Network Partner more information available on company website

'Disruptive' network offering on the cards : in the mobile market, AppChat, aims to cut the cost of voice calls by as much as 80%, disrupting the market, when it launches in October. AppChat, which claims to be SA's first end-to-end IP-based mobile network, is being launched by ECN founder and former CEO mrJohn Holdsworth. It is rolling out a national next-generation network with points of presence in all the major centres countrywide. Recent research from Ovum showed the local cost of fixed and wireless broadband is as much as 20 times higher than offerings from providers in 18 other emerging markets.

Mammoth reductions
Holdsworth explains the company will use voice over 3G technology and expects to reduce the cost of on-net calls by as much as 80%. He expects a viral uptake based on the popularity of messaging, which is rapidly replacing SMS. AppChat bought out a company called Altivex, which gives it access to ECS and ECNS licences. He says the licences will be used to build a core network, while the last mile will be leased. Holdsworth has injected the initial, undisclosed, capital amount, but will bring in a third-party equity or network partner when “appropriate”. In July last year, Holdsworth stepped down as CEO of ECN Telecommunications, just a few months after the company was bought out by Reunert for R171.9 million. He started ECN in the first quarter of 2005 to take advantage of a shift to voice over IP (VOIP).

More competition
The local mobile market is dominated by two players, which has led to a lack of competition, says Holdsworth. “This lack of competition has many negative consequences for consumers, the primary one being that SA has very high mobile tariffs compared to virtually every other comparable country in the world.” Holdsworth says the emergence of mobile VOIP, the Independent Communications Authority of SA's (ICASA's) plan to implement wholesale open access and an interconnect rate of 40c per minute by March 2013, will see the “biggest change in the mobile market for 15 years”. AppChat is taking advantage of these shifts, says Holdsworth. “Our objective at launch is to provide our prepaid and postpaid customers with the highest quality lowest-cost mobile voice minute in the country – by some distance more information available on company website.”

Tough challenge
Steven Ambrose, MD of Strategy Worx, says “there is probably more chance of me falling pregnant than the networks allowing him to get away with it”. Holdsworth expects the mobile networks to move against the offering, but says this would be anti-competitive, which is against the law. “We look forward to the competition. Ultimately, prices will come down, service will get better and consumers will benefit. Real competition always has that effect.” Ambrose says there are massive challenges in competing with the current operators and Holdsworth's offering may add a layer of complexity for end-users, which could work against it. However, he adds that he does not know the specific details. Further details will become clearer closer to the launch date, says Holdsworth. AppChat is “possibly one of the most disruptive new entrants to emerge in the mobile market for some time”, he claims. Holdsworth will need billions to roll out a national network, based on the investments MTN and Vodacom have made, says Ambrose. “I hope he pulls it off; competition is always good.”