ICT Initiatives in Egypt

This is an overview of the ICT sector and various ICT policy issues in Egypt. These pages are a common effort with other non-governmental organisations (NGOs) worldwide to make ICT policy issues a public concern. For a wider angle, The Association for Progressive Communications (APC) offers information about ICT policy and internet rights on a global level. Furhter, a primer for ICT policy is the ICT Policy Handbook.

The Egyptian government has made information technology and telecoms a flagship developmental priority and has heavily invested and supported the sector. Egypt has become the largest Internet market and the third largest mobile market in Africa (after South Africa and Morocco) with an annual revenue of US$2.6bn (2004).

The main ICT sector stakeholders in Egypt are:

The ICT sector has been progressively liberated. An analysis of this liberalization effort has been presented in a follow up meetings for the WSIS in Geneva May, 2007 by the the Global Information Society Watch (GISW) . For more information about GISW visit www.globaliswatch.org/ Geography makes Egypt a key player, located between Europe and Asia, it is an international and regional fiberoptic traffic node. These cables provide the country with international links and reliable online connectivity: In 2000, TE signed an agreement with FLAG to build a local IP peering point in Egypt, directly connecting ISPs to FLAG IP backbone via an STM-4 link on FLAG cable. This agreement resulted in reduced prices for Internet connectivity. MCIT anticipates the Internet user base to increase to around seven million by mid-2007, representing 10% of the population. In June 2004, the Egyptian government launched a public-private initiative to boost broadband access; the government also plans to raise awareness among small and medium-sized businesses about the advantages offered by broadband services. MCIT is actively supporting the use of computers at home, in schools and universities, as well as in businesses of all sizes. To further this end, the government is guiding Telecom Egypt to establish low-cost and transparent network interconnection and equipment co-location agreements with ISPs and application service providers throughout Egypt. The government has two master plans for infrastructure expansion: Master plans I (2000-2004) and II (2004-2007), with the goals to provide nationwide connectivity in an integrated telecoms network and backbone. Objectives for the infrastructure include: Master plan I concentrated on expanding the fixed line connections and plan II will combine wireless and wire-line technologies and will liberalise access services to attract private investment. Master plan II focuses on the Egyptian networking needs covering data, voice and video services on the same core. The technology proposal covers ATM, IP, fiber optic and DWDM, CDMA wireless local loop, to accommodate increased demands for bandwidth and provide relief for existing switched network o due increased data traffic. The plan recommends the configuration of new switched and non-switched network. With these plans the Egyptian market will have an increased demand for telecommunication equipment and components comprising of copper and fiber optic cables, central office switches, cellular stations, data communications satellite, and microwave communication equipment. With the planned phasing out of TE’s fixed lines monopoly business prospects in wireless technologies, Wi-fi, Wi-Max, VoIP, CDMA, GSM solutions and applications will appear. Wireless technologies are distributed around Cairo with hotspots installed in a number of hotels and coffee shops/restaurants. NTRA is analysing VoIP for nationwide use. There is interest in the private sector (as shown in the ICT 2005 exhibition) to apply new telecommunication technologies, e.g. telecommunication services via satellites, connectivity services, global peering, GPS and IVR.

ICT Market: Mobile Communications and Broadcasting

Since the introduction of GSM services in 1996, the mobile communications market has witnessed strong growth, starting with 194,000 subscribers at the end of 1998, rising to 5.8 million customers at the end of 2003 and reaching 8.5 million customers in 2005. Egypt is the third largest mobile market in Africa after South Africa and Morocco. The mobile market is dominated by two private operators, MobiNil and Vodafone Egypt. Both networks offer 2.5G services, such as WAP, GPRS, SMS and mobile banking. GPRS is not widely used yet. Growth has been driven by prepaid services; the vast majority of subscribers now use their mobile phones on a prepaid basis. The licensing of a third mobile operator is under way. In late 2003 TE applied for and bought a third mobile licence from the National Telecommunication Regulatory Authority (NTRA), soon after the four-year exclusivity period of the current two mobile network operators ended. However, the plan was put on ice after a study showed that a third network was not economically feasible. The two mobile operators, MobiNil and Vodafone Egypt, have each paid LE1 billion to TE to acquire the frequency it bought. Yet, TE has one leg in the mobile market through its 25.5 per cent stake in Vodafone Egypt. However, MobiNil remains Egypt's dominant mobile operator with 3.29 million customers. Vodafone Egypt remains close behind with just over three million subscribers as of June 2004.

Third telecom operator

MobiNil and Vodafone were for years the only providers for mobile telecommunications. In 2006 Etisalat was choosen as the third provider offering third generation (3G) services. The creation of a third operator is expected to regulate competition and decrease the market monopoly of the two previously exclusive mobile carriers. Although, it will be hard for the third operator to compete with the two companies before 2009 as they have an established market base with brand name and operational experience.

Orascom Telecom's regional role

Expanding from its involvement in MobiNil, Orascom Telecom Holdings (OTH) has become the largest telecoms player in the region. OTH now holds ten licences, in, among others, Algeria, Pakistan, Tunisia, Congo, Chad, Zimbabwe, the Democratic Republic of Congo and Iraq—giving it some 8m subscribers. OTH announced its acquisition of a Bangladeshi mobile-phone operator, Sheba Telecom, for US$60m in September 2004. OTH has sold licences in Jordan, Yemen and a number of Sub-Saharan countries. The Egyptian Sawiris family owns 56.9% of the firm. Its shares are also traded on the London Stock Exchange in the form of global depository receipts.

Hardware and Software production

Egypt is an importer of PCs and computer parts. Hewlett-Packard, IBM, Dell and Acer are the principal companies. Centra Technologies is the main computer assembler. The company is state-owned by Banha Electronics and International Electronics, a subsidiary of the Bahgat Group. Orascom Technologies is distributing hardware and software for global IT companies including Microsoft, Oracle, Novell, Hewlett-Packard, Lucent Technologies, American Power Conversion, and Netscape. In addition, Orascom owns an ISP and a software development venture. Microsoft is the principal seller of software. The largest local IT company is Raya Holding with registered sales of US$121m in 2003, including exports of US$16m. In 1999, the company was formed through the merger of seven local IT companies. Raya offers a range of services through its subsidiaries: Raya Integration, Raya Software, Oratech, Raya Academy, Raya Telecom, Raya Contact Centre, Protech and Raya Network Services. The company employs over 1,300 people. Raya has partnerships with major global IT companies such as Microsoft, Oracle, Cisco Systems and Intel. Sakhr Software is a regional software enterprise which creates software specifically for the Arab market and Arab-speaking user. It was founded in Kuwait in 1982, and was relocated to Cairo in 1990. The company's clients include Intel and Oracle as well as regional governments. In the ISP sector, LINKdotNET, owned by Orascom Telecom Holding Company, is the largest player, followed by Internet Egypt, Soficom and Menanet. Nile Online (NOL) is a major infrastructure and digital service provider in Egypt, offering online services to individuals, businesses and ISPs. NOL is a privately held company whose shareholders include the Egyptian Ministry of Information and several banks. The Egyptian Networks Company (EgyNet), established in 1998, built and operated the first privately owned public data network in Egypt. EgyNet has bought majority stakes in Soficom and Internet Egypt.

The Smart Village

A 450-acre IT park – “The Smart Village” - was launched in September 2003, providing state-of-the-art infrastructure 28km outside Cairo. The Smart Village, is owned by a private consortium under the sponsorship of MCIT which holds a 20% shareholding. Major shareholders are Raya Holding, Orascom Group, EgyNet, Arab Contractors, Suez Canal Insurance and Banque Misr. Investors are permitted a 10 year tax exemption. The IT park has attracted international companies such as Alcatel, the Cairo and Alexandria Stock Exchange, Microsoft and Vodafone. Its facilities include a back-up bourse for the Cairo and Alexandria stock exchanges, Xeed -Telecom Egypt’s call center, a conference center and a hotel. To boost ICT small and medium enterprises, a venture capital company, the Technology Development Fund, was established as in mid-2004. The fund is financed by EFG-Hermes and managed by IdeaDevelopers with a capital of over $1 million. The Smart Village is expected to create over 30 000 technology jobs. The number of companies working in the ICT field reached 1152, employing 33,413 professionals.

E-Government Initiatives

MCIT's e-government project was established to provide citizens day-to-day services through downloadable forms and instructions, e.g. how to acquire a birth certificate, checking the traffic fines to taxation and customs services. The e-gov’t site is also intended to enable technology transfer between local and foreign companies through partnership projects. An example of this partnership is the e-Government Gateway established with Microsoft corporation. Furthermore, information related to more than 700 services provided by the various ministries is available on the portal www.egypt.gov.eg.

But something is missing ...

Yet despite these achievements Egypt’s network readiness was ranked (66) out of (115) countries in 2007 by the World Economic Forum. The Networked Readiness Index (NRI) is used to “measure the degree of preparation of a nation or community to participate in and benefit from ICT developments. The NRI is composed of three component indexes which assess: - environment for ICT offered by a country or community - readiness of the community's key stakeholders (individuals, business and governments) - usage of ICT among these stakeholders.”

The Global Map of Digital Inclusion

Gender

Egypt’s ranking in the Global Gender Gap Report 2006 is (109) from 115 countries with Saudi Arabia (114) and Yemen (115). Women’s rankings in Egypt are according to economic participation and opportunity (108), educational attainment (90), health and survival (66), and political empowerment (111). Female literacy rate was 47% in 2005, though improvement in education enrolment is evident with 94% at elementary and 77% at secondary level, still the official workforce was 20% females in the same year. MCIT has initiated the following national and regional infrastructure initiatives:

Core Backbone

For the modernization of the core backbone, transfer of voice, data, and video information throughout Egypt, over three years with a cost of $1 billion, TE is looking for strategic partners to provide financing and know-how for the deployment of the core backbone. Upgrading the core backbone is a supply push, which will enable TE to satisfy the increasing demand for capacity. TE implemented the first improvement phase of its core transmission network using DWDM technology, expanding the capacity of the network to approx. 15 times the current capacity without installing new fiber rings. TE deployed a new ATM/IP architecture for the core backbone that will offer integrated services for voice, data, and video with greater flexibility due to packet switching and IP-based technology.

Dial Up

Egypt introduced the Subscription-Free Internet in 2002. Value added services are currently provided via a special numbering scheme, with the prefix 0908, at a costlier fee.

ISDN

TE and ISPs provide high-speed Internet dial-up connections (64- 128 Kbps), through ISDN services across Egypt. The total number of ISDN subscribers is 12,539.

ASDL

Due to Egypt’s local loop partial unbundling in April 2002, broadband Internet access via ADSL (Asymmetric Digital Subscriber Line) is available. In cooperation with TE, 8 data backbone licensed operators, are providing ADSL services. ADSL technologies deliver digital data at high speed (128–512 Kbps) over existing phone-lines. The monthly cost is US$24. The major Internet Service Providers in the country are allowed to negotiate their own international bandwidth agreements and not be tied to getting the bandwidth from TE.

Leased Lines

Leased lines connections are available nationwide with speeds ranging from 64 kbps up to 155 Mbps. ISPs as well as TE provide leased line connections, mainly used by the business sector or other ISPs.

Video Conferencing

Interactive Video Conference service is available over ISDN, TCP/IP (Leased Lines) and over the Internet. Video conferencing facility is used at the Ministry of Education, IDSC, MCIT and some private companies and International organizations.

IP VPN

TE and ISPs provide IP Multi-service (voice, data and video) and Virtual Private Network (VPN) for customers who need a highly secured network. Dial-up VPN is also offered, where those who have been authenticated may access the network through a regular Internet connection with the added security.

Voice over Internet Protocol (VoIP)

In April 2005, the NTRA has released the regulations governing the VoIP market in Egypt. PC-to-PC IP telephony calls will not be regulated, whereas services to end-users will be monitored for quality of service. Infrastructure-owning ISPs can, along with Telecom Egypt, resell IP connectivity to companies wishing to offer VoIP services, or sub-contract the networks' roll-out to other firms. In June 2005, LINKdotNET, a major privately owned ISP and solutions provider has become the first company to provide VoIP services in Egypt. An agreement has been signed with the National Telecommunications Regulatory Authority (NTRA), expanding the class 'A' ISP license granted to LINKdotNET to include providing VoIP services to agencies and corporations using VPN networks. NTRA are currently evaluating the next phase of implementing this service in order to allow Egyptian consumers to use VoIP from home to make international or local calls by the end of this year.

The Broadband Initiative

The Egyptian government embarked on a broadband diffusion initiative in response to the low use of ADSL and other DSL services. The initiative includes the increase of ADSL lines up to 10 times, WiFi hotspots in public areas and the promotion of wireless LANs in residential areas. In the long run it includes also the introduction of cable modem for the delivery of advanced integrated services to households.

Wireless Local Loop (WLL) – CDMA

TE is soliciting strategic partnerships to deploy a nationwide fixed Wireless Local Loop (WLL) system based on the latest CDMA technology. WLL cuts cots and efforts of installing copper cables to under-served areas. TE has issued a tender including 100,000 WLL/CDMA lines in the 800 MHz range during the fourth quarter of 2003. No single technology can be the best for all regions, and mixed solutions, using Inter-working Functions (IWFs) and gateways, may provide attractive options.

Cairo Regional Internet Exchange

The Cairo Regional Internet Exchange Point (CRIXP) was formed in Cairo in December 2002. CRIX is a local and regional peering point that routes all intra-Regional Internet traffic among the operators without having to pass through the United States or Europe. This allows the regional data carriers to significantly optimize upstream capacity costs, enhance their existing bandwidth capacities and reduce the size of the routing tables worldwide. While CRIX is a joint venture project between National Telecom Corporation (NTC) of Egypt, and Flag Telecom – ECC, an NTC subsidiary, is currently hosting, operating, and maintaining the exchange point in its data center. By September 2004, there were ten national IXPs in Africa: Democratic Republic of Congo, Egypt, Kenya, Mozambique, Nigeria, Rwanda, South Africa, Tanzania, Uganda and Zimbabwe.

E-commerce Initiatives

MCIT is planning to have e-commerce in Egypt by 2007. There are limitations, at present, for a widespread e-commerce service in the local market due to the relative diffusion of Internet users and the minimal use of credit cards in financial transactions within Egypt. Law No. 15/2004 on E-signature and Establishment of the Information Technology Industry Development Authority (ITIDA) was passed on April 22, 2004. The Central Bank of Egypt has licensed 12 banks to provide E-banking services. The services include phone and mobile banking as well as Internet banking services. With the planning of e-commerce, a full modernization of the National Postal Authority is a key government project. The Postal Authority started to build a network to connect its 3,000 post offices throughout the country. Plans for transforming the Authority into a joint-stock company are already under way. The opportunities exist for partnerships with the private sector to introduce electronic postal services and new applications in postal banking .

Call Centers

Egypt is in the process of establishing the first transit telecommunications free zone. Located in Alexandria, the free zone will offer co-location services, managed services and application services via the 'Telecom Hotel'.

Building human IT capital/resources

In 2000, MCIT in collaboration with Cisco systems started an advanced training programme to train 25,000 IT professionals and 5,000 engineers. In addition to the Cisco programme, training academies have been established in cooperation with Nortel, Ericsson, Lucent, Huawei and Alcatel to create a group of skilled IT professionals. These programmes are free of charge for the selected qualified youth being subsidized by MCIT and private companies.

IT Accessibility

The diffusion of computers and Internet use is tied into literacy, availability of hardware and cost of online time. PC and Internet use is not growing as fast and as pervasive as mobile communication. The government took several initiatives to speed their diffusion.

IT Clubs (ITCs)

Early pilot projects in 1997 with Century Kids Clubs and Technology Access Community Centers attracted mainly select groups of users (children under 15 and local professionals) and did not achieve the broad coverage and usage the Ministry wished to promote. The Ministry launched the IT Club initiative, designed to promote awareness and affordable access to ICTs to all Egyptian citizens including those in underprivileged areas. The main aim is to make Internet accessible and affordable (at around 20 cents/hour) to people with little or no prior experience with ITs. Under the initiative, MCIT selects and supports hosting organizations. Host organizations can apply to become an IT Club by preparing a detailed business plan outlining the services it will offer and a budget to demonstrate its financial sustainability. Criteria for selecting a host organization are: MCIT provides the necessary equipment (computers, printers, LAN, Internet access, a server, as well as ten networked PCs, etc.) on a three year lease programme. Private sector partners provide space, infrastructure, utilities, furniture and security. If the IT Club is successful, it retains ownership of the equipment on lease maturity. If it is unsuccessful, the equipment returns to the Ministry for use elsewhere. A minimum performance of 50 per cent utilization is required from the host organization. If it is not successful in maintaining this utilization rate, it is either downsized or closed. The Clubs are building on existing foundations like community centres and organizations. At least 40 per cent of ITCs have been established in youth centres, sport clubs, cultural centres, schools, mosques, churches and NGOs in every governorate. This allows benefits from an established customer base and existing demand and reduces start-up costs, especially premises, an important barrier in communities with limited resources. By December 2003, 618 IT Clubs had been established, 191 of them were established in 2003 alone, with the Ministry planning to achieve one thousand clubs by 2005. Other benefits include the development of ICT skills and the creation of jobs for university graduates who can join the “Training of Trainers” programme to become instructors.

Internet Accessibility

To increase Internet use, the Ministry abolished Internet subscription charges in January 2002, enabling anyone, without an ISP subscription, to access the Internet by dialing a local number that costs the same as a local call, making Internet prices in Egypt among the lowest in the world at LE 1.25 or $0.2 per hour (details of this initiatives are in the Annex ). The connection fees are shared between TE and private ISPs in a joint venture. The ISPs lease access ports from TE’s fixed-lines, they buy a dial-up number for the consumers to use to go online. The fees are split 70% to the ISP and the rest to TE, many ISPs found the profit margins to be low. Due to the successful implementation of a free Internet strategy in early-2002, Egypt now has the largest Internet market in Africa with almost four million users by the end of 2004. However, Internet penetration is still relatively low and the vast majority of users are located in urban areas; up to 80% of subscribers live in Cairo. The sector is highly competitive with around 180 Internet and data communication providers and many small and virtual ISPs. At present over 4 million people are estimated to be online. ISP density is at 474,727 inhabitants per ISP in 2004. Spurred by infrastructure based competition and government initiatives, Egypt's Internet accounts are projected, by the Arab Advisors Group, to grow at a Compound Annual Growth Rate (CAGR) of 23.7% between 2003 and 2008. We project Internet accounts to grow from around 647,000 by end of 2003 % to reach around 1.9 million by end of 2008, a penetration rate of 2.5%. Internet users are expected to grow from 1.94 million by end of 2003 to reach 5.6 million by end of 2008, a penetration rate of 7.4%. Egypt's subscription-free Internet service has generated revenues amounting to US$ 66.2 million between January 2002 and August 2004.

IT Hardware Diffusion Initiatives

The PC For Every Home initiative - launched by MCIT and implemented by Telecom Egypt and 18 private sector computer manufacturers in a public-private partnership. Computer parts are imported and assembled in Egypt. The plan is to increase PC ownership from 1.5 million (a big number of which is owned by businesses) to 6.5 million within 5 years. The idea is to offer affordable, internet-enabled family computer on installments, with no collateral and no deposit required - the only guarantee needed being a fixed telephone line. Since the launch of the project late in 2002, the initiative proved growth in both the local assembly and software industry as well. So far, over 300,000 PCs were purchased through the initiative in 2002. The depreciation of the Egyptian pound in the last 3-4 years has made the purchase of these locally assembled PCs not as cheap for the average Egyptian as was initially foreseen by MCIT. Laptop for Every Professional - this project provides an opportunity for professionals to purchase laptops with reasonable terms. Fujitsu, Siemens, HP, IBM and Toshiba are participating in the first phase of the project, which was launched in July 2003, and are offering their products through the existing 15 distributors already participating in the PC for Every Home initiative.