BusinessDay

New opportunity for fixed telephony as demand for VoIP rises

Expectations are that the rising demand for Voice over Internet Protocol (VoIP) services in Nigeria will drive the resurgence of fixed-line telephony, industry analysts say. VoIP is a form of communication that allows people to make phone calls over a broadband internet connection instead of typical analogue telephone lines. The protracted crisis engulfing the first national carrier (FNC), Nigerian Telecommunications Limited (NITEL), has contributed immensely to the dearth of fixed-line services in Nigeria. Out of the 2.4 million connected fixed-lines as at February 2013, according to the regulator, only 410, 664 lines were active, leaving about 2 million lines dormant.

“There is still a market for fixed-line services in Nigeria in view of the deployment of broadband and emergence of VoIP. There are big businesses in the banking, telecoms, oil and gas industries with huge number of employees scattered across countless branches. Increasingly,these businesses are demanding for cheaper fixed voice telephony to enable employees communicate with their counterparts in other branches effectively. With VoIP, businesses can get access to advanced voice services over the Internet cost-effectively. “We see this as a new growth area in Nigeria”, Vernon Van Rooyen, executive head, network operations, told BusinessDay.

This year has been predicted to be another big year for VoIP. Forbes Magazine estimates the VoIP market has a total value of $15 billion. This does not include Skype, Google, and other services that provide VoIP to the consumer market for no upfront charges. “Africa is a rapidly growing market, leap-frogging ‘legacy’ technologies to take advantage of the cost savings and enhanced services that can be enabled with VoIP and SIP,” said Serge Adam, vice president of EMEA at Sonus Networks, an IT firm. “We have seen growing demand for next generation VoIP and SIP (Session Internet Protocol) services in Africa,” added Romain Boulet, sales director, Evox.

Investors are shying away from deploying fixed-line networks, which requires huge capital expenditure and focusing on cheaper and more efficient wireless technologies, analysts have said. The heavy investment profile required for fixed-line networks, according to them, may undermine efforts of the Nigerian Communications Commissions’ (NCC) to revive the ailing segment of the telecommunications market, which has already become unattractive to investors. “Many countries (including Nigeria) with under-developed fixed-line networks have achieved rapid mobile telephony growth with much less investment than fixed-line networks would have needed, “ said Leonard Waverman, fellow, London Business School, in a report backed by Vodafone.

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