Cost benefits of VoIP services unclear

Local telecoms free to set up VoIP telephony systems, but experts say that celebrations may be premature until the charges are known.

Abu Dhabi United Arab Emirates - April 02, 2009 Skype application available on iphone shot in office. ( Tina Chang / The National ) *** Local Caption ***  TC_090402_skypeiphone_3.jpg

ABU DHABI // Consumers and telecoms industry experts cautiously welcomed the arrival of Voice over Internet Protocol (VoIP) programmes, adding that the benefit to consumers would become clear only when telecommunications providers announced details of service charges.

Narain Jashanmal, 30, from Kuwait, runs a chain of book stores across the UAE from Dubai. He said he had many friends who used VoIP services illegally because of the convenience and cost savings. "I have friends who spend at least an hour a week on social international calls, plus five or six hours on business calls. They are saving thousands of dirhams each year." Consumers were not blocked from using Skype, he said, but he wondered if a wall could go up "once there is the Etisalat or du version of VoIP".

"Lifting the restrictions on VoIP seems like a good idea," said Mr Jashanmal. "There is only a very small proportion of people here using things like Skype, so by making packages available through trusted telecommunications providers like Etisalat, it will make the technology more mainstream." Dan Stuart, a 36-year-old Canadian who works as an internet entrepreneur in Dubai, said he would wait for details of how any new VoIP scheme worked before celebrating.

"I expected they were not going to open up the networks like they do in the West," he said. "It could be really good for consumers but there are still a lot of things about the pricing that we don't know." Steven Hartley, a principal analyst at international telecoms consultancy Ovum, said deregulation was a positive move. He said telecoms firms spent large amounts of money establishing the infrastructure which allowed the internet and telephone communications to function, and earned back considerable sums from the international call charges.

"The UAE has a massive expat community and it would appear that the risk of eroding that international call revenue proved too great," Mr Hartley said. "They have opted to say that VoIP services can only be offered by licensed groups." The licensing system was a way of combating networks, such as Skype, which used the telecommunications infrastructure built by Etisalat and du, and which "piggyback" on the telecoms provider's hardware, he said.

Mr Hartley added that Etisalat and du could choose to provide their own VoIP product or agree to a deal with one of the established VoIP service providers, perhaps allowing joint branding of the new service. If Etisalat or du came to terms with a company such as Skype it could translate into a competitive advantage, said Mr Hartley. "It's like a game of poker between Skype, Etisalat and du," Mr Hartley said. "Skype has the branding but Etisalat and du have the customer base. It could be more in du's interest to sign a deal with Skype, because they are the second player and they would benefit most from the extra recognition."

He suggested that the competition between the local telecoms could drive down any VoIP-style charges to consumers, making the service "even cheaper". But, he added, it was "important not to forget that the regulator is still keeping very tight control on VoIP services and that will limit the impact for consumers". Katja Ruud, the research director at the telecoms consultancy Gartner, said: "For consumers, there is an expectation this will make calls cheaper but this is not necessarily true. If the regulation does not deal with the issue of pricing, this deregulation of VoIP services could make no difference to prices.

"They could decide to price it at a very minor discount or not at all. It doesn't have to be, by default, a better deal for customers."