Cable & Wireless, faced with a new threat to its overseas calling market by a growing number of voice-over-the-internet (VOI) companies, is now contemplating getting into that market itself.

C&W told the Business Observer that it was now testing a VOI for possible offer to commercial clients.

Cellular service provider Digicel said that although it was contemplating offering a calling card service, it would not be VOI calling cards.

The VOI represents the latest frontier in the fight over the telecommunications market, estimated to be worth $1.5 billion per year - given the 150 million minutes of calls made each year by Jamaicans to the USA.

However some small but aggressive and nimble players are offering rates as low as $2 per minute for Jamaicans to call the USA, using the Internet. This compares with $16.50 per minute for a regular phone call.

"The market is even better than ever," Mark Allen, chief executive officer at VOIP International, told the Business Observer.

VOIP International operates the Yap Jack - a device which allows persons to phone internationally via their home computers.

An alternative method known as voice over internet protocol (VOIP) allows the use of calling cards for these calls.

"The large players are looking to get into VOIP...but we are not concerned about them, because we already have an advantage of having market share and equipment," says Allen, who has a Yap Jack client base of some 30,000.

VOIP International is not the only one in the market. Other prominent players include Avoxi Communications Ltd, InfoChannel Ltd, Cool Cards Ltd, Caribtel Ltd and N5.

The average rate of VOIP is around $8 per minute, but the rate can be as low as $4 per minute offered by Yap Jack operators to the US and $2 to the United Kingdom.

VOIP is not without problems, with the calling quality notoriously inferior to traditional phones - a factor attributed by C&W to poor equipment being used by these new entrants to the telecoms market.

"In the general marketplace, very few cheap offerings of VOIP offer any quality of service," said C&W in a response to the Business Observer query. "Excessive compression or insufficient bandwidth in a VOIP scenario could be identified with the symptoms cited (as problems)."

But VOIP players charge that C&W has been blocking their calls and affecting the quality of their service, in a bid, they say, to protect its market share.

Even the regulator agency has made similar charges against the former monopoly.

"C&W has engaged in anti-competitive practices," says the Office of Utilities Regulation (OUR)- accusing the telecoms firm of charging higher rates to VOIP players than to other customers for the same services, and of blocking VOIP calls.

"The Office of Utilities Regulation is very concerned about the practices of C&W," notes Courtney Jackson, the deputy director general.

One company, Avoxi, a VOIP calling card service provider, told the Business Observer that it grew so fed up with C&W, that it recently invested US$400,000 to set up a satellite to completely bypass it and legally.

Generally, VOIP players utilise C&W's internet fibre-opic line, with C&W offering the most reliable internet infrastructure, through a line which stretches hundreds of miles from Jamaica into Miami, USA.

"We at Avoxi were paying US$13,000 per month for a T1 line (which is an internet line) from C&W," says Avoxi chief of operations, Gregg Dalmar, "even though a T1 is US$600 at C&W in the USA."

C&W USA was sold in December 2003.
Dalmar claims that even though he was paying C&W for the service, some calls could not be completed.

"The DSL connection was behaving like (a slow) dial-up internet connection, and the calls were dropping. If you were my customer you would not curse C&W, you would curse me even though it is not my fault," he complaim. "We were faced with a choice: either pack it all in, or dig deep and invest. So we dug deep and invested in a satellite."

Added Robert Swaby, a VOIP reseller: "The OUR should determine if the dominant player is acting as the only player in the market, and if this is the proper way to conduct business."

The OUR, however, says that the practices "are not illegal but anti-competitive".

"We are trying to establish competitive safeguards but until it is established it is not illegal," notes Jackson, who says that studies are now under way.

"If we act now and do not (act correctly) we will be carried to court," adds Jackson.

Last year, Caribtel, which offers a calling card, sued C&W for some US$20 million over the blocking of its toll-free number. The case was settled out of court.

Yet other players have complained that the technology is still new to Jamaicans, who are either ignorant of VOIP, or simply prefer to use mobile phones to speak to relatives abroad, and that these factors are affecting sales.

"We have not had major success with selling the Yap Jack," says Herman McDonald, chief marking officer of InfoChannel. "We feel, although extremely well-priced, it is for a narrow market which does not wish the convenience of mobile phone."

Both InfoChannel and VOIP International are Yap Jack distributors, with InfoChannel Jamaica's largest internet provider, after C&W.

"Jamaicans are willing to pay more for phone calls with cell phones than going to a land line and making a much cheaper call with a Yap Jack," marvels McDonald.

The problem is that a Yap Jack sells for US$125, as opposed to calling cards which only require the user to buy the card.

"It is a prohibitive factor but not significant," he argues.
Allen, from VOIP International later added: "This is true (that the sales of Yap Jack have stalled), but we get a lot of traffic with the existing Yap Jack holders from years ago - before the calling cards."

The OUR estimates that 600 million minutes enter Jamaica, and 150 million minutes leave every year.

By Allen's calculations, at an average calling rate of J$10 per minute, total revenues for the sector is $1.5 billion per year.

VOIP has exploded in places like Europe where several Internet providers now offer 'internet voice' services at very low charges, forcing the large telecoms companies to adopt new tactics to preserve their income.

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