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Net Phones Taking Off in the Third World
dipfan writes "Internet telephone technology is surging in popularity and starting to make a big dent in telephone revenues in the Third World, for a simple reason: cost. A call from Honduras to the US over the net is just 5 or 10 cents a minute at an internet cafe, compared with $1+ a minute through a telco, reports the Washington Post, which compares the situation to the US where internet telephony "is used mostly by college students and geeks" who have the time and energy to install the software."
Be careful of bandwith issues. Bandwidth will always be a problem. No matter how much bandwidth you add, no matter how big you make your highways, no matter how much oil you drill, people will always use as much as you make, even if it means wasting it or creating enough traffic to degrade the whole thing. There is no substitute for efficiency. A better license can compensate for inferior technology to only a minor degree.
1) Decrease the costs of traditional telephone service because they will need to compete with net based services.
2) Increase the costs associated with connections to the internet, because as people use more, the costs for everyone goes up.
I'm not sure which will actually occur, but I bet with services such as this around, you'll see a lot of broadband companies upset because they will want their piece of the action. If the average user starts using his/her connection for phone services too instead of just downloading, why are people so confused when they hear about price increases such as this. To me, it just makes sense, more people will use it for more things==service costs more to provide.
Now I'm just waiting for some level of QOS to implemented world wide for this sort of thing, that way my phone call doesn't wait for your warez. Know what I mean?
The Internet has really turned communication on its ear. I have a friend in the Ukraine that I chat with almost daily and every weekend we set up NetMeeting and have a video conference for a couple of hours. It costs neither of us any extra than what we already pay for our internet connection.
In fact the connection we get with NetMeeting is by far more reliable than using phones! Phone calls are (in my experience) about 25% likely to be unusable. They are also quite expensive. Even researching the best "10-10" numbers gets you down to about $0.22US per minute. Calling from Ukraine to the US is extremely expensive.
The Internet has made a lot of things possible that just 5 years ago were out of the hands of most people. The economy of calling that far and that cheap is amazing. When I was a kid I always wanted a video phone. The Web Cam is it.
I think the effect of wireless communication and integrated web communication will stall the growth of physical phone lines and we will start to see them disappear in a few decades. It seems to fit the natural order of how technology progressess. With 3G coming to Sprint PCS phones this summer and all the other carriers later this year and next year I predict that even how we connect to the Internet on a daily basis will change. I see the majority of IP traffic coming from wireless devices rather than desktop computers in 5 years time.
That's what I've been saying for years. VoIP, while still definitely in its infancy, is just as much the future undoing of the LD industry as P2P is the undoing of the (current) music industry.
I hope those third world countries really save enough money from these large first world corporations to make a quality lifestyle change. I hope they take this opportunity to manage their own services and dont let USA bully and sanction and threaten their way into corporate control of the new technologies there.
I'm an American but currently live in Mexico. I don't know what you're talking about in terms of "these large first world corporations." If you are implying that American telco companies are robbing the poor in third world countries you are sadly mistaken--at least in Mexico.
Mexico has a terrible telephone monopoly, "Telmex." It historically has terrible quality and their prices are outrageous. It costs about 80 cents per minute for me to call the U.S. but only about 15 or 20 to call from the U.S. to Mexico. And Telmex is entirely a Mexican monopoly.
In fact, a few years ago the phone monopoly was "broken" by the Mexican government and competition was introduced. Both MCI and AT&T entered the market, and we even have competition in local service in many parts of Monterrey. However, Telmex is still the monopoly. Since most people get their phone lines with Telmex they generally get new subscribers to sign-up for their LD service. AT&T and MCI are at a distinct disadvantage and have even considered leaving the Mexican market because Telmex maintains its monopoly in fact, if not in law.
As is usually the case, problems in the third world--political and economic--are NOT the fault of the U.S. or other first-world countries. They are almost always the fault of powers closer to home. In this case, telco providers in Latin America make a killing because they either have a government-mandated monopoly, or the government allows competition but silently supports the original monopoly by not encouraging the competition or forcing the monopoly to act in non-monopolistic ways.
I work on voice over IP telephony products, and I think that the market is ready to switch (pun intended).
SME's are figuring out that they can use their DSL lines to make net calls and video conferencing, and they're starting to ask (big time) exactly why they're paying per minute to make voice calls. And telcos are listening, and worrying.
There is a huge demand at the low end for true all-in-one products that encorporate an ethernet switch, DSL uplinks, a firewall and web server, handle IP-to-IP calls as well as IP-TDM, TWIF, ISDN (yuk), voicemail, door answer, that come with web browsing hardware phones and PC softphones and value added applications like videoconferencing. You would not believe the amount of software and hardware that we have in our current product; think 128Mb RAM, 128Mb compact flash, a 10 GB hard drive and a PCB that would make your head spin, in what's traditionally been a market for small (embedded devices.
And we're not developing this stuff simply because it's fun; there's a real demand from SME's for it. Initially we intended selling these boxes at retail (unheard of for a full featured telecomms switch); we've backed off from that now, simply because telco's are so keen to sell them as part of packages, because they know that if they don't, we will sell them at retail, and they'll lose a stack of voice money.
Note that the features that we enjoy today on residential lines - caller ID, call waiting, three party, callback - all came out of SME private branch exchanges. Telcos just realised that they could make extra money selling them to residential customers as well. They'll dig their heels in (hard) to stop us moving from TDM calls to VoiP, but - bearing in mind that once your call hits the local exchange, it hops to an IP backbone anyway - they can't hold out forever. Sooner or later, a residential provider will crack and start offering realistic VoiP to the home, and then all the rulebooks get ripped up. Roll on the day!
If you were blocking sigs, you wouldn't have to read this.
I don't know abotu Africa, but in a lot of developing countries, the state-owned telco monopoly is also the gatekeeper of internet connectivity.
I've had personal experience with the Republic of Palau in the Western Pacific. Palau National Commuinications Corp. owns the phone system, and also runs Palaunet, the only ISP on the island. (Good luck getting another ISP in when PNCC owns the access to the lines.)
Result: internet telephone calls are prohibited on Palaunet. (It's easy-- watch for bi-directional high-bandwitdth traffic, instead of uni-directional. So simultaneously uploading and downloading on a P2P will get your account a once-over, but that's life in the Third World.) Instead, you're forced to pay the egregiously expensive long distance voice rates.
Internet telephony only works if you've got an open communications industry. That's not true in a lot of developing countries, where the Government is footing the bill for all infrastructure, and wants to keep control of it for economic or political reasons.
And on top of that our voice quality is US toll quality or better, even with the quater second delay. If it were not illegal I would interconnect to the Indian PSTN and sell a calling card using excess capacity on my system.
It *is* possible for the telcos to embrace VoIP or a similar packet voice technology and integrate it into their SS7 or ISDN networks. Other than corruption of the PTTs I don't see why it isn't being done to lower costs and improve quality where appropriate.
VoIP termination is certainly illegal. Even though the phone company, who also have a monopoly on bandwidth, make money whatever you do. They're getting local call rates (Billed at $2 an hour inc taxes), bandwidth money from the ISP, and they still don't want to lose the international telephony deals, where they make ridiculous amounts of money.
All over Europe, telcos don't want to lose lucrative internation traffic. Real third world countries (rather than emerging economies) have neither enough bandwidth nor the latency required to provide adequate VoIP anyway.
However bandwidth in Morocco is pretty good. Check out www.tiboo.com for a site hosted in Morocco with high visits and reasonable serving of pages.
Conversion Rate Optimisation French / English consultant
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