As the South African economy develops, enterprises are starting to turn to hosted IP services to allow them to focus on their core business operations. Hosted IP services enable end-users to cost-effectively access technology using sophisticated infrastructure. The low penetration of communication equipment makes hosted IP services a feasible solution in South Africa. 

New analysis from growth consulting company Frost & Sullivan finds that the South African hosted IP services market recorded 6% growth in 2006 and estimates that this will reach 11% by 2013.
Service providers, however, have to deal with several issues to remain competitive. For instance, they will have to arrange for substantial infrastructure if they wish to serve a wide range of customers. They will also have to consider the limited availability of specific skills and fluctuations in the Rand exchange rate.
“Furthermore, high broadband costs hamper the growth of local hosted IP services,” says Frost & Sullivan Research Analyst Letticia Nkumbula. “However, the various investments currently shaping the telecoms market will eventually lead to a levelled playing field.”
Market participants can gain market share by being among the first to provide unique and tailored service features to clients. As competition escalates, distinct services will be just as important as competitive pricing, since customers will expect more economical products without compromising on the value of the service.
The increase in end-user mobility is also facilitating the adoption of services that improve work efficiency. Hosted IP services are well suited to meet these requirements.
Small, medium and micro enterprises (SMMEs) are the biggest potential revenue contributors to the hosted IP market due their inability to establish expensive in-house infrastructure. Large enterprises are also beginning to buy into the hosted IP concept so that they can focus on their primary competencies.
“Hosted IP services can provide and manage the voice infrastructure requirements at reduced costs,” notes Nkumbula. “Since the future trend shows convergence of communication services over IP, hosted IP service providers will likely gain from this trend.”
The South African market for hosted IP voice received a shot in the arm with the deregulation of voice over Internet Protocol (VoIP) in 2005. Since calls made on traditional voice carriers are considered to be extremely expensive, VoIP has gained rapid acceptance as a result of customers incurring low calling costs.
“Contact centres in particular are increasing market demand for hosted IP telephony services,” notes Nkumbula.