Everybody whines about the high cost of telephony in SA forcing local businesses to spend a disproportionate amount of their budget on communications.
Not everybody does something about it, except perhaps sign up for Skype’s global telephony service to make free international calls over the internet.
Inspired by Skype’s success, and frustrated by Telkom’s call fees, Thabo Malebadi has developed a local alternative. Although Skype has the market pretty well sewn up, Malebadi believes a local offering, backed by a range of other telecommunications and internet services, was a niche waiting to be filled.
The result is e-Mbizo, which is now exporting voice calls for about a dozen companies.
Small stuff so far, Malebadi admits, but his software has already been downloaded by an Indian company planning to resell e-Mbizo minutes, and a UK company is also negotiating to resell its services.
Users need a PC with high-speed internet access and a microphone and speakers, or a modem to connect a fixed-line phone to their PC. After downloading free software from www.embizo.co.za, they can make free calls to other e-Mbizo users anywhere in the world.
Users can also dial from their PC to a regular fixed or cellphone in any other country and pay what Malebadi claims to be the cheapest fees in SA at 10c a minute to the US and other countries.
Several of his existing clients are internet cafés in Johannesburg, which have installed the software on their PCs to let migrant workers make cheap long-distance calls.
Most of the traffic is going to Nigeria, the Democratic Republic of Congo and Angola, as well as to the UK and US.
So far e-Mbizo is carrying about 1|500 minutes of calls a month for each business customer, while 600 individual users are making free calls to each other or paying by credit card to dial a phone from their PC.
For the savings to kick in, users need broadband internet access so they are not paying a per-minute connection fee. That can either be an ADSL fixed line or a wireless link, although wireless connectivity is less stable so quality may suffer.
The service uses Voice over Internet Protocol (VoIP) technology. Since SA’s restrictive legislation still requires VoIP providers to lease Telkom’s fixed lines as their backbone, e-Mbizo must hand over part of its revenue to Telkom. That makes it harder to turn a profit, Malebadi says.
“It’s not easy, especially when it comes to providing a very good service for very little money and still pay Telkom’s fees,” he says. “Telkom already provides exceptionally good- quality telephone calls, and having to beat that isn’t easy.”
When SA’s telecommunications market was partly liberalised last year, many players spoke of offering VoIP services to avoid Telkom’s international call fees by routing calls over the internet. Most of those rivals are targeting established businesses and government.
“We are taking it to the more difficult territory of individual users and small businesses, which everybody else is trying to avoid.”
Yet recent research from the SME Forum confirmed that very few small companies have broadband internet access, so they cannot use this service. Malebadi hopes that will change as SMMEs realise it will be worth paying for an ADSL connection because of the cash they will save on phone calls.
“We are increasing the chance of small businesses getting ADSL by giving them reduced telecoms costs so they can run more effectively. With the cost of ADSL coming down gradually, it will be affordable for them,” Malebadi says.
Malebadi, 23, studied at Tshwane University of Technology and is “fanatical” about satellite technology, telecommunications and broadcasting. His company is now five years old and began its research and development at the Innovation Hub, a Pretoria-based science park for entrepreneurs partly funded by government. It is also a member of Enablis, an international mentoring organisation run by Canadian entrepreneur Charles Sirois.
Malebadi’s partner in the business is his father Joseph, an electrical engineer with a background in communications technology. The company also employs technicians as consultants to sell its services, get customers up and running, and resolve any problems they have.
The technology behind the operation is complex, the profit margins are slim and building up a paying customer base is taking time.
“We don’t have a lot of resources and we shied away from loans, but we have come across people interested in investing. We are looking at growing by acquiring more investors,” Malebadi says. “We don’t see ourselves as a South African company, we see ourselves as an international South African company.”