VoIP, Is Zambia Ready?

VoIP stands for Voice over Internet Protocol. In layman’s terms it simply means transmitting a voice conversation through a computer (data) network.    Much has been said and written about VoIP technology and its impact on traditional phone companies. VoIP technology is one of the greatest   inventions in the technology industry since the internet. In Zambia there has been a lot of talk about VoIP and its perceived impact particularly on the telecom sector and ZAMTEL. Less has been written or discussed regarding the requirements of VoIP implementation and the overall benefits in the long term.  In this article i will endeavor to look at this subject objectively from a Zambian perspective. Previously I wrote an article responding to Hon Peter Daka’s threats to arrest “illegal” VoIP providers in the country despite the fact that there are no specific laws written to either allow or Outlaw VoIP. There are various factors to consider from a technical stand point regarding the implementation of VoIP as a means of transmitting phone conversations versus the traditional Public switched telephone network (PSTN). The benefits of VoIP are ginormous in the long term.  The cost of setting a VoIP network can be considered pocket change compared to a traditional telephone company. In terms of capital and infrastructure ZAMTEL has a head start in this new era of telephone provisioning, although from the look of things they do not seem to realize the potential ZAMTEL is sitting on. I think it’s worth mentioning that you cannot have VoIP without broadband internet, period. So are we ready for VoIP as a nation? Well let’s find out.

I will break this article in four parts i.e. Internet infrastructure, VoIP Implementation Consideration and requirements, the impact of VoIP on business networks and The Blueprint for Affordable broadband internet. In Part I we will focus on Zambia’s capacity to utilize VoIP technology based on the internet infrastructure available in the nation. We will look at the customer base, what type of internet connectivity available in the nation to both businesses and residential users and what kind of internet connectivity is needed to be able to utilize VoIP technology. We will also look at what can be done to bring competition in the ISP sector and also point out both direct and indirect prohibitive conditions the government has put in place proving to be too hard to surmount by Zambia’s prospective local investors in both the ISP and VoIP sectors.

INTERNET CONNECTIVITY RAW DATA

Broadband Internet availability and affordability is the Cornerstone of VoIP. We will look at some statistical data regarding internet connectivity in Zambia. The data presented in this section is collected from page 65 of the 5TH National Development Plan.

There are six (6) internet service providers (ISPs) in Zambia. i.e. Zamtel, Zamnet, CopperNet, UUnet, Microlink and Afronet. The total number of dial up internet subscribers by December 2005 was 16,288. By December 2006 we had 16,981 subscribers nationwide. Going by the numbers provided by the 5th National Development Plan, in the fiscal year December 2005 to December 2006 we only had 672 new internet subscribers nationwide. Scary as it may sound the average number of Zambians who patronize internet cafes at least twice a week is 339,620.  Folks it doesn’t take a PHD to know that there is something wrong with the picture I just painted. 16,981 subscribers v 339,620 internet users.  The other important statistic worth noting is that by December 2005 Zambia had only 92,700 fixed phone lines. This includes business lines and residential lines. During the same period we had 946,000 cell phone users. The question is what can we do as government and as an industry to not only convert the 339,981 to subscribers but make broadband internet available at an affordable price. Correct me if I’m wrong, but my assumption is that if a person patronizes an internet café once or twice a week. They may have some extra cash beyond their basic needs. If favorable conditions were put in place, these people would in fact afford a computer and an internet subscription. 

I will spend as much time as possible on the internet connectivity infrastructure and availability because broadband internet is the foundation upon which VoIP is implemented. Economists say competition brings prices of products and commodities down. One would argue that six companies is enough competition to bring the internet price down in Zambia. So what is the problem? Why is it that less than 17,000 people out of estimated 12M can afford a monthly internet subscription? Well I have done some extensive work in this area and I have come up with a few conclusions. There are three (3) major cost drivers to the development of the internet industry in Zambia i.e. The Communication Authority + ZRA = GRZ and the cost of the backhaul connectivity.

Why do I say that? Firstly to start an internet provisioning business you need to pay a license fee of $40,000.00 to The Communication Authority (CA). This is before you invest in equipment and backhaul connectivity. This is just for permission to run a business. When i look at the Zambian landscape today, I don’t see that many Zambians who can pay $40,000 for a license and remain with another $100,000.00 to invest in equipment and other business necessities. Remember this does not include license fees for the radio waves you might need to transmit the internet signals. What i don’t understand about the CA is that if no one has started an ISP business in the last three (3) years that means you have made Zero (0) out of a potential $40,000.00. This in itself tells us that there is no demand for the ISP licenses. Probably it is because the licensing fees are prohibitive.  If the CA was a private company selling licenses for a living, they could have adjusted the licensing prices downwards by now in order to attract new customers. But why is the CA comfortable making Zero? Probably the answer lies in the policy of protectionism. Remember ZAMNET is owned by UNZA which is owned by GRZ which owns the CA. Zambia was one of the first countries to have internet on the continent of Africa. Surprisingly we are stuck on dialup because somebody sees internet as a luxury for the select few and not as a means of communication and a major driver for ecommerce.

You might say so where does ZRA come in. Well, in the last 2-3 years GRZ has reduced customs duty on computer equipment to 5%. Sounds good? But hold your horses; this is how ZRA calculates its duty. 5% + 17.5% VAT of the total product cost which is your invoice total + shipping and handling costs.  At the end of the day the cost of bringing in computer equipment is your purchase price + 33%.  The seller also has to make a profit for him or her to pay his operational costs. You will find that a good computer is priced around $1,900.00 which could be below $1,300.00.

The third component is the backhaul connectivity to the satellite companies. Three (3) months ago I contacted Skyvision for a backhaul connectivity quote. They told me I needed $12,000.00 for the earth station equipment and a monthly cost of $7,000.00 for 2MB connectivity. The solution to backhaul costs lies in the alliances and cooperation within the industry. I will get into details on this subject in Part IV.
The two major impediments to bring the cost of internet down are the licensing fees which prohibit the local Zambians from exploiting opportunities in the ISP industry. This is ironic because the call for the current administration is empowering the citizenry.  The other factor is the cost of computer equipment which is prohibitive to most Zambians. Both the license fees and the tax factor are within GRZ’s domain. The backhaul connectivity issue can be mitigated by serious players getting into the industry. In other words make it attractive. 16,981 dialup accounts  and less than 400 broadband accounts in 12 years is a very discouraging statistic for potential investors in the Information Technology industry.

If we have more companies providing internet services and the cost of owning a computer is reasonable probably 30% of the 339,981 would open internet accounts. Low prices would also encourage providers to seriously look at various broadband technological offerings. Bare in mind that VoIP does not work on dial up. At the moment it does not make any business sense for ISP’s to focus on broadband if their customers can not even afford a dialup account. Yes there are some compression technologies being developed and already in place designed to tap into the dialup market. But USA and Europe have focused their energies on broadband telephony. The quality of your VoIP telephone conversation is directly related to the quality of your internet connection and the speed (bandwidth) of your connection. In USA more than 60% of internet subscribers have broadband accounts. This trend makes it very un attractive for the companies leading the VoIP innovation to focus on Dialup. Two basic components needed to use VoIP are: broadband internet and a VoIP provider. If we are going to move forward and take advantage of the new and existing advancements in technology, the government has to lead the way. GRZ has to come up with comprehensive policies that promote competition and eliminate unnecessary limitations that prevent ordinary Zambians from participating in the ISP/IT sector. It’s worth mentioning that the 262 page 5th National Development Plan only contains three (4) pages on ICT.

In PART II we will look at VoIP implementation consideration from both a provider and consumer perspectives.

Francis Malama
Los Angeles California
francis@zambiahosting.com