London — For years VoIP services in Africa were the grey market in voice calling, which was seen as rather grubby by the mainstream operators.
VoIP came of age with widespread use of consumer apps like Skype and Viber which have continued to increase in popularity, particularly among high-end consumers. Now a corporate version of this kind of VoIP calling is being adopted by companies in Africa. Russell Southwood spoke to Marc Israel, Microsoft Office Division Director and reflects on what this means for traditional mobile operators.
Skype has millions of users in Africa, although as elsewhere the number of paying customers is much smaller. In my own experience, I tend use Skype as my main means of international calling in the office in the UK unless I get the rather prim response that "using Skype is not company policy." However, difficult or detailed negotiations remain on the fixed line.
The number of countries in Africa where a good, solid call can be conducted has increased several fold. It's not always reliable but I prefer to pay for data than expensive minutes. Calling by Skype within Africa is much patchier and harder out of certain countries. I've used Google Hang Out (with Googlers) and the quality's also very good but I somehow just don't end up using it. Old habits die hard, which only goes to show that it's people's habits that need to change.
Skype's owner Microsoft is now integrating Skype into its bundle of communications tools for consumers and has done the same for corporate customers with Lync. According to Marc Israel:"Lync is federated with Skype but each set of users can call the other."
Microsoft has been launching Office 365 with its communications module Office Online. It has already launched in Kenya and Nigeria and will soon launch in Cote d'Ivoire, Namibia, Botswana, Zimbabwe, Ghana, DRC, Zambia, Senegal, Ethiopia, Rwanda and Tanzania.
But what about issues of quality that have dogged VoIP? You might be happy as a consumer to have a slightly dodgy free service but corporates clearly need something better if they are paying:"Before launching in a country, we check the bandwidth and particularly the latency on that bandwidth. Anything beyond 250 milliseconds and you don't get a quality voice call. There's a set of CODECs in Lync that will degrade a call to old phone call quality if the bandwidth's not there but we don't want to go below that."
"But it's been getting better in many places across Africa. In a country like Cote d'Ivoire, it reasonably good in Abidjan but not there yet in the cities of the north. So it's improved but it's not completely there yet. However, I did a video call with my wife without a problem."
So what constrains the growth in demand for these kind of VoIP services? "The price of bandwidth is (in the main) still expensive, costing more than in the USA or Europe. If a company doesn't purchase enough bandwidth because of cost, they won't be able to accommodate lots of voice users or enable video conferencing." On the latter, 1 mbps a month will enable 1-2 people, not hundreds.
The other problem is that outside of the capital city and sometimes main cities, bandwidth supply and quality tails off:"You really need fibre right across a country. This is happening in some places but more slowly in others. It's why under our 4Afrika initiative we've been piloting TV White Spaces services. Customers like banks have offices in remote areas."
"We're deploying Office 365 in a major bank in Lagos and they're asking us: how can they use Lync Online in the north of the country, where currently they use VSAT, which is very expensive?"
From a start point in July last year, it now has 200 customers and Israel says that the current take-up pattern is very similar to what they saw in the UK and Europe. He's bullish about the future potential that he thinks will be in the millions, seeing small business owners as a major opportunity:"We've seen 400% growth on Office 365 and that will continue over the next 4-5 years."
His competitors include Google Apps (with its Hangout product) and Cisco's many corporate offerings, including high-level video conferencing with its immersive room environment.
So what has been the attitude of his corporate customers to VoIP adoption?"My own take one year ago would have been that it would be the large companies that would go first. There's a willingness but the complexity in large organisations makes it much slower."
"Smaller international companies with 50-100 employees have actually adopted more quickly. They might have a headquarters in Nairobi and offices across East Africa in places like Kigali and Dar es Salaam. It offers them a single way to communicate through the Internet."
The part of it that will bring about a major breakthrough is that by integrating a company's PBX, its travelling staff can make calls either directly with their mobiles or through a softphone on their laptop or tablet. The sheer inconvenience of keeping multiple SIM cards to avoid the currently outrageous roaming costs will be a big incentive to use VoIP.
Once corporate mobile customers start to peel off and use these kind of VoIP services, the rich seam of mobile post-paid customers will start to contract. But old habits die hard and this will not be an overnight process:"We're pushing mobile hard and not just on Windows phones. We've also got Android and iPhone applications."
A combination of LTE and video calling will ramp up data use. 3G is insufficiently stable or well provisioned and Wi-Fi is completely variable. But with bandwidth availability changing, one to one video calls, particularly on issues where you need to see the called person's reactions, and video conferencing (to save travel costs) will become services people want to use. Initial feedback from existing LTE implementations shows that this is the pattern of behaviour to expect. Video may drive an increase in bandwidth use that could be anywhere between 10-30 times, according to Israel.
The traditional mobile voice operators are under threat in two different directions of they do not pay attention: they will start to lose international voice revenues and they will begin to see their high-margin, post-paid customers buying less domestic minutes if company policy is to use services like Lync.
What has Israel found the mobile operators' attitude to be?: "I was with MTN this week, and it has already shifted to cloud based services and digital overall. They're also increasing their data coverage at all levels. We're also signing up mobile companies to sell Office 365 as what we call syndicators. We'll be announcing the sign-up of a major global telco in a short while and most operators in the continent have approached us."