Big Events in South African and Chinese Telecom

It seems as though the onslaught of “revolutionary VoIP apps” is finally starting to dwindle down. Except for established applications, you don’t hear much news about a new application making its way to the market. You will occasionally come across a press release for a new app, but it is very unlikely it will be heard from again.

Many existing providers are seeking to improve their services by either building new features for their platform or merging with – possibly, acquiring – a competitor. As innovation begins to level off in terms of disruptive technology in the communications field, companies have to figure out how to use existing concepts for the better.

We have called attention to various regions around the globe amidst major changes. Coincidentally, many of these areas and the providers in these area are dealing with similar issues. With many newer technologies now in the main stream, companies that have interpreted how to best serve people using these technologies are now in the process of taking over the market.

Overall shifts in the market

We can see a lot of the same trends occurring in different regions. Everyone wants a piece of what they believe to be the next big thing. For many, this boils down to a few select technologies.

  • Fixed-line providers are seeking access to fiber or are running fiber to various switching nodes in their service area.
  • Mobile providers are trying to find the best possible way to provide 4G LTE service.
  • Telecom providers the world over retain certain data. You’ve heard about this because of the scrutiny NSA received for monitoring calls. Providers have a need to store massive amounts of data as such, many are building massive SANs in datacenters to store this data. This further contributes to factors such as office location.

Providers are seeking ways to best use new technologies but business shifts are becoming very common too. If you kept up with the pieces on Canada, you know that people are passively taking down monopoly-like business setups in some regions. Though Canada did not gain Verizon as a provider and virtually no changes came from Bell, Telus or Rogers, the “threat” of a new company in the market space shook up consumers by making everyone aware of the practices these companies employ summarized as the delivery of substandard service at a high price.

Changes in South Africa

Canada isn’t the only place where large businesses are abusing a dominant position. It’s happening everywhere. Fortunately, authorities are stepping in where needed and attempting to remedy the situation by enacting new laws essentially forcing a redistribution of power.

Early October in South Africa, the Independent Communications Authority of South Africa (ICASA) stepped in to enforce legislation on the two companies responsible for essentially controlling the mobile market in the country. Vodacom, a child company of the Vodafone giant, and MTN, which operates in many countries throughout Africa as well as the Middle East, are both effectively convicted for taking advantage of customers. So ICASA is attempting to put a stop these operations. However, this regulatory initiative needs to be approached with caution.

Until now, ICASA has laid low in most matters even when MTN acquired Investcom in 2007. A large profit was generated from this acquisition that allowed MTN to become prominent in the regions they occupied. Hence, this granted them the ability to compete with Vodacom.

Now that ICASA is in the picture, a 75% rate reduction will be set into motion. Also privileges are bestowed to two smaller providers: Telkom Mobile and Cell C. The problem possibly on the horizon as a result of this huge shift could mean retaliation from MTN and Vodacom. I share sentiments with the writer from TechCentral who feels that the companies could respond by abandoning efforts to dutifully maintain and further upgrade infrastructure. This will become a burden to customers who will suffer through either company’s temper tantrum but better options may be on the horizon. Such actions will only harm the companies at the end of the day possibly causing consumers to seek service with one of the smaller providers.

The 4G Network and China

There is an interesting dilemma we are seeing with the roll-out of faster data networks. Charging for both minutes and texting is going to the wayside because VoIP apps are replacing these services that were previously supported by the voice network. For example, many people are utilizing messaging apps that tie into social media which has alleviated the voice network from the burden of hosting SMS.

Because of this shift to fast data networks and the subsequent move to alternative methods of communication as well as heavy data use, mobile providers are adapting. China is no exception to this rule. The company with the largest number of subscribers in the world, China Mobile, is being pushed by forces such as Apple and Huawei to make the shift as it makes the products and service they sell more valuable.

Based on a recent report from Reuters, there is a lot of fear that this shift will cause a loss in profits. The president of one company investing in the overhaul, ZTE Corporation, made a statement that it will take nearly five years to recoup the $16.4 billion dollar investment in the new infrastructure. Other contributing factors are making companies involved in the effort wary though the initiative is still slated to go underway soon.

The reason the companies are worried that it will take so long to become profitable is two-fold: the average Chinese consumer is typically frugal and China Mobile will want to raise rates. This could make the adoption rate much lower. However, high end smartphones are the most popular products on the market.

Should the companies want to recoup faster, a small raise in rates for the 4G network should work if a large number of adopters bite. To make this happen, China Mobile needs to offer the best phones on the market, meaning the latest iPhones as well as popular Android phones. Since phones are subsidized this will likely carve into profit, at least at first. With enough buzz around 4G and certain phones, China Mobile, Huawei and ZTE may recover costs sooner than expected.

About the author  ⁄ Andy

Andy has been creating articles and blogs for WhichVoIP for many years. He has vast knowledge of the VoIP industry and as an Engineer he designed many products in the telecommunicators sector.

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