VoIP Archives - GUJRAT INDIA

So You Want to Start a VOIP Business in Uganda?

I have recently been reviewing the business model for a company that is dealing in VOIP. For the uninitiated, VOIP stands for Voice Over Internet Protocol(VOIP). It is basically a technology/ies that allows telephone calls to be made over the internet rather than over traditional telephone lines.

I set out my simple and straight forward observations.

First the cons (of course)

1. Internet stability.

Internet in Uganda can be very unreliable and where it is reliable it is very expensive. Now this is very critical as to make calls over the internet you need VERY RELIABLE internet and so this is the starting point for anyone looking to invest in this sector. It is however not uncommon for an ISP to charge $1400 per month for 64 kbps. That’s not a lot of bandwidth as a typical telephone call requires about 8kbps at any time and so 64kbps supports only about 8 simultaneous conversations or less depending on internet conditions. The good news of course is that this is changing with fibre optic cables being laid all the time and so internet costs reduce. My best advice, use ADSL and shared bandwidth. UTL does a good job here, with a great value and generally reliable product if you can get the telephone line.

2. Competition

VOIP prides itself in being cheaper than the traditional telephone companies and many a VOIP provider will give you rates that are much cheaper than the networks. That was until recently. Many telecom providers in Uganda for example Orange have great international calling bundles that give the VOIP provider a run for their money. The VOIP provider is therefore having to compete with the telecom companies in offering customers international calling services. You have to therefore be prepared to look at your financials closely and constantly lest you fall into losses so do yourself a favour, get a good accountant!

3. The Exchange rate

The Uganda shilling is depreciating against the dollar and this may continue to be the case. In 2006 for example the rate was Shs 1,700 to the dollar. In 2011 at the time of writing, it is Shs 2800. For VOIP,this is critical as the main purchase is “digital airtime” from international VOIP providers. This is purchased in dollars and as such the prices charged to customers need to factor in the exchange rate, in addition to ensuring remaining competitive against the BIG BAD WOLVES (I mean the telecom companies).

4. Technology know how

VOIP is a specialised sector and so it of course requires someone with interest but this is not such a significant matter as employing an IT person will help reduce the entreprenuers need to worry about this.

5. Start up capital

From my rough estimates, a typical VOIP business (say a phone shop to support 6 phone booths) can ideally start up business from as little as UGX 8.7m. This should cover; rent at 500k per month (including 2 month deposit bringing it to 1.5m), internet installation and subscription; 700k, purchase of the VOIP and computer equipment; 1.975m, furniture/ fittings; 1m an inverter; 2m, legal and related costs; 700k and signage(to advertise); 500k.

From my analysis, a VOIP business on its own is however not profitable and therefore it is ESSENTIAL to also have an internet cafe running side by side. The costs of the internet cafe side plus the VOIP side stripping out the shared start up costs like rent and inverter will be 20,383,275. I have written about an internet cafe set up costs separately in the article on the internet cafe. The total start up cost is therefore about Shs 20m

AND NOW THE PROS

1. Profitability and quick return on capital

Like the rest of Africa, In Uganda there are tremendous growth opportunities in the ICT/ communications sector and per Uganda Investment Authority, this is one of their key sectors for investment. Call traffic continually increases as Ugandans enjoy higher incomes. Despite the biting inflation, there is a continual increase in call traffic. VOIP is not being left behind and assuming ICT sector growths averaging 25% per year turnover averaging Shs 53m would not be an exaggeration. On the basis of my knowledge of this sector, I set out a summary profitability picture as well as the return on capital (this includes a diversified model which includes an internet cafe). All estimates are in UGX. The exchange rate to the USD is about 1 USD = Shs 2,700.

Gross profit

1.Revenue- calls: 65,520,000. Assuming 7 days a week at 180k per day.

2.Revenue- internet: 13,884,000. Assuming Shs 290k per week from 4 computers and multi purpose maching.

3.Cost of sales: -49,140,000. Assuming it is 75% of revenue for calls on basis of exchange rate and reseller margin.

4.credit transfer cost: -1,228,500. Assuming 2.5% of cost of sales

5.Franchise fee: – 655,200. 1% of revenue-calls.

Gross profit: 28,380,300

Overheads

Rent: Shs 4,800,000

Internet: Shs 3,840,000

Staff costs:Shs 6,000,000

Other overheads: Shs. 1,800,000

Total overheads: 16,440,000

Net Profit: 11,940,300

Capital investment: 20,383,275

Return on Investment: 1.71 years.

2. Return on capital

On the basis of the above profit picture therefore, this business should be able to have a return on capital of 1.71 years. A word of caution here. The model above assumes full capacity growth and so may not necessarily reflect a start up business in say its first few months. In addition the model assumes the internet cafe and call shop will run side by side and concurrently. I have done a separate analysis of the VOIP model on its own and from my analysis it will take 90 years to get a return on your capital! In Uganda, there is therefore no alternative for a VOIP investor but to integrate the call shop and the VOIP services.

3. Diversified services

Despite the fierce competition, a VOIP business can survive by being diverse. Many VOIP providers do not only provide low cost international calls. They also provide other related services like cheap calls on your internet enabled phone, a foreign number(for example USA) even while in Uganda and use of VOIP in homes/offices. Some like http://www.telebm.com provide a special Uganda rate. In addition many integrate an internet cafe within their models as well as selling telephones and accessories. The diverisifed services spread the over head costs and enable continued profitability. In the profitability analysis above, I assume this business is diverse offering both VOIP and internet cafe services.

4. Franchise model.

The beauty about a VOIP business is that it is very scalable meaning you can keep on expanding to other towns, other urban centres, other countries. The typical VOIP provider will give you a software management system which can be accessed anywhere on the internet (after all since calls are made over the internet, call logs are likewise internet based). This gives a key advantage of remote monitoring for the business owner. You don’t have to necessarily worry about revenue as you can remotely monitor the sales(calls) on a real time basis because the call logs display calls(and costs) as they occur. The model can therefore be replicated by having you the business owner setting up agents who also get access to your system. I believe this is the model that http://www.mafudian.co.uk a Ugandan VOIP company is promoting.

SUMMARISING AND THE FINAL WORD

First the numbers

On the basis of my analysis:

* Capital investment(internet and VOIP equipment) (A): Shs 20,383,275

* Revenue per year: Shs 79,404,000

* Profit per year (after all expenses (B) is Shs 11,940,300

* Return on capital(years to get capital back)(A/B) is 1.71 years

Now the basics you must get right before investing.

* Internet stability and reliability. Get a good ISP who supports VOIP

* Diversification of services. Don’t only do the VOIP services, consider an internet cafe, multipurpose machine, WIFI hot spots or even selling cell phones and related accessories.

* Location, Location, Location. This business best thrives in an urban setting with heavy traffic particularly of business users.

* Get an IT person, VOIP can be tricky to continuously configure.

FINAL WORD, YES OR NO?

This is not an easy sector to invest in with internet stability as well as the fierce competition with local telecom companies who now offer some good international calling bundles. Furthermore the exchange rates are continually changing due to the falling shilling hence potentially eating into the profit. I know many VOIP businesses that have failed and so to invest in it you need to have not only technology know how but like looking at the financial numbers as the margins can be very tight! A business which has taken off can however enjoy a significant amount of turnover and diversifying and expansion through franchising seem to hold the key to success.

What Every Company Needs To Know About Business VoIP And Unified Communications

A business voip solution is an alternative to a traditional switched-voice service. Instead of using dedicated trunks between PBXs, you can share the bandwidth with your data services, making better use of the available capacity. Also, in today’s business world the availability of a plethora of Unified Communications features within the VoIP ecosystem is a huge boon to business communications at all levels.

No matter which direction your business goes with a business VoIP solution… the key is understanding how you communicate and what you want to achieve.

The search for a business VoIP solution, or more appropriately Voice Over Internet Protocol, can confuse any business. There are many flavors of VoIP… and many pros and cons… that you need to be aware of when considering which service to choose. The goal of this article is to help you navigate through the technospeak so that you can make an informed decision that will save you time and money.

BUSINESS VOIP

The first thing you need to know about business VoIP Service is that it can replace your local phone company. Whether you have just one POTS (plain old telephone service) line… or a voice T1 (24 bundled dedicated lines)… a business VoIP solution is meant to replace your phone company. Instead of using your local phone company’s voice connection, VoIP will digitize your voice signal and send it over an internet connection.

In order for your voice to transmit digitally through the internet, you need to be sure you have enough bandwidth to facilitate the communication link. To optimize the quality of your business connection we recommend a minimum of a T1 Line (preferably ethernet fiber depending on the size of your enterprise) – a dedicated link directly to the internet that is guaranteed to be up over 99.999% of the time. Since you will be entrusting all of your business voice communication to this technology, your connection to the internet becomes the critical link. You don’t want to risk a company-wide phone outage to save a few hundred dollars on your bandwidth connection. So always opt for at least a T1 Line (preferably ethernet fiber) over DSL. It just makes business sense.

If you need assistance finding and provisioning bandwidth… we have developed software that will allow you to generate a circuit price in just seconds. You can request a bandwidth quote (as well as quotes for Business VoIP solutions) by simply asking at Business-VoIP-Solution.Com. Of course the quotes are free and no obligation. NOTE:… all circuits acquired through this resource also include FREE independent circuit monitoring.

Once you have your high-speed internet connection taken care of, it’s time to select a Business VoIP Service provider – the company that will actually route your digitized voice signal to a real telephone on the other end. In essence, your VoIP carrier will become your long distance carrier. The service providers we work with offer unlimited telephone calls to the United States and Canada, all for one fixed price. For companies who average more than $40 in local and long distance usage per employee, VoIP is well worth the initial investment. In some cases there are also very cost effective options for international calling also {just ask if you’re interested}.

There are likewise other hidden benefits of Business VoIP service, the main benefit being the reduced bandwidth required to conduct a regular telephone conversation. Since a VoIP transmission only requires 32KB of bandwidth, you can fix up to 24 ‘VoIP lines’ on a Data T1, and still have 768KB left over for dedicated high-speed internet access! This means that you can migrate your entire phone system on to your existing T1 and still have half of the bandwidth allocated for data.

Another benefit of VoIP lies in the prioritization of the digitized voice signals that are generated when you speak. In the event no one is talking, the VoIP line does not transmit any data. This allows your T1 Line to dynamically allocate bandwidth as it is needed, instead of permanently blocking out an entire channel of data.

Business VOIP means intelligent communications. Whether it is toll-bypass call routing, unified communications (integrated phone, email, IM, etc), or a specific application on the phone itself, the power of IPT is in the applications. In fact, the robust capabilities and functionality of the unified communications applications available are a real selling point in adopting Business VoIP.

In a highly mobile sales organization “find me follow me” functionality may be priceless. In an organization where deadlines have to be met, point and click call control settings may be crucial. Other organizations may benefit with high level call log metrics to track billable time. Enabling true mobility across your work force, enhancing video/conferencing activity, and easy use when traveling globally are also very attractive attributes to businesses.

With so many features available on most platforms… rarely do you see every user applying the same controls and features. It’s the freedom to control communication at the single user level that makes VoIP a great business solution. Additionally, the marriage of Business VoIp technology and Unified Communications features opens up a world of unlimited possibilities and applications for today’s business communications.

Make VoIP Calls to India Without Emptying Your Pockets

There was a time, when sending messages to the people residing in the remote areas was a very lengthy task. But, the telecommunication technology is getting advanced day by day and the invention of advanced telecommunication devices such as telephone has made the communication very easy. Now, we are able to talk to the people residing at any place with ease.

In the case of telephones, the communication is made through the analog signals. This is a very efficient system, but it incurred heavy cost in the case of calling abroad. But, now there is no need to get intimidated by the gigantic bills, as the digital technology has made it possible to talk in the cost-effective rates. Moreover, there are a number of methods that allow the users to talk totally free of cost.

VoIP stands for Voice Over Internet Protocols and it is the result of the advancements in the digital technology. Now, one can call anywhere across the globe with the help of this technology. India is a land where there are a lot of business as well as professionals opportunities. Most of the call centres that provide the customer care support are available in India. That is why, day by day, free calling to India is getting very popular. There are number of websites available, in order to avail these free calls.

Many of the Internet portals are also facilitating the users to forward unlimited calls to India. With the help of the IP phones, one can contact their loved ones residing in India. The Voice Over IP technology requires a broadband connection and IP or specialised phone. There are a number of Internet forums that give you information about the free calling through VoIP.This technology is available on most of the websites and they offer the facilities to make free calls to India.

PC to PC call can also help the people in free calling to India. The aforesaid feature is available on many websites and the messengers of many popular portals and you can call a person if he or she is online. But the people are highly crazy about the Internet phones. The Internet portals also offer many exciting and deals to the users availing VoIP services.

The VoIP calls to India are increasing day by day and it is quite obvious, as the calls for which you have to spend a lot in the past, can now be forwarded without even paying a single amount of money. Some of the websites charge a little money in order to provide these facilities, but the charges are very little. The free calling to India is definitely a beneficial deal for people, as it not only helps the people in their personal talks, but one can also get benefits from it in their business purposes. More and more websites are entering in this arena and the sound quality of the IP calls is also very good. The day will come, when these calls will be as easy as regular phone calls.

How Does VoIP Phone Service Work?

For years, businesses have been replacing their analog phone lines with VoIP phone service. In its early years, VoIP picked up its own reputation among users and skeptics who touted it as unreliable; however, throughout its history, this new communication technology has grown in popularity and left its mark as a reliable and practical communication solution for businesses of all sizes.

Today, businesses use VoIP features to stay in touch with customers and colleagues, expand their businesses seamlessly, monitor employee performance, and build customer loyalty. By harnessing the power of the cloud, VoIP also offers a degree of flexibility and simplicity that analog users just can’t experience.

While analog phone service keeps communications fixed in one location, VoIP allows you to make and receive your business calls from any device (office, mobile, or soft phone app) or forward them to external sites and extensions.

The flexibility and convenience of this technology is what most users love about business VoIP providers.

Small businesses and entrepreneurs are also able to use VoIP phone service to create the image of a larger company with features like auto attendant and custom prompt menus.

What can you expect from a VoIP phone service?

VoIP takes analog audio signals and converts them into digital data which can be transmitted over the internet. With less bandwidth required to transmit the data, there is less occurrence of jitter which causes that choppy audio and lackluster call quality that drives everyone crazy.

Call quality, cost savings, and easy setup are the main drivers of VoIP’s success but there are several features and capabilities that set this communication technology apart.

These are few of the standard features you can expect when using a VoIP phone service:

Call forwarding
Voicemail to email
Auto attendant, also known as a digital receptionist or cloud receptionist
Call continuity
Programmable keypads
App integration
Caller ID display
Call blocking
Call conferencing
Mobile capabilities

VoIP phone service can seem like a drastic change to your communications strategy but if you’re willing to speak with consultants, you will see that it’s actually a simple transition.

A Better Business Communication Solution

Convenient set up

Even with more recent, premise-based business phone systems, set up is cumbersome and expensive compared to a cloud-based phone system. It requires users to connect wires and figure out which line pairs with which extension; most busy business owners usually end up either having to hire someone to install it for them or spend hours on the phone with their phone company.

With VoIP, the time it takes to get up and running is minimal and most VoIP service providers offer support to help you every step of the way. Usually, however, it’s as easy as plugging in your IP phone and letting it initialize to your existing network.

There are no wires or lines to worry about since your service provider takes care of most of the set up before you receive your new equipment. When you use VoIP phone service, your settings come pre-configured to your phone so all you have to do is connect your phone to the correct ports and you’re on your way.

The best part?

Since VoIP is cloud-based, your provider is able to take the maintenance of equipment and servers that help power your communications off your hands by managing their own servers and IT staff for your convenience.

This means any business can enjoy using this technology regardless of the size of their location.

Minimize costs

Businesses see significant savings when they switch from traditional phone service. With older PBX systems, you had to hire an IT staff to maintain the equipment housed in your office, pay for long distance charges, and if you wanted to add a line to your office you had to pay the phone company more for the phone number and installation.

Today’s VoIP technology only requires one-time hardware costs and a monthly subscription based on service plan rates. Long distance calling rates vary among providers but many offer unlimited calling along with competitive international rates.

Easy setup, lower costs, and robust features make VoIP a great solution for business communication. It’s no surprise that VoIP is seeing rapid growth with no signs of slowing down in the coming years.