VoIP is still restricted in many countries by regulations. Apart from the birth it gives to the grey market, eats up revenue and traffic of the PSTN operators, blah blah; the restrictions not allowing VoIP has fragmented the industry considerably.

The large serious players are unlikely to do anything that is illegal. So we might not see them entering in to a market that prohibits VoIP. This makes a market for the small, often a group of friends or colleagues joining to form a VoIP company. SIP is an open source platform and getting a softphone is not difficult for these people. Then you have so many wholesalers from where one can add minutes.

There are thousands of such small VoIP providers who mainly exist only because of prohibited markets. They easily sneak in to these markets and through resellers sell their cards and softphones to the customers. Regulators also, rarely come to know about these unheard of VoIP ‘companies’ and do not block them.

Having a fair number of players in the market is good for any market as it creates tough competition benefiting customers. But in case of VoIP, the market is highly fragmented and because of these small players the large ones (serious ones) are suffering. This is creating problems for the mainstream players as well as the industry. The main problem to which these small operators are contributing is about the perception of the technology. Since, they are small, they look for cheap things. Cheap equipments, cheap minutes and at the same time give no attention to QoS. So the users are never able to see the acceptable level of quality coming through VoIP and that hinders them trying the service again even from a serious player.

Even if the incumbents have problems in allowing VoIP in their respective countries, they could resort to restrictive market practices rather than not allowing the service altogether (through the respective regulators). The best policy in the interests of the incumbent was that the Incumbent should only be allowed to offer VoIP. That way it would not lose on the revenues that otherwise go to these small VoIP operators and when people have the alternative, they would not look at the illegal things. Hope these regulators finally wake up and allow VoIP even in limited manner.

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