to look out for as a VoIP service provider one can go as far to say that it will only contribute to the VoIP Market growth.

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