Internet on the Nile : Egypt Case Study

Home , Internet in Egypt, Nilesat, Telecom Egypt

March 2001 This report was drafted by Tim Kelly and Guy Girardet of the ITU and Magda Ismail, formerly of the Ministry of Communications and Information Technol- ogy, (MCIT) Egypt, and now working at the Centre for International Develop- ment, Harvard University, USA. The authors can be contacted, by email at [email protected], [email protected] and [email protected]. The report was edited by Michael Minges and Vanessa Gray. Valuable comments were provided by Amr Abdel Kader of the Ministry of Communications and Information Technology.

This report was based on a research visit to Egypt carried out in May 2000. A list of interviewees is contained in Annex 1 to this report. The authors would like to thank all those who contributed and commented on the report. This report is one of a series of six Internet diffusion case studies undertaken by the ITU during 2000. Other studies cover Bolivia, Hungary, Nepal, Singapore and Uganda. For more information, see the web site at www.itu.int/ti/casestudies. The opinions expressed in this report are those of the authors and do not necessarily reflect the views of the ITU or its membership or the government of Egypt.

ii Contents

1. Country background ...... 1 1.1 Overview...... 1 1.2 Demography ...... 1 1.3 Economy ...... 2 1.4 Human development...... 2 1.5 Politics ...... 3

2. Information and Communication Technology Sector ...... 5 2.1 Telecommunication sector ...... 5 2.2 Information Technology sector ...... 9 2.3 The Internet market ...... 11 2.4 Mass media ...... 17

3. Internet strategy and policy ...... 20 3.1 Role of incumbent telecommunications operator in Internet ..... 20 3.2 Pricing structure for Internet services ...... 20 3.3 Regulatory status of Internet ...... 22 3.4 IP Telephony ...... 23 3.5 Universal access...... 25 3.6 Content...... 26

4. National absorption of Information and Communication Technology ...... 29 4.1 Government ...... 29 4.2 Health ...... 30 4.3 Education ...... 31 4.4 Electronic Commerce ...... 36

5. Summary and Recommendations...... 42 5.1 State of the Internet in Egypt ...... 42 5.2 Recommendations ...... 43

Annex 1: List of Interviewees ...... 48 Annex 2: Framework dimensions ...... 49 Annex 3: Acronyms and Abbreviations ...... 51 Annex 4: Selected Egyptian Web sites...... 52 Annex 5: References...... 53

iii Figures

1.1 Map of Egypt ...... 1 2.1 Egypt's place in the Arab region ...... 6 2.2 Egypt's international traffic ...... 9 2.3 Internet users and ISP distribution in Egypt ...... 12 2.4 Internet Gateways ...... 16 3.1 ISP Dial-up tariffs ...... 21 5.1 State of the Internet in Egypt ...... 42

Tables

1.1 Human Development Indicators ...... 3 2.1 Leading Telecommunication Indicators ...... 10 2.2 Egyptian Internet Service Providers ...... 14 2.3 Egyptian daily newspapers with their own web site ...... 17 2.4 Mass media indicators ...... 18 3.2 Leased line pricing ...... 22 4.1 e-commerce costs in Egypt compared to other countries ...... 39 5.1 State of the Internet in Egypt compared to other economies .... 44

Boxes

2.1 Egypt's Information and Decision Support Centre (IDSC)...... 11 3.1 Premium rate services ...... 21 3.2 Telecom Egypt: If you can't beat them, join them ...... 24 3.3 Cairo's Internet Cafés ...... 26 4.1 Egypt's Government Sector Internet Pioneers ...... 30 4.2 CiraNet - Pharmaceutical Portal ...... 31 4.3 The next India? Egypt's software dream ...... 34 4.4 Tourism...... 40

iv 1. Country background

1. Country background

1.1 Overview lion.1 The latest population estimate, for 1999, is around 62 million. In ad- The Arab Republic of Egypt is located in dition there are some 2.8 million Egyp- northeast Africa. It is bordered by Libya tian citizens living abroad. It is on the west, Sudan on the south, the estimated that there are over 15 mil- Red Sea and Israel on the east and the lion people living in Cairo. Other large Mediterranean Sea on the north. With cities include Alexandria, Giza, Shubra an area of 1001450 square kilometers, el Kebma, and El Mahalla el Kubra. The the country is divided percentage of the population living in into two by the north flowing Nile River. The Figure 1.1: Map of Egypt capital and largest city is Cairo.

The roots of Egyptian history go back more than 6000 years to the beginning of settled life along the banks of the Nile. Egypt is considered one of the great civilizations of the past and its Pyramids are the oldest and only sur- viving example of the ancient wonders.

Both the Sinai Penin- sulathe only land bridge between Africa and Asiaand the Suez Canalthe short- est sea link between the Indian Ocean and the Mediterranean Seaare part of Egypt. As the most populated Source: The World Factbook. Arab state and with its proximity to Israel, Egypt plays an important role in Middle Eastern geopolitics. urban areas in 1999 was 45 per cent.2 Administratively, Egypt is divided into The estimated population growth is 26 governorates and eight geographi- 1.7 per cent.3 cal regions: Upper Egypt; Central Egypt; North Upper Egypt; Greater Cairo; the The Nile Valley and the Delta, which Canal Zone; the Delta; Alexandria and account for less than four per cent of Matrouh. the total area of the country, are the most densely populated parts of Egypt 1.2 Demography while over 95 per cent of Egypts land area is desert.4 Continued population Egypts last census in November 1996 growth represents an acute problem showed a total population of 59.3 mil- for Egypt. It is the most populated

1 Egypt Internet Case Study

country in the region and suffers from ployment at 8 per cent, and the labor high density on fertile lands and ac- force is growing at around 2.7 per cent celerated depletion of natural re- annually.9 sources.5 According to the Egyptian State Information Service, one of the The principal export commodities for fundamental goals of Egypts policy is the country include oil, agricultural to redistribute the population and to products (especially cotton and tex- make full use of the so far unexploited tiles), metal products and chemicals. areas and natural resources available. The estimated value of exports for Great attention is presently directed 1999 was US$ 4.5 billion. Major trade to the new cities with special empha- partners include the United States, the sis given to the master development European Union and Japan. The value plan of Sinai; an area with huge eco- of imports for 1999 amounted to nomic and strategic potential. 6 US$ 17 billion. The major import commodities are fuel, foods, and capital The major ethnic group in Egypt is the goods.10 Eastern Hamitic (Egyptians, Bedouins, and Berbers) forming 99 per cent of Tourism forms an important part of the population. The remaining one per Egypts export earnings. In Novem- cent is made up of people of Greek, ber 1997 the tourism industry faced a Nubian, Armenian, and other Euro- setback with the massacre of 58 tour- pean (primarily French and Italian) ists by Islamic militants in Luxor. While origin. While the majority of the Egyp- the government took immediate steps tians are Sunni Muslims, there is a to alleviate the situation, there was a minor faction that practices Coptic 19 per cent fall in income earned from Christianity. Egypts official language tourism, from US$ 3.64 billion in is Arabic. English, and to a lesser ex- 1996-97 to US$ 2.94 billion a year tent French, are understood by most later.11 of the educated class and many official government web sites exist in The governments recent commit- English.7 ment to liberalizing the public sector has produced mixed results. 1.3 Economy While there was an initial surge in privatization in 1996, most public en- In 1991, following problems of low terprises remain overstaffed with productivity, economic stagnation, huge debts and poor quality services. high population growth and inflation, However, the governments zeal to Egypt undertook several Interna- privatize is evident in the way it is tional Monetary Fund (IMF)-sup- promoting privatization in some sec- ported structural reform measures. tors, especially the cement and bank- The results of these reforms have ing industry12 . been slow in coming, yet the economy has shown visible signs of 1.4 Human development improvement, manifested by lower inflation rates (down from 21 per cent Egypt ranks 119th out of 174 in the in 1992 to 4 per cent in 1999) and United Nations Development Pro- increasing GDP growth per annum (up grammes (UNDP) Human Develop- from 1.9 per cent in 1992 to 5.5 per ment Index (HDI), placing the county cent in 1999). Egypts GDP was in the medium human development US$ 89.1 billion in 1999, or US$ 1440 category. The HDI is composed of a per capita. This categorizes Egypt as basket of indicators including life ex- a middle-income country. Egypts to- pectancy at birth, adult literacy, school tal debt, as a percentage of GDP, has enrolment and GDP per capita. Egypt decreased from 87.9 per cent in 1989 is also one of the countries that have to 33.6 per cent in 1999.8 made the fastest progress in human development, starting with a low HDI In 1999, agriculture accounted for of 0.432 in 1975 to a medium HDI of 17.4 per cent of GDP, industry for 0.616 in 1997.13 Table 1.1 shows 31.5, and services for 51 per cent. Egypts Human Development ranking Current official estimates place unem- compared to other Arab nations.

2 1. Country background

Table 1.1: Human Development Indicators

Egypt compared to selected Arab economies, 1998

Adult Combined primary, Life literacy rate secondary and GDP per expectancy (% age 15 tertiary gross capita HDI at birth (years) and above) enrolment ratio (%) (PPP US$) Rank Economy 1998 1998 1998 1998

36 Kuwait 76.1 80.9 58 25314 92 Jordan 70.4 88.6 69 3347 101 Tunisia 69.8 68.7 72 5'404 119 Egypt 66.7 53.7 74 3041 124 Morocco 67.0 47.1 50 3305 143 Sudan 55.4 55.7 34 1394 148 Yemen 58.5 44.1 49 719 Arab States 66.0 59.7 60 4140

Source: United Nations Development Programme .

In 1996, 90.4 per cent of the house- til his death in 1970, despite the de- holds were provided with electricity14 feat against Israel in the June 1967 but only 20 per cent of these house- war. Vice-President Anwar el-Sadat holds had telephones. Both figures succeeded Nasser as president. In an are likely to affect the usage of, and attempt to improve relations with Is- access to, the Internet. rael and the United States, President Sadat involved his country in vari- 1.5 Politics ous negotiations with Israel and signed the Camp David accords of Egypts recent political history can 1978. The accords provided for a re- be traced back to 1922 when it turn of the Sinai, which had been gained independence from Great captured by the Israelis in 1967, to Britain. Remnants of British control Egypt in May 1982. While his at- over the country came to an end fol- tempts to reconcile with Israel made lowing the Second World War. In Sadat a hero in Europe and the 1954, Gamal Abdel Nasser, leader of United States, it alienated Egypt the then ruling military junta, came from other Arab states. On Octo- to power. When the US and the World ber 6, 1981, Sadat was assassinated Bank withdrew financial support for by members of a group of religious the building of the Aswan High Dam extremists.15 in mid-1956, Nasser nationalized the privately owned Suez Canal Com- Sadats successor, Hosni Mubarak, pany. This move resulted in invasion was overwhelmingly approved in a by Britain, France, and Israel. There national referendum on October 24, was almost universal condemnation 1981. With the end of President and the invading forces were com- Sadats rule, there was a gradual lib- pelled to leave. Egypt regained con- eralization of the political climate in trol of the canal and the Suez crisis Egyptcitizens began to experience made Nasser the hero of the Arab more freedom of expression, and the world.15 judiciary has demonstrated greater independence from the executive Nasser held a strong following and legislative branches of parlia- amongst the Egyptian population un- ment.

3 Egypt Internet Case Study

1 United Nations Statistics Division: http://www.un.org/Depts/unsd/demog/dybcd-pub. 2 International Planned Parenthood Federation, Country Profiles, Egypt: http://www.ippf.org/regions/countries/egy/index.htm#SOCIO. 3 World Bank, Egypt Country Data Profile (data for 1999): http://devdata.worldbank.org/external/dgprofile.asp?rmdk=82608&w=0&L=E. 4 Egypt State Information Service, Yearbook 1999: http://www.us.sis.gov.eg/public/yearbook99/html/land02.htm. 5 International Planned Parenthood Federation, Country Profiles, Egypt: http://www.ippf.org/regions/countries/egy/. 6 Egypt State Information Service, Overview, Land and People: http://www.us.sis.gov.eg/egyptinf/overview/html/ovwland.htm. 7 See, for example, http://www.presidency.gov.eg/index.html or http://www.us.sis.gov.eg. 8 World Bank, Egypt, Country Brief: http://www.worldbank.org/html/extdr/regions.htm. 9 World Bank, Egypt at a Glance, and Egpyt Country Brief: http://www.worldbank.org/data/countrydata/aag/egy_aag.pdf. 10 World Bank, Egypt at a Glance: http://www.worldbank.org/data/countrydata/aag/egy_aag.pdf. 11 Financial Times. Country Briefs. ECONOMIC OVERVIEW: Not yet on the global stage: http://www.ft.com/ftsurveys/country/sc2aa6.htm. 12 Financial Times. Country Briefs. Privatization: A Testing Time: http://www.ft.com/ftsurveys/country/sc2ae6.htm. 13 UNDP, Human Development Report 1999: http://www.undp.org/hdro/Backmatter1.pdf. 14 UNDP. Egypt Human Development Report 1997-98. Available at http://www.undp.org.eg/HDR/HDR-97-98/default.htm. 15 The Library of Congress Country Studies, Egypt, Chapter 1, Historical setting: http://lcweb2.loc.gov/frd/cs/egtoc.html.

4 2. Information and Communication Technology Sector

2. Information and Communication Technology Sector

2.1 Telecommunication sector The same law that established Telecom Egypt, Law 19 of March 26 2.1.1 History and Current 1998, also created the Telecommu- Status nication Regulatory Authority (TRA) as an independent regulator. It is ex- The structure of the telecommuni- pected that TRAs independence will cations industry in Egypt represents be confirmed by a new law, currently a relatively traditional structure in being drafted. The sector was fur- that the incumbent operator, Telecom ther revamped in 1999, when re- Egypt, remains the dominant player. sponsibility for telecommunications, But there are signs of change. The which had previously rested with the current reform process positions Ministry of Transport and Communi- Egypt as one of the more forward- cations, was transferred to a newly- looking of the Arab countries. In par- created Ministry of Communications ticular, the process of corporatization and Information Technology (MCIT). of the incumbent has already taken The MCIT is championing an ener- place, the separation of regulatory getic approach to development of the and operational functions is sector. The new law, expected to be underway, and the privatization of passed in early 2001, should put the the incumbent is at an advanced sector onto a sounder, more com- stage of planning. However, the most mercial footing and establish a time- dramatic changes in the sector have table for further liberalization and the been brought about by the introduc- licensing of additional players. tion of privatization and competition in mobile communications and 2.1.2 Public Telecommunica- Internet service provision. tion Operators

Telecommunications in Egypt began Telecom Egypt is by far the biggest as long ago as 1854, when telegraph company in the Egyptian telecom services were introduced in Alexan- market. It is also the biggest tel- dria. For much of the ensuing period ecommunications company in the telecommunications in Egypt were Arab region, as measured by number conducted by the government. In of fixed telephone lines in operation. 1982, the Arab Republic of Egypt At the start of the year 2000, Telecommunication Organization Telecom Egypt had some 5.7 million (ARENTO) was created. ARENTO was subscribers and a teledensity of just given a mandate for the development under seven lines per 100 inhabit- of telecommunications and a full mo- ants (see Figure 2.1). This places it nopoly on domestic and international behind the Gulf States but margin- traffic. In April 1998, the process of ally ahead of Algeria and Morocco. corporatization progressed a step By mid 2000, following the comple- further with the creation of Telecom tion of the Egypt 2000 project, this Egypt (TE) as a joint-stock company, had increased to seven million lines inheriting ARENTOs monopoly. How- with a teledensity of 8.5. ever, in the same year, competition was introduced in mobile services While the growth rate in the number with two new companies entering the of main telephone lines over the last market. Subsequently, other tel- five years has been 13 per cent per ecommunication services were year, this has not been sufficient to deregulated and the de facto com- keep ahead of demand. The waiting petition in the Internet market was list has remained fairly static, at also endorsed. around 1.2 million for most of the

5 Egypt Internet Case Study

Figure 2.1: Egypt's place in the Arab region

Top five Arab countries by number of fixed telephone lines, 1999 and by teledensity (telephone lines per 100 inhabitants), 1994-99

)L[HGÃWHOHSKRQHÃOLQHV 7HOHGHQVLW\ÃÃTop five Arab States 5.10 7RSÃILYHÃ$UDEÃ6WDWHVÃ 20 Million Saudi 3.62 Arabia 15

Syria 1.84 10 1.60 1.60 Eg y p t Morocco 5 Algeria

Egypt Saudi Morocco Syria Algeria 0 Arabia 1994 1995 1996 1997 1998 1999

Note: In left hand diagram, statistics relate to year-ending 1999. In right-hand chart, figures for Egypt relate to financial year ending 30 June (i.e., 1999 = 30 June 1999). Source: ITU World Telecommunication Indicators Database.

1990s. At current rates of growth, goals (for instance, the current goal this converts to an average waiting is to reach a teledensity of 12 lines time of just over two years but the per 100 by the year 2002). goal is to increase growth to 1 million lines annually in the early years There are some signs of change. For of the 21st Century. It is likely that instance, Telecom Egypt has now set the phenomenal growth of mobile up a marketing department, recog- communications will also reduce the nizing the need to sell its services level of the waiting list for fixed serv- and market its brand in an increas- ice. ingly competitive market. It has also established a new web site Telecom Egypt enjoys a monopoly and, over all fixed-line domestic voice as a precursor to privatization, is- services in the country and, crucially, sued its first annual report in Eng- over international transmission and lish for the year ending June 2000. voice services. For consumers, ac- Similarly, it has established a New cess to international services was, Services department and is actively until recently, quite restricted, re- pursuing joint ventures with other quiring separate registration and au- companies in fields such as data thorization. Previously, access to communications (with EGYNet) and international telephone service re- Internet Service Provision (with quired a deposit of L.E. 100 (US$ 29) GegaNet). It has also recently be- but even since this has been discon- come more innovative in its approach tinued, only 148000 subscribers are to Internet access and IP Telephony. registered to make direct-dialed In June 2000 a new head of the com- overseas calls. pany was appointed, Akeel Beshir, an entrepreneur who previously man- The management style of Telecom aged Giza Systems, a hardware and Egypt was, until recently, more typi- software company. The planned pri- cal of a government bureaucracy vatization of Telecom Egypt is likely than a private company. It used a to bring about further changes. How- five-year planning cycle to establish ever, this has now been postponed

6 2. Information and Communication Technology Sector

due to unfavorable market condi- 71.25 per cent of the company fol- tions. lowing its purchase, in January 2001, of the quarter share owned by Orascom Telecom is emerging as the Motorola. The remaining 28.85 per second major player in the country. cent is owned by a consortium com- It is part of a consortium that owns prising Orascom Telecom, and local MobiNil, the countrys leading cellu- companies Systel and Raouf Abdel lar operator, which bought Telecom Messih (Alcatels local agent). By Egypts GSM network in May 1998. acquiring Telecom Egypts assets, In February 2000, Orascom acquired MobiNil was able to gain a flying start an 80 per cent stake in Telecel In- in the market, which it has main- ternational, a company with holdings tained to date. The company is now in cellular operators in numerous Af- valued at US$ 2 billion on the Cairo rican countries. This was the largest Stock Exchange. ever acquisition by an Egyptian company. In total, Orascom now has Misrfone (www.clickgsm.com) is the stakes in 18 GSM licences, including second cellular operator and oper- operators in Jordan, Syria and ates under the brand name of Yemen. Orascom is also a share- ClickGSM. It won the tender for the holder in Menatel (with France second mobile cellular license in Telecom), which has a franchise March 1998, and launched service in (from Telecom Egypt) for the instal- November 1998. Like MobiNil, it paid lation of a minimum of 20000 pub- US$ 515 million for a 15-year license. lic payphones over a ten-year period. Within its first year of service it Orascom is also the biggest player gained some 332000 subscribers. As in the Internet Service provision of September 2000, it had market. In April 2000, it acquired the 790000 subscribers, of which 85 per remaining 59 per cent it did not own cent are on pre-paid schemes. of InTouch, the countrys largest ISP Misrfones owners are international and combined this with Link Egypt, mobile operators Vodafone (60 per another leading ISP of which it ac- cent) and MSI Cellular, a subsidiary quired 50 per cent in July 1999. of French water company, CGSAT, as Orascom Telecom is a subsidiary of well as local companies Banque du Orascom Technologies, which, in Caire, EFG-Hermes and the Alkan turn, is one of three companies run Group. by Orascom, a company founded in 1950 and privately owned by the In addition to Telecom Egypt and the Sawiris family. It employs some two mobile operators, there are a 20000 people in Egypt alone. Via number of other industry players that the Technologies subsidiary, received licences either from Telecom Orascom is involved in computer Egypt (before corporatization) or hardware, software and services. It from the MCIT. One characteristic of acts as a local agent for Hewlett- these players is that Telecom Egypt Packard and Lucent (a major sup- invariably has a shareholding in plier to Telecom Egypt). Orascom them. Thus, it may be more appro- is also involved in tourism and con- priate to regard them as franchisee struction. operations of Telecom Egypt rather than as competitors. These licensed MobiNil (www.mobinil.com.eg) is the operators include: leading cellular operator in Egypt. By year-end 2000, it had amassed some · Two payphone operators, 1.2 million subscribers, giving it Menatel and NilePhone; around 55 per cent of the market. At the time it was created, through · Two operators of Very Small Ap- the purchase of Telecom Egypts GSM erture Terminals (VSAT) net- operations in 1998, it had only works, Local Alcan Trading 83500 subscribers. MobiNils princi- Group and NEC (these licences pal owner is Orange (majority-owned were issued directly by Telecom by France Telecom) which holds Egypt);

7 Egypt Internet Case Study

· Nile Online, a newly-established · A business group that prepares Internet infrastructure com- marketing and pricing recom- pany. mendations for existing and new services. The private sector will · EGYNet, a data communications help bring these new services company. to the end users. An example of a popular initiative, which 2.1.3 Regulation and policy- came out of this groups work, making is the premium rate Internet ac- The newly created Ministry of Com- cess scheme, discussed in the munications and Information next chapter. On-going work Technology has oversight over the includes defining a licensing telecommunications and Internet framework and developing busi- sectors. An independent regulator, ness models. the Telecommunications Regulatory Authority (TRA) was established by · The fourth group is concerned presidential decree 101 on April 4th, with human resource develop- 1998. The TRA has experienced ment in telecommunications some difficulties in establishing an and IT. identity independent of Telecom Egypt. Its legal status should be The new law foresees a progressive clarified by the new telecommunica- liberalization of the sector. One positions law. A draft version of the Law tive move in this direction is that, as (as at 3 June 2000) foresees that the of 1st October 2000, the price of in- TRA would be responsible for pub- ternational leased lines used for lishing a list of licensed operators and Internet has been cut by 30 per cent defining the conditions under which and the price for premium rate licences may be issued. The TRA will Internet access has been cut by also be responsible for ensuring the 50 per cent. However, the overall optimal use of the spectrum. policy direction remains controver- sial and the situation is subject to The government has embarked upon clarification. One example of this un- a program of progressive market lib- certainty is the situation concerning eralization. Initial steps towards lib- the licensing of a third mobile net- eralization in mobile and Internet work. Telecom Egypt says it already services should also be extended to has a license; other operators say basic services and the Internet back- that no new licences will be awarded bone market. Impetus for this move before 2003. came from the new Minister of Com- munications and Information Techno- 2.1.4 Network logy, and a relatively democratic and Egypts telecommunications network inclusive process has been adopted for has been modernized and extended elaboration of the new law. over the last few years and almost 100 per cent of subscriber lines are In December 1999, four groups were now digital. The long distance dial- established to draft sector reform ling network now reaches some changes: 254 cities. ISDN service was introduced in Cairo in 1998 and there is · A legal group to draft a new Tel- also a nationwide X.25 network ecommunication Act for Egypt. (Egypt Net) with a capacity of The draft law was prepared by 3500 ports. June 2000 and recommended a stronger level of private sector International connectivity is assured participation. by the SEA-ME-WE 1, 2 and 3 submarine cables that link the country to · A technical group, aimed at as- other countries across the Mediterra- sessing the current infrastruc- nean as well as to South East Asia and ture and the development of an Western Europe. Egypt is also linked integrated master plan. to the FLAG cable that follows a simi-

8 2. Information and Communication Technology Sector

lar route. At a regional level, there are around ten per cent per year (Fig- fibre optic links to Syria and Lebanon ure 2.2, right chart). The effects of (ALITAR-BRITAR) and to Italy and the decline in tourist traffic in 1997 Greece. Satellite communications are and 1998 are evident in the reduced also used extensively and there are rate of growth in these years. How- some nine earth stations in operation. ever, higher growth returned Egypt has one of the worlds largest in 1999. This is likely to have been networks of educational television via further stimulated by the cuts in in- satellite. ternational tariffs, of up to 40 per cent on longer-distance routes, 2.1.5 International Service which were made in 2000.

Telecom Egypt has a monopoly over 2.1.6 Market Indicators international traffic relations. Dur- ing 1999, the total volume of inter- The main telecommunication indica- national telephone traffic (incoming tors for Egypt are summarized in Ta- and outgoing) was 681 million min- ble 2.1. utes, an increase of 13 per cent over the previous year. There are almost 2.2 Information Technology four times as many minutes of incom- sector ing traffic as outgoing. However, this is not true for all routes. As Figure 2.2, Egypts Information and Communi- (left chart) shows, while the ratio be- cation Technology (ICT) sector is one tween incoming to outgoing is ten to of the largest in the Arab region. One one for traffic with the United States source puts the value of the ICT mar- and six to one for Saudi Arabia, the ket at US$ 2.4 billion in 1998, with two biggest traffic partners, Egypt ac- IT (computer services, equipment tually sends more traffic than it re- and software) accounting for around ceives to correspondents such as Italy, twenty per cent.1 Software is a par- Lebanon and Canada. ticular bright spot, estimated to be growing by 20 per cent a year. Egypt Over the last five years, Egypts in- is starting to emerge as a regional ternational traffic has grown by software hub with some 80 per cent

Figure 2.2: Egypt's international traffic

Major partners, incoming and outgoing traffic, 1999, and traffic trends, 1995-1999, in thousands of minutes

(J\SW VÃPDMRUÃWUDIILFÃSDUWQHUV thousand minutes (J\SW VÃLQWHUQDWLRQDOÃWUDIILF thousand minutes Italy 600 UK Incoming c alls ,QFRPLQJÃPLQXWHV 2XWJRLQJ 500 Kuw ait PLQXWHV 400 Germany 300 UA E 200 Outgoing calls USA 100 S. Arabia 0 -200’000 -150’000 -100’000 -50’000 0 50’000 1995 1996 1997 1998 1999

Source: ITU/TeleGeography Inc. Direction of Traffic Database.

9 Egypt Internet Case Study

Table 2.1: Leading Telecommunication Indicators

Year ending 30.06

Unit 1995 1996 1997 1998 1999 2000

TELEPHONE NETWORK

Main telephone lines 000s 2'716 3'025 3'453 3'97 4'686 5'484 -per 100 inhabitants 4.6 5.0 5.5 6.0 7.0 8.5 -% digital % 67 72 75 82 86 96 Waiting list (1) 000s 1'300 1'300 1'278 1'363 1'294 1'300 Public payphones (2) 4'734 5'046 4'946 4'976 10'316 21'987 MOBILE SERVICES Mobile cellular subscribers 000s 7 7 65 91 481 1'448 -per 100 inhabitants 0.01 0.01 0.10 0.14 0.72 2.28 Radio paging subscribers (3) 23'000 37'000 36'335 27'307 28'770 26'971 TRAFFIC International outgoing telephone traffic (minutes)(4) 10x6 100 113 119 127 149 ... International incoming telephone traffic (minute) (4) 10x6 376 417 451 475 532 ... STAFF Telecommunication staff (5) 52'291 51'750 51'981 54'015 55'568 ... Main telephone lines per employee 52 58 66 74 84 ... REVENUE Telecommunication revenues (US$) (6) 10x6 640 774 874 1'055 1'121 ... Telecommunication revenues as a % of GDP % 1.06 1.15 1.16 1.28 1.26 ...

Notes: (1) 1995-96, 2000: ITU estimates. (2) From 1999, including Menatel and Nile Telecom. (3) 1995: ITU estimate. (4) Year ending 31.12. (5) Telecom Egypt. (6) Telecom Egypt. Source: ITU.

of software exports destined to other of 2.1 per 100 inhabitants. Practi- Arab countries (primarily Saudi Ara- cally all computers and parts are bia). Duties on imported software are imported with a significant portion relatively high (23 per cent), perhaps reassembled locally. The value of to protect the nascent industry. There computers and peripherals imported are a growing number of IT special- in 1999 was US$ 328 million, up ists and IT organizations. In addition, some 20 per cent over the previous Egypt has played host to leading IT year. Import taxes are a relatively exhibitions and conferences such as low five per cent. Egypt has emerged Gitex and Comdex. According to gov- as the largest Arab PC market with ernment figures, there are some sales of 270000 in 1999. The mar- 700 high tech companies in Egypt. ket price for a PC purchased in Egypt is not significantly higher than the 2.2.1 Computer market world market price, though products are sometimes later to market due There are some 1.4 million personal to delays in introducing Arabic lan- computers in Egypt for a penetration guage operating systems. Because

10 2. Information and Communication Technology Sector

of the lack of credit card facilities, it (www.frcu.eun.eg) in October 1993, is relatively rare for users to pur- via an initial 9.6 kbit/s link to the Eu- chase computers directly from ropean Academic and Research Net- abroad. As a result, computer im- work (EARN). However, according to porting companies have been able to Dr. Tarek Kamel, co-founder and Sec- hang on to the market and to de- retary of the Internet Society of Egypt velop subsidiary business lines in (ISE), awareness of Information Tech- software, turnkey services and sys- nology in the country predates the tems integration. One of the most Internet by about 10 years.2 successful is Raya, a subsidiary of the Triangle Group, which recently A landmark event that raised aware- underwent an International Public ness within government circles of the Offering (IPO) valuing the company potential of the Internet was the In- at several billion US dollars. ternational Conference on Population and Development held in Cairo, from 2.3 The Internet market 5-13 September 1994 and attended by some 15000 people.3 One of the 2.3.1 History of Internet in conditions for hosting the meeting Egypt was that the Egyptian Government As in many parts of the world, the had to provide a 64 kbit/s connec- Internet in Egypt has developed out- tion to the Internet for the duration side the formal telecommunication of the conference. This link, estab- sector. What makes the history of lished via a leased line to Montpellier, Internet in Egypt unique is the de- France, cost the Egyptian Govern- gree of government support from ment US$ 450000 for nine days. early on. The Egyptian Cabinet In- formation and Decision Support Following this event, the government Center (IDSC) (http://www.highway. decided to allow the IDSC and the idsc.gov.eg/aaindex.htm) (see Regional Information Technology and Box 2.1) has played a key role in Software Engineering Centre raising awareness about the (RITSEC) (http://www.ritsec. Internet, provided a forum for dia- com.eg) to offer free Internet ac- logue between the ISPs and the in- counts to government agencies, cumbent telecom operator (Telecom NGOs, and private companies as part Egypt) and played an active role in of a long-term government funded encouraging the diffusion of Internet campaign. The objective of this ini- services outside of Cairo. tiative was to promote awareness of the Internet and boost the number The first use of the Internet can be of users in sectors such as trade, traced to a link started by the Egyp- manufacturing, health care, tourism tian Universities Network and social services.

Box 2.1: Egypt's Information and Decision Support Centre (IDSC)

The Information and Decision Support Centre (IDSC) · support the establishment of decision support started as a think tank for government ministries and centers in different ministries and make more eventually evolved into an instrument for building- efficient and effective use of the available in- up a national information infrastructure. The mission formation resources. of IDSC is to provide information and decision support services to the government for socio-economic · initiate, encourage and support informatics planning and to improve the countrys managerial and projects that could accelerate managerial and technological infrastructure through enhancing the technological development of Egyptian min- decision making process. To realize such an ambi- istries, sectors and governorates. tious mission, the objectives of IDSC are to: · participate in international cooperation activi- · develop information and decision support sys- ties in the areas of information and decision tems for top policy-makers in Egypt. support.

11 Egypt Internet Case Study

Another landmark event was the de- and reducing leased-line prices and cision taken in December 1995 by removing sales tax on Internet serv- the Chairman of Telecom Egypt to es- ices. The Internet Society helps run tablish an open-door policy for com- the annual CAINET conference and mercial Internet services. Telecom exhibition in Cairo and, in March Egypt stated that it would establish 2000, hosted a major meeting of the Internet gateways and allow 12 ISPs Internet Corporation for Assigned to begin operating. Names and Numbers (ICANN).

In October 1996 Internet diffusion 2.3.2 Current Market Structure suffered a setback when the Egyp- As shown by Figure 2.3 (left chart), tian press ran a series of negative in March 2000, Egypt had the fourth articles, claiming that the Internet largest number of Internet users in was being used for the spread of sub- the Arab region, behind the United versive literature. This led to de- Arab Emirates, Saudi Arabia and mands from government circles that Lebanon. There are some 60 Internet an official body be nominated to Service Providers in Egypt, catering regulate the Internet in Egypt. The to roughly 55000 subscribers. It is best candidate, it was decided, would generally estimated that there are be a local chapter of the Internet some four users for each commer- Society. The Internet Society of cial account, which would put the Egypt (www.ise.org.eg) was formed number of Internet users at with the understanding that it would about 220000. Estimates vary, act as the regulatory body for though, and the London-based Al- Internet matters. Formed under law Sharq Al-Awsat newspaper has esti- No. 32 of 1994, the Egyptian ISOC mated the number of Internet users Chapter is managed by a Board of in Egypt at 400000.4 As the popu- Directors. It includes 15 members lation of Egypt is around 60 million, elected by the General Assembly of Internet penetration is less than the Society. The Internet Society has 0.4% and the vast majority of these been instrumental in establishing a users reside in Cairo. code of ethics for Internet use; defining ground rules for commercial As Figure 2.3 (right chart) shows, the relationships between ISPs and majority of ISPs are located in Cairo, Telecom Egypt; establishing policies with only one or two ISPs serving for IDSC with respect to services of- most other towns. This means that fered to government departments although there is considerable com-

Figure 2.3: Internet users and ISP distribution in Egypt

Estimated Internet users in Arab region, 000s, March 2000 and distribution of ISPs in Egypt

UAE Cairo KSA Alexandria Lebanon Ghar biyah Egypt El Menia Tunisia Bani Sweif Kuwait Duqhaliya Jordan (VWLPDWHGÃQXPEHUÃRIÃ Port Said Morocc Aswan Oman ,QWHUQHWÃXVHUVÃLQÃWKHÃ As yut Luxor Qatar $UDEÃUHJLRQÃ V Ã Buhaira 'LVWULEXWLRQÃRIÃ,63VÃLQÃ(J\SW Bahrain Manofya Syria Sinai Yemen Dumiat Sudan Suhag Libya Fayoum 0 100 200 300 400 500 0 102030

Source: ITU adapted from Internet Arab World Magazine (left chart) and IDSC (right chart).

12 2. Information and Communication Technology Sector

petition available in Cairo, citizens cluding dial-up (both post and pre- living outside the capital often have paid), leased-line and web develop- only one ISP to choose from. IDSC ment and it reported some is actively trying to combat this trend 70 corporate customers in a range by offering substantial discounts on of industries (i.e., oil companies, fi- bandwidth to ISPs establishing op- nancial services, media, etc.) with erations outside of Cairo and Alex- leased line capacity ranging from andria. 28.8 to 256 kbit/s. Web development accounted for an increasing percent- The largest ISPs are LINKdotNET, age of revenue and the development GegaNet and Internet Egypt. As ISPs team increased from two to 30 in the are generally reluctant to divulge the last three years. Link Egypt was the number of subscribers, an accurate first ISP to offer flat rate pricing. picture is hard to come by. However, Initial pricing of US$ 42 per month it is safe to say that these three ISPs dropped to US$ 22 per month. After hold the lions share of the market. the merger, in December 2000, the In view of the relatively low ratio of monthly flat rate offered by subscribers for each ISP, the market LINKdotNET was around US$ 12. appears ripe for consolidation. In- deed, LINKdotNET was Mohamed El-Nawawy founded the formed from the merger other company involved in the of Link Egypt and merger, InTouch Communications, in InTouch in June 2000.5 January 1992. Although the Internet LINKdotNET has was not available in Egypt at that 230 staff serving some time, InTouch offered a variety of 100000 users and hun- data services via X.25 data networks, dreds of corporate cus- and positioned itself as the Egyptian tomers. This makes CompuServe. It also introduced an LINKdotNET the largest X.400 messaging service for a flat ISP in Egypt and, poten- US$ 50 monthly fee. In June 1993, tially one of the largest InTouch became the first Egyptian ISPs in the Arab region. company to be registered in the .com Orascom, the large in- top-level domain and from 1995 Khaled Bichara, Former Managing Director of Link vestment company, started to offer full Internet dial-up Egypt, recently appointed owns 75 per cent of access. InTouch had two interna- President and CEO of LINKdotNET. The re- tional gateways to Europe, a terres- LinkdotNet. maining 25 per cent are trial circuit via IDSC, as well as a owned by Link Egypt. receive-only satellite circuit. Its total capacity was unknown but Before the merger, Link Egypt was one InTouch claimed that it was in the of the countrys largest ISPs, report- order of multiple E1s. ing over 7000 subscribers. It was started by Khaled Bichara in March 1996 together with 11 other college graduates with an initial seed capital of LE one million (US$ 300000). The company employed 130 staff, all under 30 years old. According to Mr. Bichara, in its last four years, Link Egypt saw growth rates of 100 per cent per annum. It also opened offices in Dubai and offered web development and e-commerce solutions within the United Arab Emirates, Saudi Arabia and Kuwait. Link Egypt also had PoPs in Cairo and Alexandria but 90 per cent of its sub- Mohamed El-Nawawy, Former scribers were based in Cairo. Link Director of InTouch Egypt offered a range of services in-

13 Egypt Internet Case Study

Table 2.2: Egyptian Internet Service Providers

May 2000

ISP Web Page City

ALEXCOMM (MADENTEX) www.alexcomm.net Alexandria ALEXNET www.alexnet.com.eg Alexandria DATA EXPRESS www.dataxprs.com.eg Alexandria TECHNOMINA www.tecmina.com Alexandria INTERNET ALEXANDRIA www.inetalex.ie-eg.com Alexandria GLOBALNET www.globalnet.com.eg Alexandria CNS www.cns-egypt.com Alexandria ACCESS www.access.com.eg Cairo COMMNET GROUP www.commnet.com.eg Cairo DATUM www.datum.com.eg Cairo EGYPT ONLINE www.egyptonline.com Cairo EIS www.eis.com.eg Cairo GEGANET www.gega.net Cairo IEC www.iec.egnet.net Cairo INFINITY www.infinity.com.eg Cairo LINKdotNET www.link.net Cairo MIST www.mist-net.com Cairo PAN ARAB COMPUTER CENTER www.pacc.com.eg Cairo RITE www.rite.com Cairo CLICK www.click.com.eg Cairo S.C.C. www.scc.com.eg Cairo ETSNET www.etsnet.com.eg Cairo STARNET www.starnet.com.eg Cairo THE WAY OUT www.wayout.net Cairo WORLDNET www.worldnet.com.eg Cairo INTERNET EGYPT www.ie-eg.com Cairo SHAHD www.shahd.com Cairo ONLINE www.online.com.eg Cairo PURENET www.purenet.com.eg Cairo NIEREC www.nierec.com.eg Cairo MENA NET www.menanet.net Cairo SOFICOM www.soficom.com.eg Cairo/Alex BEC www.bec.com.eg Port Said SINAINET www.sinainet.com.eg Sinai CONSULTANT INFORMATION CENTER www.cic.com.eg Tanta INTERNET ISMAILIA www.ie-eg.com Ismailia INTERNET SIXTH of OCTOBER www.ie-eg.com 6th of October INTERNET HURGHADA www.ie-eg.com Hurghada

Source: PC Week Egypt.

14 2. Information and Communication Technology Sector

The Egyptian German Telecommuni- 2.3.3 Bandwidth cation Industries (EGTI) is a local company established as a joint ven- The IDSC is the main provider of nature between Telecom Egypt and tional Internet bandwidth in Egypt. Germanys Siemens in 1990. Today According to Mostafa Abdel Wahed, Telecom Egypt, which used to be the Director of Communications, IDSC/ biggest shareholder, has a rather RITSEC accounts for 70 per cent of symbolic role, given that most of its national IP traffic with an estimated shares have been sold to Siemens. 14 Mbit/s of total capacity. Telecom EGTIs main activities are concen- Egypt and GegaNet handle the re- trated on production, installation, maining 30 per cent. By pooling band- and commissioning of public digital width, IDSC is able to offer cheaper telephone exchanges. EGTI also in- tariffs than those available from stalls new digital switches that can Telecom Egypt for both dial-up and function as a point-of-presence (PoP) wholesale connectivity. However, ca- for Internet Service Providers. EGTI pacity is often oversold, leading to formed GegaNet (www.gega.net) as congestion and poor quality of serv- an ISP in 1996 and Telecom Egypt ice. IDSC/RITSEC has installed digital and GegaNet jointly own Commnet, multiplexers in the public switches, another Internet service Provider enabling the creation of a digital net- (www.commnet.com.eg). GegaNet work in Egypt. The network, managed offers a range of dial-up, ISDN and by Telecom Egypt, provides a high- leased line services including pre- speed distribution network for more paid, post-paid and premium serv- than 50 nodes throughout the country. ices. GegaNet currently has 6000 dial-up subscribers and pro- Bandwidth to the academic sector is vides leased-line services to some provided via the Egyptian Universi- 30 corporations. Leased line connec- ties Network (EUN) (www.frcu. tivity ranges from 64-512 kbit/s. On eun.eg). EUN has been connected to average there are 10-15 users per the Internet since October 1993, ini- leased line. GegaNet has a T1 tially through a 64 kbit/s link. Sub- (1.5 Mbit/s) outbound bandwidth via sequent upgrades brought speeds to Teleglobe, costing US$ 15000 per 256 kbit/s in October 1996 and month and six Mbit/s incoming band- 512 kbit/s in December 1997. Further width via iSkySat, costing capacity was added in April 1999, US $30000 per month. bringing speeds up to 2 Mbit/s. EUN connects major Egyptian uni- The merger of Link Egypt and versities to the Internet. In addition, InTouch has moved Internet Egypt it connects approximately 90 sites (www.internetegypt.com) to third from the academic, research and place in the ISP ranking. Claiming governmental sector and it provides 4000 individual and 105 corporate accounts for some 4000 dial-up sub- subscribers, Internet Egypt offers a scribers comprised of university staff range of services including dial-up, and postgraduate students. premium and leased line. It also gen- erates revenues from web hosting A newcomer on the Egyptian Internet and web development. A dial-up sub- scene is Nile Online, which was re- scription costs US$ 224 a year or cently granted a license to operate a US$ 18 a month. Internet Egypt has commercial Internet backbone in a direct terrestrial T1 (1.5 Mbit/s) Egypt.6 Nile Online is owned by link to the United States via Cable & Telecom Egypt and other investors. Wireless and an incoming E1 satellite connection (two Mbit/s). Internet Total international Internet bandwidth Egypt has also been authorized by was 26 Mbit/s at October 1999.7 Ac- RIPE (www.ripe.net) to act as regis- cess to the international gateway is trar for Egypt and the Middle East. controlled by Telecom Egypt, which is Internet Egypt operates seven planning a massive increase in capac- Internet cafés in Cairo that also dou- ity.8 However GegaNet and Internet ble as support and outlet centers. Egypt have direct access to the US

15 Egypt Internet Case Study

backbone via Cable and Wireless and of bandwidth providers offering MCI. It is anticipated that available inbound links via satellite. One is bandwidth will increase significantly iSkySat that provides a bundled so- as a result of two forthcoming de- lution, offering ISPs a one-stop shop- velopments: ping resource for satellite space segment, gateway transmission · Nile Online is expecting to es- services and a dedicated connection tablish an IP backbone network to the Internet backbone. iSkySat domestically that will provide an uses a hybrid combination of satel- additional 45 Mbit/s of band- lite and terrestrial connection, ena- width initially. bling the less bandwidth intensive outbound request to travel over the · A new submarine cable across terrestrial circuit and routes the more the Mediterranean, Nautilus 1 bandwidth intensive return traffic over (MN1), will be put into place a simplex satellite connection. Con- during 2001. The bandwidth ca- figuration ratios are typically 4:1 pacity 3.84 Terabits per second (inbound vs. outbound). The connec- can theoretically transport tion can be configured in such a way 45 million phone calls simulta- as to allow time sensitive applica- neously or 300 hours per sections, such as chat, audio, etc. to be ond of digital video. However, it routed via the terrestrial network is likely that most of this band- while less time sensitive applications width will remain unused until (e.g., email and web traffic), are demand rises. routed over the simplex satellite circuit. This 4:1 network configuration Although Telecom Egypt still holds a is optimized for Egyptian users wish- monopoly on the terrestrial gateway ing to browse web sites located in to the Internet, there are a number North America. However, the asym-

Figure 2.4: Internet Gateways

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(J\SWÃ7HOHFRP(J\SWÃ7HOHFRP *DWHZD\VÃIRU*DWHZD\VÃIRU $UHQWR $UHQWR ,QGLYLGXDOÃ,63,QGLYLGXDOÃ,63

Ã*DWHZD\VÃIRUÃWKHÃ*DWHZD\VÃIRUÃWKH *RYHUQPHQWDOÃ6HFWRU*RYHUQPHQWDOÃ6HFWRU (GXFDWLRQDOÃ6HFWRUÃDWÃ)5&8(GXFDWLRQDOÃ6HFWRUÃDWÃ)5&8 *DWHZD\Ã,'6&5,76(&*DWHZD\Ã,'6&5,76(& &RPPHUFLDOÃ6HFWRU&RPPHUFLDOÃ6HFWRU 0LQLVWU\ÃRIÃ(GXFDWLRQÃ$8&0LQLVWU\ÃRIÃ(GXFDWLRQÃ$8& *DWHZD\Ã,'6&5,76(&*DWHZD\Ã,'6&5,76(&

(167,1(7 0LQLVWULHV0LQLVWULHV *RYHUQRUDWHV*RYHUQRUDWHV (167,1(7 DQGÃRWKHUÃ5HVHDUFKDQGÃRWKHUÃ5HVHDUFK &HQWHUV Ã,63VÃ,63V &HQWHUV *RYHUQPHQWDO*RYHUQPHQWDO 0LOLWDU\0LOLWDU\ 2UJDQL]DWLRQV2UJDQL]DWLRQV )RUFHV)RUFHV 8QLYHUVLWLHV8QLYHUVLWLHV (81 (81 6FKRROV6FKRROV &RPPHUFLDO&RPPHUFLDO ,QGLYLGXDOV,QGLYLGXDOV 1*2V1*2V 6HFWRU6HFWRU

Source: Internet Society of Egypt.

16 2. Information and Communication Technology Sector

metric nature of this connection Egyptian civilization, history, culture, means that overseas users generally economics and politics. It also offers have much slower access to Egyptian online audio and video transmissions. web sites. This can be disadvanta- geous for Egyptian based sites that 2.4.1 Print hope to attract international visitors (e.g., for tourism). All newspapers and periodicals operate under governmental supervi- Telecom Egypts recent announcement sion and partial government about building a new Internet Access ownership, as do all publishing Network should bring some significant houses. While Egypt is open to the changes.9 Telecom Egypt plans to idea of the new information age in transform Egypts existing telephony an increasingly global society, it is infrastructure from circuit-switched to also concerned about proctecting its a packet-based voice and data net- cultural and national identity. The work. In the interim, the new system government is vigilant about the re- will separate data from voice traffic, percussions of sensitive or social providing faster service for Internet content, given the conservative Is- users. lamic mores and Egypts location in a volatile region. 2.4 Mass media In 1996 Egypt had 17 daily newspa- Egypt has the strongest journalistic pers, with a total daily circulation of traditions amongst Middle Eastern 2.4 million copies. This means that countries, with important film, televi- roughly one in every 17 adults reads sion, and sound industries, as well as a daily newspaper.10 Al-Ahram, the the largest publishing sector in the semi-official daily in Egypt, has a cir- Arab world (See Table 2.4). culation of nearly one million and is also available online. Other major The major information organization in Arab language newspapers include Egypt is the State Information Serv- Al-Youm, Al Gomhouria, El Shaab, ice (SIS), which, as part of the Minis- Al Akhbar, Al Mesaa, Al Gomhuriyyah, try of Information, is the public Al Wafd, and Al Alam Al Youm. Ta- information organ and press agency ble 2.3 shows the dailies that are of the government. SIS has 42 For- available online. eign Press and Information Offices sta- tioned around the world. It launched 2.4.2 Radio its own web site in September 1996 (www.sis.gov. eg), which is a major Radio gained influence as a means source of information online. Besides of communication during President offering information on current affairs, Gamal Abdel Nassers rule, when it it also provides facts and data on was used as a tool for pan-Arab broadcasting. Egypts radio Table 2.3: Egyptian daily broadcasting system is the big- newspapers with their own web site gest in the Arab world, trans- mitting programs in Arabic, October 2000 English, French, and other languages.11 There are 11 radio stations servicing the entire Newspaper URL country. In 1997 there were an Al-Ahram www.ahram.org.eg estimated 20.5 million radio receivers, which represents Al-Youm www.alalamalyoum.com 317 radios per 1000 inhabit- El Shaab www.elshaab.com ants. Al Gomhouria www.eltahrir.net 2.4.3 Television

Source: ITU. TV transmission, which is under government control, began in

17 Egypt Internet Case Study

Table 2.4: Mass media indicators

,QGLFDWRUÃ 9DOXHÃ 6RXUFHÃ

1XPEHUÃRIÃGDLO\ÃQHZVSDSHUVÃ Ã 81(6&2Ã6WDWLVWLFDOÃ

1XPEHUÃRIÃUDGLRÃUHFHLYHUVÃ ÃPLOOLRQÃ 81(6&2Ã6WDWLVWLFDOÃ

7HOHYLVLRQÃKRXVHKROGVÃ ÃPLOOLRQÃ (XURSHDQÃ$XGLRYLVXDOÃ2EVHUYDWRU\Ã +RXVHKROGVÃZLWKÃDÃWHOHYLVLRQÃ È Ã ÈÃ 6WDWLVWLFDOÃ

1XPEHUÃRIÃVDWHOOLWHÃGLVKHVÃ ÃWKRXVDQGÃ (XURSHDQÃ$XGLRYLVXDOÃ2EVHUYDWRU\Ã $VÃÈÃRIÃ79ÃKRXVHKROGVÃ ÈÃ 6WDWLVWLFDOÃ

1960 with just one channel but has vide an additional six channels in its now expanded to include two nation- coverage.14 wide channels that cover the whole of Egypt and six regional channels In 1992 the government of Egypt that each cover an array of started a project called Media Produc- governorates.12 In 1999 there were tion City (MPC), which was completed an estimated 11.6 million television in 1997. MPC plans to produce some households, which means that about 8500 hours of TV programs and 84 per cent of all households have a 100 films per year. MPC, which is also TV set. Egypt does not have cable known as the Hollywood of the East, television. Pay television is available is the biggest media production center in the form of encrypted over-the- in the Middle East and is equipped for air transmission with 46000 sub- cartoon production, sound recording, scribers at March 2000. Satellite is editing, dubbing, and television and the most popular source of video filming.15 Egypt is interested in multichannel television with an esti- possessing up-to-date media produc- mated 877000 dishes. Almost all tion facilities in order to expand and Egyptians watch TV regularly.13 improve its national media output, and to introduce Egyptian and Arab spe- Egypts first satellite, Nilesat 101, an cialized TV channels. According to one audio-video communication satellite, source, Egypt, whose population of was launched in 1998 and covers the around 64 million is more than dou- whole country, as well as other parts ble that of any other Arab country, of the Arab region and some neigh- hopes Nilesat and the media zone will bouring countries, such as Turkey help it regain its once-dominant role and Iran. The success of Nilesat 101 in the Arab media industry, challenged (www.nilesat.com.eg) has led to the in the past decade by proliferating launch of a second satellite, Arab satellite stations funded by Gulf Nilesat 102. While Nilesat 101 has money. 16 Egypts broadcast media am- 18 channels, of which 12 are already bitions point to the countrys potential in use, Nilesat 102, which was as an Internet content provider and in- launched in August 2000, will pro- formation hub within the Arab region.

18 2. Information and Communication Technology Sector

1 Other parts of the ICT sector include telecommunication equipment and services. This data and other in the section come from European Information Technology Observatory 99. EITO. Frankfurt. www.eito.com. 2 For more on the early years of the Internet in Egypt see Tarek Kamel. Internet Commercialization in Egypt: A Country Model. Internet Society 1997 Conference Proceedings. 3 See the web page for the United Nations International Conference on Population and Development: www.iisd.ca:80/hGET /linkages/cairo.html. 4 Reuter, Work like an Egyptian, November 14, 2000 5 LinkdotNet. Link Egypt merges with InTouch To Form LINKdotNET. Press Release. 19 June 2000. www.link.net/docs/link_Media.htm. 6 The backbone will supposedly have a capacity of 210 Mbit/s to serve up to five million subscribers. See Khalid Hassan. Egypt Building 210-Mbit/s Connection to Become Internet Gateway for Region. DIT News. 10 August 2000. www.ditnet.co.ae/Itnews/newsaug2000/53.html. 7 See email entitled Update on Local Exchange Point in Egypt / Internet Update on the Network Startup Research Centre web site at: www.nsrc.org/db/lookup/operation=lookup-report/ID=939058779810:489020354/fromPage=EG. 8 For example, Telecom Egypt signed an agreement in July 2000 to increase capacity on the FLAG undersea fibre optic network to 155 Mbit/s. See Flag Telecom. Growing Internet Demand Leads Telecom Egypt to Purchase Increased Capacity from Flag Telecom Between Alexandria and New York. News Release. 27 July 2000. www.flag.bm/index_e1.htm. 9 Ericsson. Telecom Egypt selects Ericsson to build Internet Access Network. Press Release. 6 December 2000. www.ericsson.com/press/20001206-0009.html. 10 The term adult here applies to those Egyptians that are 15 years or older. Approximately 65 per cent of the total population is 15 years or older, see: www.un.org/Depts/unsd/social/youth.htm. Newspaper circulation data are from the UNESCO Statistical Yearbook 1999, Section: Daily newspapers: unescostat.unesco.org/statsen/statistics/yearbook/cult.htm. 11 Arab Net: www.arab.net/egypt/culture/et_media.html. 12 Egypt State Information Service (SIS): www.us.sis.gov.eg/egyptinf/overview/html/ovwinfo.htm. 13 European Audiovisual Observatory. Statistical Yearbook 2000. See also, US Department of State. Country Commercial Guide 2000, Egypt. www.state.gov/www/about_state/business/com_guides/2000/nea/egypt_CCG2000.pdf. 14 Document INFO/13-E, presented by Salah Hamza, Head of Engineering, Nilesat Co., at the ITU Preparatory Meeting of the Arab Region for the World Telecommunication Development Conference, Alexandria, Egypt, October 2000. See also: Egypt State Information Service (SIS), Yearbook 1999, Information, www.us.sis.gov.eg/public/yearbook98/html/lcinf1.htm. 15 Egypt State Information Service (SIS), www.us.sis.gov.eg/public/yearbook98/html/lcinf1.htm. 16 Arabia.com. Taboo-breaking Arab broadcaster to set up in Egypt. April 18, 2000, www.arabia.com/article/0,1690,Life|18463,00.html.

19 Egypt Internet Case Study

3. Internet strategy and policy

3.1 Role of incumbent ing joint ventures with other compa- telecommunications nies in fields such as data communi- operator in Internet cations and Internet Service Provision through a franchise model. Although Telecom Egypt (www.tele comegypt.com.eg) holds a monopoly 3.2 Pricing structure for in most areas of telecommunications Internet services in Egypt, it is not perceived as being a major player in the Internet. How- Internet Service Providers in Egypt of- ever, this is misleading. Telecom Egypt fer a range of dial-up and leased line (TE) is the sole provider of the do- services charged at either a flat rate, mestic and international connectivity hourly, or even per minute basis. and also has shareholdings in several These services are offered on both pre ISPs. The reason that Telecom Egypt or post paid basis. For dial-up tariffs, is not perceived as being involved in telephone usage charges may be ap- the Internet is because it has not as- plicable. A number of free calls units sociated its own brand name with (6 minutes each) are allowed per year many Internet services, preferring to (1600 for residential users and work via franchisees, and does not 300 for businesses). Once these calls provide national Internet peering. are used, users are charged However, it is likely to do so in the ten piastres (2.9 US cents) per near future. 6 minute unit. A so-called premium rate service was launched in Decem- In contrast with other countries, where ber 1999 where users pay a higher competition in Internet services al- telephone usage charge, but no ISP lowed new market entrants to estab- access charge (see Box 3.1). However lish their own international gateways, this rate results in charges that are Telecom Egypt has retained its mo- actually higher except for users where nopoly. Even though it owns the en- there is no local ISP (see Figure 3.1, tire backbone network, TE was slow left chart). Egyptian dial-up Internet in responding to the promise of the tariffs fall in the mid-range of those Internet. Corporatization in 1998 did charged in other Arab countries (see not lead to any immediate changes Figure 3.1, right chart). Several com- although the companys recent deci- panies are contemplating launching sion to improve its existing telephony free Internet access. Users would not infrastructure to provide faster and pay a subscription fee but only the better Internet access for its end-us- regular local telephone rates. This ers, shows TEs increasing interest in would most likely have a strong im- expanding its addressable market for pact on the markets pricing struc- new revenue generation opportunities. ture.1

With regards to the ISP market, There are a variety of prices for high- Telecom Egypt decided to establish an speed access to the Internet via leased open-door policy for commercial lines depending on whether the cus- Internet services in 1995 and it es- tomer is a direct client of Telecom tablished private and public Internet Egypt, an ISP, or a client of an ISP. gateways and allowed 12 ISPs to be- One limitation is that digital leased gin operating. Today, there are more lines and ISDN are not available on than 60 ISPs. Telecom Egypt, recog- all exchanges. Also, none of the ISPs nizing the need to sell its services and publish their leased line prices. market its brand in an increasingly Telecom Egypt provides digital leased competitive market, is actively purs- lines ranging from 9.6 kbit/s -

20 3. Internet strategy and policy

Figure 3.1: ISP Dial-up tariffs

Various Internet dial-up plans within Egypt and selected Arab States, December 2000, US$/month

ÃKRXUVÃGLDOXSÃ,QWHUQHWÃDFFHVVÃ(J\SW ÃKRXUVÃGLDOXSÃ,QWHUQHWÃDFFHVV 40 45 7HOHSKRQHÃFKDUJH 40 ,63ÃFKDUJH 30 35 30 20 7HOHSKRQHÃFKDUJH 25 ,63ÃFKDUJH 20 10 15 10 0 Flat rate 10 hours pre- 10 hours 10 hours 5 paid ’premium’ ’premium’ off- 0 peak peak Jordan Morocco Bahrain Egypt Tunisia Qatar UAE

Source: ITU adapted from ISP data.

Box 3.1: Premium rate services

Premium Rate Services were introduced in Egypt charged on a per minute basis. Telecom Egypt in December 1999, following months of exten- collects the revenue from the subscriber and sive discussions between Internet Service Pro- shares 50 per cent of this with the ISP. The viders and Telecom Egypt.2 The scheme is now subscriber is charged 20 piastres (5.7 US cents) open to all ISPs. Each ISP is allocated a 900- a minute for peak usage and 15 piastres access number by Telecom Egypt. A subscriber (4.3 US cents) a minute for off-peak use. The dialing the 900 number is routed to the ISP via premium service generated revenues in excess Telecom Egypts intelligent network and is of US$ 600000 in March 2000.

Box Figure 3.1: Doing things differently

Revenues from premium rate Internet services, in thousands of US dollars per month, and an example of advertising

700 ISPs 600 Telecom Egypt 500

400

300

200

100

0 Dec-99 Jan-00 Feb-00 Mar-00

Source: Telecom Egypt, ITU Egypt case study research.

21 Egypt Internet Case Study

Table 3.2: Leased domestic lines and international connec- line pricing tivity from IDSC.4 The idea is that it is more efficient to pool resources and Prices per month of Telecom Egypt purchase connectivity in bulk to lower digital leased lines and ISDN, costs. However, three ISPs have an ex- December 2000 emption from this requirement and have varying degrees of international connec- Ã'LJLWDOÃOHDVHGÃOLQHVÃ tivity. There are no foreign equity limits /(Ã 86ÇÃ for ISPs but currently, only one, GegaNet, is partially foreign owned. ÃÃNELWVÃ Ã ÇÃ Ã Ã ÇÃ There is a local exchange located at Ã Ã ÇÃ IDSC. It connects the four gateway operators in Egypt (IDSC/RITSEC, EUN, Ã Ã ÇÃ Internet Egypt and GegaNet) and pro- Ã Ã Ç Ã vides a peering service for national traf- Ã,6'1Ã%5,Ã Ã ÇÃ fic. In addition, EUN operates a local Internet exchange for the educational Source: ITU adapted from sector. Telecom Egypt. 3.3.2 Top Level Domain Name

512 kbit/s. It also provides Basic Rate The Supreme Council of Universities is Interface ISDN connections. Pricing for the official administrator for Egypts top- Telecom Egypts high speed access is level domain name (.EG).5 As in many shown in Table 3.2. GegaNet provides other countries, second level domains ISDN Internet access at a significant are used (and required) of which there mark-up over conventional dial-up tar- are seven: .com.eg (for business), iffs. For example, GegaNets conven- .net.eg (for ISPs), .eun.eg (for the tional flat rate monthly dial-up tariff is Egyptian Universities Network), .edu.eg LE 105 whereas it charges LE 185 for (for other academic institutions), .sci.eg ISDN dial-up. (for scientific organizations), .gov.eg (for government) and .org.eg (for non- profit organizations). 3.3 Regulatory status of Internet Responsibility for registering domains is split between EUN and IDSC. EUN is Responsibility for Internet policy and responsible for .eg.eun, .eg.edu, and regulation in Egypt is carried out by a .eg.sci while IDSC is responsible for reg- number of organizations including MCIT, istering the .eg.gov, .eg.com and IDSC, ISE and even the incumbent tel- .eg.org domains. It is not clear who is ecommunication operator, Telecom responsible for .eg.net. In order to Egypt. As a result, there is some confu- register in the .eg.gov domain, the sion about exact duties and responsi- entity should be within governmen- bilities. tal sector (e.g., ministries, military, governorates). Requirement for reg- 3.3.1 Internet Service Provider istration within the .eg.com domain is (ISP) Market that the entity should be a private sector organization in Egypt. Other condi- In theory, the Internet service provi- tions also apply. The name server must sion market is open and there are no be physically located in Egypt. In order license requirements or fees in order to to protect copyrights, the domain name become an ISP. In reality there are a must be related to the entity name and number of approvals that must be ob- should not be a generic name. The name tained. For example, ISPs must obtain must also start with alphanumeric char- a concession agreement from IDSC in acters and cannot be longer than order to operate.3 Furthermore, ISPs 22 characters (including the .com.eg, are generally not allowed to provide etc.). Neither the IDSC nor the EUN their own infrastructure but must lease charge for registering a domain.

22 3. Internet strategy and policy

IDSC has devolved registration of viders, but TEs contractual agreements .eg.com names to ISPs who charge dif- with ISPs restrict the use of acquired ferent fees.6 Egyptonline, for example, bandwidth to the provision of Internet charges LE 400 (US$ 115) for the first data and text services only, not real- year and LE 300 for every following year. time voice. End-users may make inter- A domain name registration with national calls over the Internet, for Commnet (Telecom Egypts ISP), how- instance from a PC. However, Internet ever, costs only LE 150 (US$ 43) per Service Providers may not advertise year. voice over IP services. ISPs are not li- able for voice over IP traffic that passes There are no national statistics online through their access points. Telecom on the number of hosts, domains or web Egypt monitors ISP traffic and if a com- servers in use in Egypt. The .EG top- pany is discovered to be providing IP level domain name is captured by in- Telephony over TEs infrastructure, this ternational host counts. For example, company may be closed down and the the Internet Software Consortium listed owner put in prison. International calls 5422 hosts and 269 sub-domains un- over IP may be terminated at a rate as der .EG in their July 2000 survey. Curi- low as three cents/minute, which is ously, RIPE found only 2191 .EG hosts much cheaper than the current Inter- in a December 2000 survey. In a Feb- national tariff charged by Telecom Egypt ruary 1999 survey, Netcraft found over fixed lines (slightly less than 593 web servers using the .EG domain. US$ 1). Nevertheless, TE has under- Egypt ranks fifth in its number of hosts gone tremendous efforts to liberalize the compared to other Arab nations. On a per telecom market. It reduced the tariffs capita basis, Egypt is one of the lowest on international telephony several times ranking Arab countries. This suggests that during 2000, particularly on routes to many sites in Egypt are not using the .EG the United States. domain name. Indeed, Telecom Egypt struck an agreement in March 2000 to Since incoming international phone traf- become a registrar for generic top-level fic is one of the largest sources of rev- domain names (e.g., .com).7 enue for Telecom Egypt, the next telecom law will continue to give full 3.4 IP Telephony control to Telecom Egypt for international telephony for the forthcoming five IP Telephony is currently a closed mar- years. As the percentage of profit for ket in Egypt. Telecom Egypt is the sole international telephony decreases vis à provider of IP Telephony services in the vis revenue from mobile services, cur- country (see Box 3.2). There is no local rent access providers for Internet and IP Telephony within a city or data services could be possible candi- Governorate since the price of a tel- dates for distribution of voice over IP ephone call would be incurred in addi- services. Telecom Egypt has an agree- tion to the Internet subscription fee or ment to deal with two operating carri- tariff, making the service unattractive. ers to provide voice through a direct However, IP Telephony may be a po- link (using IP protocol) with the US, but tential solution for long distance phone not through the public Internet. This is calls from one Governorate to another, a PC to Phone service. This service is both for personal use or interoffice com- provided at its web site (www. munications. However, the total charge support.idsc.gov.eg) at a rate of the incurred, including the Internet tariff equivalent of 20 cents/minute. However, and the price of the local phone call, customer support for this service has should be cheaper than the long dis- not reached competitive levels. TE tance tariff to justify this activity. could possibly redistribute its services to ISPs for reselling of IP telephony, International IP Telephony is a some- yet TE is still weary of venturing and what tolerated activity in Egypt (though losing control over this market. Phone provision is restricted to Telecom to phone services are not provided as Egypt). There is no explicit law that of yet although TE is planning to pro- restricts the provision of IP Telephony vide poor quality services at off-peak services through Internet service pro- times (8:00 p.m. - 8:00 a.m.).8

23 Egypt Internet Case Study

Box 3.2: Telecom Egypt: If you can't beat them, join them

Ties between Egypt and the United States are sig- Telephony services. So Telecom Egypt decided if it nificant. There are over 100000 Egyptians living, cant beat IP Telephony it might has well join in. In working and studying in North America. At the same March 2000, it signed a deal with eGlobe of the US time, Egypt is the second largest recipient of US to market retail IP Telephony service. The press foreign assistance. Thus, there is considerable po- release for the agreement shows support from the tential for international telephone calling between highest levels, quoting Egyptian Minister of Com- the two destinations. While outgoing traffic from munications and Information Technology, Dr Ahmed Egypt to the United States has increased modestly Nazif, as saying I am pleased to offer the newest since the mid 1990s, incoming traffic to Egypt in- of technologies allowing our people to more effi- creased dramatically, at least until 1998, when it ciently and economically access the global market- stabilized (see Figure below). In 1998, US carriers place. 10 started routing their traffic via alternative routes, which resulted in lower settlement payments, in- Telecom Egypt is offering the new IP Telephony serv- cluding refile via third countries, routing via leaky ice at 80 piastres (21.6 US cents) per minute for PBXs and, increasingly, via the Internet. calls to the United States compared to the published rate for PSTN calls of 3.50 Egyptian pounds The reason that US carriers have been shifting traffic (US$0.95) per minute. In order to promote the serv- away from the direct route is due to mounting set- ice, Telecom Egypt is offering ISPs and other tlement payments to Egypt, which reached some resellers a 10 per cent discount. Even so, Telecom US$ 80 million in 1999. Egypt has been reducing Egypt reports that the majority of traffic is incom- its settlement rate with the United States by an ing rather than outgoing, suggesting that it is be- average of 12 per cent per year, and has agreed to ing less successful than it had hoped in marketing come down to US benchmark rates on schedule. the service nationally. One reason may be that the This is not enough to placate US carriers, nor to off web site it established to market the service, set the increasing effects of asymmetry in the traf- www.commegypt.net, is regularly congested and fic balance. It is estimated that around 30 million works only sporadically. minutes of traffic from the United States was di- verted in 1998. It is not possible to know what pro- Telecom Egypts rate of 21.6 US cents per minute portion of this went via the Internet, but it is thought for IP Telephony is considerably below the official to be a considerable amount. settlement rate with the United States, which is currently 35 US cents per minute. It is not known net2phone, an IP Telephony company, is known to what Telecom Egypt is receiving for incoming calls have been particularly active in Egypt. Early in 2000, terminated over its IP Telephony service. The main Telecom Egypt convinced the government to block point is that, at least Telecom Egypt is now gaining net2phones traffic.9 This has had mixed success some revenue from what would otherwise be lost since users can try any of another some dozen IP traffic.

Box Figure 3.2: Traffic and tariff trends between Egypt and the United States

International telephone traffic, in millions of minutes, 1993-99, and tariffs in US$ per minute, 1996-2000

,QWHUQDWLRQDOÃWHOHSKRQHÃWUDIIILFÃbetween US and Egypt ,QWHUQDWLRQDOÃWHOHSKRQHÃWDULIIVÃbetween Egypt and US Millions of minutes 3HUÃPLQXWHÃUS$ 140 2.50 120 86ÃWRÃ(J\SWÃÃÃÃÃÃÃ 2.00 3HDN 100 80 1.50 2II3HDN 60 1.00 6HWWOHPHQW 40 (J\SWÃWRÃ86 20 0.50 ,3 0 0.00 1993 1994 1995 1996 1997 1998 1999 1996 1997 1998 1999 2000

Source: ITU World Telecommunication Indicators Database.

24 3. Internet strategy and policy

3.5 Universal access two cities, Zagazig and Tenth of Ramadan in the Governorate of 3.5.1 Community telecenters Sharkeya, about 80 kilometres north of If Internet is to move outside the pre- Cairo.12 A preliminary evaluation was serve of a well-educated, wealthy carried out in late March 2000. The elite, then public access facilities are evaluation revealed that during the first critically important. In this respect year of operation, the TACCs generated there are a number of private and considerable interest and attracted public sector initiatives underway to some 3000 users, most of whom have help create awareness and access to no other access to the Internet. It also the Internet. revealed that the sites have become important sources of local content, gen- The vast majority of Internet users in erating over one thousand pages in just Egypt are based in urban areas. Cog- one year. The centers have targeted nizant of this, the MCIT has launched lower income groups and also users a program to bring Internet to citizens from surrounding rural areas. in all 26 governorates. There are plans to establish some 300 community There are also plans to use the Egyp- telecenters over the next two years. tian network of post offices to provide Each telecenter will use existing fa- public access to the Internet and to cilities wherever possible and will be kick start e-commerce. The Egypt Post equipped with ten PCs, each con- Office has a network of 3500 outlets nected to the Internet via a local area based all over the country, many of network. The telecenters will provide which are adjacent to local telephone training, technical advice and aim to exchanges. The postal network is al- attract involvement and interest from ready used to distribute 1.5 million diverse sectors of the economy. All pensions and salaries, and MCIT hopes telecenters will be established with to extend this to provide a wide range local partners. Some of these will fo- of online e-commerce and e-govern- cus on specific user groups and appli- ment services. This might include re- cations. Wherever possible, newal of drivers license, electronic telecenters will use existing infrastruc- transfer of funds, payment of bills, ture, such as libraries, clubs, schools, distribution of pension, access to gov- universities, etc.11 ernment information, etc.

The United Nations Development Pro- Another possible location for mass gram, along with other partners, has access to the Internet are Egyptian launched three telecenters in Egypt. libraries. There are around 1300 li- These Technology Access Community braries of which over 100 are on the Centers (TACC) (www.tacc.egnet.net) library network and more than 30 have became operational in March 1999 in a web site

3.5.2 21st Century Kids Com- puter Clubs A further initiative to extend access is the 21st Century Kids Clubs, which were established in 1997 in order to prepare Egyptian children for the next millennium. They provide Internet connectivity, software libraries and qualified trainers to help children utilize IT. The project is a good example of the collaboration between the government, NGOs and the private sector, with the government pro- The Governor of Sharkeya visiting viding the training, NGOs hosting one of the TACCs in Zagazig City the clubs and the private sector donating funds for the equipment

25 Egypt Internet Case Study

Box 3.3: Cairo's Internet Cafés

Cairo boasts some 60 Internet cafés several of which are run by ISPs such as Internet Egypt or St@rnet. Typical costs are about US$ 2.8 for one hour. Ac- cording to the owner of St@rNet, the location of Internet cafés is critical. The most successful Internet cafés are situated in districts with high tourist and student traffic that, on a typical day, might draw 50 customers. Tourists account for 60 per cent of the users and students for a further 25 per cent.

No license is required to operate an Internet Café. As the average age of Egyptian customers is generally between 12 and 20, disposable income is limited. Mainly located in affluent sections of Cairo, most Internet Cafés provide some kind of training and other value-added services. The most popular applications used are Web browsing and chat.

and the software. The clubs are man- in their contract with Telecom Egypt. aged by an NGO, Integrated Care So- Thus it may be argued that Telecom ciety www.ics.org.eg, whose Egypt has effectively outsourced this Chairperson is HE Mrs. Suzanne part of its universal service obligation. Mubarak, First Lady of Egypt. There are some 40 computer clubs in As part of the revision of the new tel- 17 governorates and the goal is to es- ecommunications law, it is likely that tablish over 1000 clubs by 2002. a universal service fund will be proposed. However, the details of this 3.5.3 Universal service in tele- fund, including who will run it, who communications will contribute and who will benefit, are still to be agreed. Until very recently, insofar as Telecom Egypt was fulfilling universal service 3.6 Content obligations, it was doing so through implicit cross-subsidies within its tar- Egypt could naturally be the sort of iff structure, in particular from profit- Arabic content and software develop- able long-distance and international ment hub in the region, like it has al- services to less profitable local access ways been for other industries, such and local call services. This has proved as the movie or TV industries. Ahmed relatively beneficial to Internet growth Nazif, Minister of Communications and in that low local call charges help to Information Technology promote more dial-up access. Egypt faces a conflict in confronting For other aspects of its universal serv- Internet content. On the one hand it ice obligation, Telecom Egypt has is sensitive about political and other taken an innovative approach. For the content that offends its values.13 On task of installing payphones, Telecom the other hand, a significant constraint Egypt has licensed two franchisees, to further Internet penetration in Menatel and Nile Phone. These opera- Egypt is availability of relevant con- tors receive no level of subsidy from tent. Rather than exclusively focusing Telecom Egypt, and are obliged to fol- on banning sites, the government, low Telecom Egypts pricing structure specifically the IDSC, has made con- but they are nevertheless obliged to siderable effort to develop content. run the payphones profitably and to It faces significant challenges in this bear any losses. They also face pen- activity having to do with a tradition alties if they fail to install the requi- of information poverty. As one inter- site number of payphones agreed on viewee stated: We are not an infor-

26 3. Internet strategy and policy

mation-based society. Furthermore, tals. Companies such as Bayt.com and there is a gut instinct in some sec- Minhina.com are competing to launch tors of the government that infor- portals providing information to local mation should be closely held by the citizens as well as the Egyptian state and then, if necessary, dissemi- diaspora. There has also been a rise nated to the general public in a sani- in specialized portals such as mar- tized format.14 riages (e.g., marriageegypt.com and afrah.com, meaning wedding). Egypts Information Highway project was launched by IDSC in 1995 to build Language is a barrier to the use of up home grown content. Pilot web the Internet for the majority of Egyp- sites were launched for culture, tour- tians who only understand Arabic. ism, health care, environment, edu- Progress is being made in this area cation, public services and local and there are now a number of Ara- government administration. Most of bic portals, such as Arabia.Com and these pilot projects were successful Naseej.Com. In addition, there is and some of them evolved into full- now software that provides English blown operations, such as TourismNet to Arabic web-based translation. For (www.tourism.egnet.net). The private example, Sakhr Software sector has recently been active in de- (www.tarjim.com.sa) recently an- veloping content. The year 2000 has nounced a service that translates witnessed the launch of several por- English web pages into Arabic.

27 Egypt Internet Case Study

1 Khaled Diab. Egypt gets first free access Internet portal. Total Telecom, 17 January 2001. . 2 In the Egyptian context, premium-rate Internet services are equivalent to so-called free Internet access elsewhere. Despite the fact that the premium rate is twice the price of a local call, it has nevertheless proved very popular. 3 IDSC listed 54 ISPs as being connected to it. See www.support.idsc.gov.eg/Isp/ISP-list.htm. 4 The price of national leased lines rented to ISPs were lowered in October 2000. See Log On Like an Egyptian. Wired News. 14 September 2000. www.wired.com/news/print/0,1294,38780,00.html. 5 For more on domain names, see ISEs Domain Registration web page at: http://www.ise.org.eg/domain.htm 6 A list of ISPs who perform registration services is available at the RIPE web site, Local Internet Registries offering service in Egypt at: info.ripe.net/ripencc/mem-services/general/indices/EG.html. 7 Network Solutions. Network Solutions and Telecom Egypt Team to Promote Domain Name Registrations in the Middle East and Africa. Press Release. 27 March 2000. www.nsol.com/news/2000/pr_20000327.html. 8 Eng Abdel Kawi, Director of Technical Affairs, Telecom Egypt. Tarek Kamel, Advisor to the Minister of CIT, Emad El Azhary, Consultant to Telecom Egypt and Khaled Bichara, CEO of LinkdotNet 9 One of the reasons put forth for the ban on Internet Telephony was the need to protect Telecom Egypts revenues to make the company more appealing to investors in the run up to its eventual privatisation. See Egypt: To Telecom Egypts glee, government cracks down on VoIP. Telecoms & Wireless Africa / Middle East (The Economist Intelligence Unit/Pyramid Research). 17 March 2000. 10 eGlobe. eGlobe Launches VoIP Service with Telecom Egypt. Press Release. 13 March 2000. 11 There are even plans to launch a boat telecenter that will float down the Nile. See American Chamber of Commerce. IT Flows to the Countryside. Business Monthly. 12 Tetiana Anderson. Egypts Cyber Cafes for the Poor. UNDP Choices. June 2000. www.undp.org/dpa/choices/2000/june/p22-23.htm. 13 As Tarek Kamel notes: The Egyptian society has its own conservative traditions. The indecent material on the Internet has triggered a lot of debates and controversy among society groups of different ages. See Kamel, Tarek. Internet Commercialization in Egypt: A Country Model. Internet Society 1997 Conference Proceedings. www.isoc.org/isoc/whatis/conferences/inet/97/proceedings/E6/E6_2.HTM. The Egyptian Internet Society, in its Code of Ethics, calls on members To accept responsibility in using and maintaining Internet service and to disclose promptly factors that might affect or conflict with the Egyptian traditional values, ethics, religion, or national welfare. www.ise.org.eg/ethics.htm. 14 Mintz, Steve. The Internet as a Tool for Egypts Economic Growth. October 1998. www.intlpros.com/Egypt%20Study.htm.

28 3. Internet strategy and policy

4. National absorption of Information and Communication Technology

4.1 Government e) Modernizing communication infrastructure; and, The 13th of September 1999 was a turning point in the Information and f) Creating a proper legislative en- Communication Technology (ICT) his- vironment. tory of Egypt. The first National Con- ference on the Promotion of The plan is based on partnership be- Technology and Information Technol- tween the public and the private sec- ogy, organized by the Cabinet Infor- tor. While the ministry intends to fund mation and Decision Support Centre core projects within the plan, other (IDSC), was used to launch a number projects will be funded through the of major ICT initiatives. The confer- private sector. Government spending ence was opened by President Hosni in support of the plan is forecast at LE Mubarak who reiterated Egypts firm 1.2 billion (US$ 338 million) between commitment to supporting technologi- 1999 and 2002. While this is a con- cal development, with emphasis on crete indication of government sup- ICT as a basis for national develop- port, it amounts to just 0.4 per cent ment.1 Achievements with respect to of total government expenditure. information technology were high- lighted, including: The Egyptian government accounts for roughly one third of the economy and · Establishment of government in- thus has a major impact on the coun- formation centers; trys development. Therefore IT use · Creation of national databases; within the government can both set · Supplying schools with comput- an example as well as improve gov- ers; ernment efficiency and the delivery of · Establishment of seven faculties public services. The IDSC has been and one center specialized in IT instrumental in developing information training. systems to assist policy-makers in various ministries. These efforts have, A month later, a new Ministry of Com- however, not permeated to lower lev- munications and Information Technol- els of government and there is a major ogy (MCIT) was formed. For the first need for government re-engineering to time in the history of Egypt, the IT adapt to IT and training of public em- community was to be represented by ployees. The new IT plan calls for the its own ministry. A National Plan for training of 20000 government work- ICT was issued in December 1999, ers a year over the next three years. with a special focus for the next five- year period on: 4.1.1 e-Government a) Promoting national demand for The IDSC has played a major role in information technology and de- providing government information veloping sector projects; online. Its Information Highway project was launched in 1995. Web b) Enhancing the software export sites were established for various sec- industry; tors such as tourism, health, culture, the environment and local govern- c) Developing human resources and ment. The project was very success- skills; ful and won several international awards.2 Some of these sites have d) Establishing international alli- been taken over by their respective ances; ministries and evolved to become rich

29 Egypt Internet Case Study

Box 4.1: Egypt's Government Sector Internet Pioneers

It is impossible to talk about the Internet in Egypt without reference to Hisham El Sherif and Tarek Kamel, both of whom have played key roles in increasing awareness and influencing government policy. Acting through forums such as the Ministry of Communications and Information Technology (MCIT), the Infor- mation and Decision Support Centre (IDSC) and the Internet Society of Egypt (ISE), these individuals have been instrumental in shaping Egypts Information Society.

Hisham El Sherif is co-founder Tarek Kamel is a member on the of the Regional Information Board of Trustees of the Internet Technology and Software Engi- Society and the co-founder and neering Centre (RITSEC) and Secretary of the Internet Soci- founder of IT Investment, which ety of Egypt. Kamel founded the has pioneered the development Communications Department at of IT usage in the African re- the IDSC. He managed the main gion in financial and on-line Egyptian Internet gateway, services. El Sherif is also the servicing over 50 commercial co-founder and former Chair- ISPs and hundreds of govern- man of the Advisory Board of ment organizations. Kamels the IDSC, which, since 1985, has developed IT work extends into liberalization issues, such as a projects in Egypt. In 1996, El Sherif chaired the tax reduction for ISPs as well as a government and Task Force that instigated the African Information private sector partnership to serve the Egyptian Society Initiative, since adopted throughout that Internet community. Kamel manages to combine his region. job as Senior Advisor to the Minister of Communica- tion and IT (MCIT) with a post as advisor on the El Sherif is also a member of the World Bank Techni- Board of Directors of Telecom Egypt. cal Advisory Panel on Information for Development, a Commissioner of the Global Information Infrastruc- Kamel co-founded the annual ISE CAINET confer- ture Forum and a widely published and awarded Pro- ence and chaired its program committee for the fessor at the American University in Cairo. last three years.

sources of information while others 4.2 Health languished due to a lack of support. Perhaps 100 out of some 350 hospitals Today, all of the governorates have an in Egypt have access to the Internet. online presence through Governo- Less than ten per cent of these hospi- ratesNet (www.ipgd.idsc .gov.eg). In tals actively use the Internet as a source addition, twelve of 32 national minis- of information, with most doctors using tries are online as well as various other the Internet for personal matters and government agencies and depart- as an electronic library. In January 2000 ments. Online government services an Internet café was established at the are being organized through the Gov- Ministry of Health. There are around 150 ernment Online portal (www. Internet users out of 5000 people work- alhokoma.gov.eg) (alhokoma means ing there. A web site was created for government in Arabic). The first serv- use by physicians at the Ministry. The ice provided was an on-line version of IDSCs Information Technology Institute the form for the national identifica- (ITI) graduates developed this web site tion card. Three hundred forms are and are currently expanding it to pro- currently displayed on the web site. vide the general public with information on diseases. The IDSC and the MCIT are also ex- ploring other methods of providing The major means of communication electronic government services. The within the Ministry are telephone and IDSC recently launched a pilot pro- fax rather than e-mail. The ministry gram to create information kiosks for does not have a web site. Medical the public. It is planned to install public records are not computerized and lim- information kiosks in rural and remote ited medical information is kept in elec- areas to enable citizens to access tronic format. However, video streaming forms for a particular service and sub- has proven to be an effective and pow- mit them for processing. erful educational tool for support staff

30 4. National absorption of Information and Communication Technology

Box 4.2: CiraNet - Pharmaceutical Portal

The Egyptian pharmaceutical industry is to be- livery. The project went live in February 2001. come a leading example of B2B e-commerce in Some obstacles are likely to arise during the ini- the country. CiraNet, announced during the sum- tial phase. The main problem is linked to the busi- mer of 2000, is a joint venture between Citibank ness culture. There is a strong resistance to and Raya Holdings (an IT holding company). change and there is a need to build trust in this CiraNet will be a business-to-business exchange new purchasing process. Most pharmacies do not between suppliers and buyers of pharmaceutical use personal computers, let alone have access to products in Egypt. Raya recently obtained a li- the Internet. There are some 19000 pharmacies cense from the MCIT for a public data network, in Egypt out of which 2000 have personal com- which would connect buyers with suppliers. The puters. Nonetheless the rewards could be great. CiraNet Pharma portal will Egypt produces over 90 per cent of its needs for provide English and Arabic content and will also pharmaceutical products and has a giant market include a call center, payment processing and de- of some 60 million people.

and health care professionals. This is cians, drugs, medical and phar- because Egyptian culture relies heavily maceutical companies, and hos- on visual and oral methods of training pitals; in contrast to the West, where education is much more text-based. There is, b) Connecting more than 60 hos- however, only a very limited amount of pitals and providing Internet ac- educational information available online cess to more than 400 and more intensive efforts need to be physicians and health care pro- made in this direction. viders;

The countrys national IT plan calls for c) Conducting training workshops the development of a health informa- for physicians and raising gen- tion network for citizens and the devel- eral awareness in the commu- opment of hospital information systems. nity; These projects are to be funded by the Ministry of Health. Given the Ministrys d) Establishing an electronic mail- lukewarm IT support in the past and ing list for physicians and health the vast sums needed for basic health care professionals to facilitate programs, it is uncertain whether these interaction; projects will succeed. Nonetheless some projects are materializing such as a pro- e) Establishing four national medi- totype for a countrywide telemedicine cal information centers. network. The Ministry of Health did not take 4.2.1 HealthNet over ownership of this project from the IDSC, so the initiative never In 1995, IDSC took the initiative to evolved into full implementation. develop several Information Highway However the web site is still up and projects, aimed at providing online running. content for various sectors. HealthNet (www.highway.idsc.gov 4.3 Education .eg/health) was a pilot project de- signed to offer online content for the We have called for comprehensive health industry in Egypt. As a pilot reform of the educational system at information network, it facilitated all levels and stages in order to cope communication and information ex- with this new epoch that depends change among physicians, health on the efficiency of using and invest- care providers and patients in Egypt. ing information to serve the society. Its main accomplishments were: We have achieved some important points introducing computers into a) Establishing a web site contain- basic education programs, paying ing online databases on physi- more attention to technical education

31 Egypt Internet Case Study

and the rehabilitation of the teacher ices in order to improve the establish- to be more able to understand the new ment and distribution of new services. trends of the (information) age. Hosni Mubarak, President of Egypt. The Ministry of Education has installed 27 technology development centers You can finish high school without for educational directorates. Each seeing a computer. You could very well center is equipped with a multimedia finish college without seeing a com- laboratory and an advanced science puter: thats the education problem. laboratory. Distance training, illiteracy The students are not going to be citi- eradication courses and one-class zens of the world (if) they dont know teacher training are provided via a how to use new, world order ma- videoconference network. The total chines. Mohamed El Nawawy, Founder number of people trained through this of Egypts first commercial ISP. network has reached 374000.

4.3.1 Ministry of Education 4.3.2 Primary and Secondary Education An Egyptian Ministry of Education pub- lication notes the current educational The Ministry has a plan to provide crisis in Egypt that has serious impli- Internet access to every school. Out cations for developing a creative, in- of the 32000 schools in Egypt, formation-based society.3 The 23000 are equipped with computers, educational system has been based on of which 6000 are equipped with rote training, which does not encour- phone lines and Internet connectiv- age the development of independent ity. In 90 per cent of these Internet thinking. Curricula and exams are of- connected schools, there is only a sin- ten based on a single textbook and gle computer installed; the remaining students are not encouraged to read ten per cent have at most 20 comput- other books or develop their own in- ers per school. The Ministry of Educa- dividual opinions and ideas. There are tion has an Intranet, which the director few laboratories, leading to an empha- of the information center would like sis on theory at the expense of prac- to replicate in every school across the tice and experimentation. Teachers nation. This network is exclusively fi- receive low salaries and have had to nanced by the Ministry. resort to alternative means of income such as private lessons. Finally, with Despite the large number of comput- a literacy rate of just over 50 per cent, ers being installed in schools each Egypt faces an immense adult-educa- year, the benefit is limited due to the tion task in order to adapt its citizens low computer to student ratio, the lim- to the information age.4 ited number of hours allotted to computer classes and the elementary level The government has a number of of the curriculum. Most of the hard- ambitious programs to improve ware installed is outdated and unable Egypts educational system by adapt- to run the latest software. Even pri- ing school curricula, enhancing the vate schools that boast advanced com- quality of teachers, and integrating IT puter labs cannot provide students in the educational sector. In an effort with sufficient hands-on computer to document the status of the educa- experience. Nonetheless, the only tional sector, a national database is three schools with web sites are pri- being developed to include informa- vate and they have been successful tion about school buildings, education in international computer competi- in each governorate, computer inven- tions. This suggests that if public tory, building capacity, school supplies, schools had the same resources, there etc. This database also includes a geo- is great potential for Egyptian youth graphic information system, which in the Information Age. depicts distribution of schools throughout Egypts governorates. It Some schools have closed their will allow identification of areas that Internet services because costs were remain deprived of educational serv- too high. It has been suggested that

32 4. National absorption of Information and Communication Technology

the government should provide a spe- ogy Institute (RITI) (www.riti.org) and cial educational rate for Internet ac- Middlesex University in the United cess. Only very few students use Kingdom. They offer 16-month computers at home and there is a courses leading to Masters degrees major lack of Arabic content. in Business Information Technology or E-Commerce. The course is taught at 4.3.3 Universities RITIs campus in Cairo and the degree Fourteen universities are connected to is awarded by Middlesex. the Internet via the Egyptian Univer- sities Network (EUN) (sunsite.scu. 4.3.4 Technical training eun.eg). EUN has a two Mbit/s con- Technical and post-graduate training nection to the Internet. In addition is an other area where improvements EUN connects some other 90 academic are needed. When President Mubarak and research and development sites visited the United States in 2000, he and has some 4000 subscribers managed to seal alliances with IT firms among staff and postgraduate stu- such as Microsoft, IBM and Cisco in dents. upgrading Egypts IT education. It is planned to train 5000 professionals a Despite EUNs accomplishments, there year so as to develop IT in Egypt and are still large barriers to ICT access to compete in international markets and usage in higher education. The to- (see Box 4.3). It is estimated that the tal number of students in universities value created by each Egyptian IT and higher education is 1.7 million, most expert is some US$ 100000, which of which do not have computers at would add up to a billion dollars a year home. Connectivity prices are relatively to Egypts GDP.5 high and most professors hardly make use of the Internet in the educational ITI process. Although there are several The IDSC Information Technology In- good computer departments in Egyp- stitute (ITI) was established in 1993 in tian universities, the majority of under- order to increase the number of IT per- graduate courses are either too general sonnel. The 9-month ITI program has or not sufficiently up-to-date. Com- been so successful it cannot keep up puter courses have been introduced with demand. The IDSC and other gov- at all university faculties, but limited ernment IT departments have priority resources allow only computer basics in recruiting ITI graduates for up to to be taught, at least in the first years three years. ITI is fully funded by the of college. government and students receive a sti- pend. In July 2000, 1300 students Though most national universities graduated, with 15 per cent obtaining have an online presence, few provide employment abroad (mainly in other interactive services such as online Arab countries and the United States). application form submission. Web sites ITI also offers professional training proof private universities, such as the grams to ministries and local govern- American University in Cairo ments. The ITI program is highly valued (www.aucegypt.edu), provide more as a step towards building badly-needed substantial and regularly updated in- IT human resource capacity. However, formation. some graduates skills are described as too limited because the program tries Egypt has a serious shortage of hu- to cover too many subjects. Many hir- man resources, especially with regards ing managers would prefer the ITI pro- to IT project managers, marketing and gram to be more finely tuned in order sales experts and business analysts. to produce graduates with more spe- It would be particularly helpful to in- cialized, in-depth skills and knowledge tegrate project management and mar- about practical business applications. keting programs with technical and computer science related curricula at Some private institutes have similar the university level. One innovative courses but the majority of computer program is a collaboration between training is done through small private Egypts Regional Information Technol- training centers that lack expertise and

33 Egypt Internet Case Study

Box 4.3: The next India? Egypt's software dream

Egypts dream is to become a leading software ing academies will be established in Egypt that exporter, much like India is today. This is not to- could later become a hub for Cisco training in the tally unrealistic given that there is some evidence Arab and Africa regions. The first stage began in of an emerging Egyptian software industry. In May with Egyptian instructors being trained in 1999, the value of the Egyptian computer soft- Cisco centres in the US and Europe. A second deal ware market was estimated at around was forged with IBM.7 The US computer giant will US$ 50 million. This is less than what Microsoft contribute over US$ 44 million and train makes in one day but for a country with a per 3000 Egyptians a year in 6-month courses at IBM capita GNP of around US$ 1400, an illiteracy rate training centres in Egypt. The top ten per cent of 45 per cent and where around one fifth of the will be trained a further six months at IBM com- population is classified as below the poverty line, puter labs around the world. it is not bad. Furthermore, Egypt does have some advantages. There is a major need to Arabize soft- It is ironic that at the same time that Egypt is ware for the Middle East region, a potentially large attempting to develop its computer software in- market with some 175 million speakers, the sixth dustry, it is accused of having one of the highest most spoken language in the world. This is an piracy rate in the world. According to the Soft- area where Egypt feels it could excel. The same ware and Information Industry Association, some way that it leads the Arab world in producing 75 per cent of all software in Egypt is pirated.8 media contentbooks, films and broadcasting This is not surprising considering the relatively it feels it can lead in electronic content develop- high price of packaged software compared to in- ment. come and explains why freeware such as Linux is so popular in emerging economies. Furthermore, In order to complete this dream, Egypt realizes lest self-righteous software police complain too that it must devote considerable resources to vociferously, alleged Egyptian software piracy educating and training IT professionals. Even amounts to a mere 0.3 per cent of the world to- though it can boast of a over a dozen universities tal. Nonetheless, the government is taking steps and some 200000 computer trainees, it knows it to curb even this. Copyright laws are already on needs to do much more to compete in the world the books so the problem has more to do with market. Most university graduates do not have enforcement and awareness plus realistic pricing specialized computer skills and most trainees are by multinational software firms. To tackle the lat- learning basic application packages or simple skills ter, a deal was forged with Microsoft.9 In return such as data entry. Egypt has only 5000 skilled for more stringent enforcement, Microsoft has computer workers such as programmers and sys- agreed to produce its products locally at lower tem engineers. prices. Microsoft will also help Egyptian software companies develop applications for export to other Human resources figure strongly in the countrys Arab countries and the rest of the world. National Plan for Telecommunication and Infor- mation which states: Human resources are con- Part of Indias success is explained by familiarity sidered the most important component in the with the English language. This is not only im- communication and information industry. The portant to sell applications to the large Plan calls for the creation of an Egyptian Soft- Anglophone market but also to understand software Export Development Organization to help ware, most of whose inner workings and docu- push software exports to US$ 500 million in five mentation is in the English language. One problem years. In order to achieve that, the nation will is that English is mainly only understood by need 30000 IT specialists. It proposes the es- Egypts elite. To battle that, the government has tablishment of a National Institute of Informa- made English language courses a mandatory part tion Technology capable of graduating of the university curriculum. However that may 5000 students a year. This is a five-fold increase be too late to acquire intuitive understanding; the over current IT training capacity of 1000 students government might explore introducing English a year. The government plans to spend over training earlier in the educational process. An- US$ 100 million through June 2002 on human re- other Indian strength has been its ability to lev- source development projects in the high tech sec- erage on contacts made overseas through Indians tor. studying and working abroad. In this area, Egypt plans to send its best IT students to other coun- Egypt knows that it cannot become a software tries for further studies. In a related move, a n powerhouse with only its own resources. In that European Union development assistance project regard, it struck two deals in April 2000 with major has targeted a number of Egyptian software com- multinational ICT companies to strengthen train- panies to help them develop software for Irish ing capacity. The Ministry of Communications and companies.10 An Irish consulting company has Information Technology signed an agreement with been hired to represent the companies, market Cisco to train 1000 students a year.6 Two train- their software and provide sales leads. The irony

.../...

34 4. National absorption of Information and Communication Technology

.../...

here is that only a decade ago Ireland embraced ware centre. Bold forecasts are being made with ICT as a means to boost its economic develop- one Egyptian claiming the country will be the ment and to reduce unemployment. This has been next Singapore or India in the IT field Watch for so successful that Ireland itself is facing a short- the Made in Egypt in the technology field Egypt age of some 10000 programmers by the year is planning to build a true IT industry for soft- 2000. ware. 12 But before it gets there, it has a long way to go. India already exports some US$ four One consulting group has proposed that Egypt, billion of software a year, a figure that even un- along with Jordan and the United Arab Emirates der the most optimistic scenario, Egypt would still (UAE), pool their human resources.11 Jordan, like not reach in a decade. Others caution that Egypt Egypt, is vying to become a regional IT hub while should not just mimic India but should focus on the UAE has the highest Internet penetration in the regional market for Arabic software and value- the Arab region and is also trying to become a added applications such as e-government and regional hub, through its own Silicon Valley, Dubai Web-enabled government services. 13 Egypt faces Internet City. Instead of competing with each tough choices but before it decides, it must build other, it suggests that Jordan and Egypt cooper- up human resources. That will not happen over- ate to market their lower cost IT workers to com- night. Therefore the government cannot afford puter companies in the UAE. to deviate from its intended IT training plans if Egypt stands half a chance of becoming a global There are no shortage of proposals, plans and software player in order to dramatically boost its agreements for turning Egypt into a regional soft- economic development.

Box figure 4.3: Egypts Computer Software Dream

)RUHFDVWÃ(J\SWLDQÃ,7Ã0DQSRZHUÃ )RUHFDVWÃ(J\SWLDQÃ&RPSXWHUÃ6RIWZDUHÃ([SRUWVÃ 80’000 US$ million 70’000 3’000 60’000 2’500 50’000 2’000 40’000 1’500 30’000 1’000 20’000 10’000 500 0 0 1999 2001 2003 2005 2007 2009 1999 2001 2003 2005 2007 2009

Source: Egyptian Ministry of Telecommunication and Information. National Plan for Telecommunication and Information.

provide low quality service. Training ready causing a depletion of human centers authorized by international resources in Egypt. There is a large software companies provide high qual- discrepancy in salaries offered locally ity training but charge fees that are and internationally. A fresh graduate out of reach for most potential train- would earn within the range of ees. Consequently, qualified compu- US$ 400- US$ 700/month. This per- ter professionals are rare and high in son would easily earn US$ 5000/ demand, resulting in high labor cost. month in the U.S. Therefore, the lack of available human resources coupled One growing threat is potential brain with a continuing brain drain poses a drain. The high demand for skilled IT serious threat to human resources and workers in developed countries is al- skills availability in ICT.

35 Egypt Internet Case Study

4.4 Electronic Commerce · To establish a Certificate Author- ity; It has become imperative that Egypt should join the electronic commerce · To adapt current customs and arena, to enable Egyptian companies taxation systems to support e- to conduct business with international commerce; markets and to conduct commercial deals via modern communication · To carry out a project that uses channels Egypts National Plan for e-commerce for government pur- Communications and Information chasing; Technology. · To execute a joint public and pri- Electronic commerce has been heav- vate project that implements e- ily publicized in the local media for the commerce in the banking and past couple of years and there is much financial sector; pubic interest. There have been many initiatives and efforts towards getting · To construct an Egyptian network Egypt e-commerce ready.14 Some sig- for e-commerce in collaboration nificant achievements include: with the Ministry of Economy and Foreign Commerce, investor as- · Financial institutions online. A sociations and other organiza- growing number of Egyptian fi- tions involved in foreign trade; nancial institutions have web sites. These include the Central · To build local awareness by or- Bank (www.cbe.org.eg), the ganizing workshops on e-com- Cairo and Alexandria Stock Ex- merce. changes (www.egyptse.com) and a number of commercial banks. The Ministry of Economy and MCIT There is also a growing amount have formed a joint e-commerce task of financial and economic infor- force. It will focus on the following six mation available online. areas: 1) regulations and law; 2) telecommunications infrastructure; · Financial data network. The Egyp- 3) encryption and payment security; tian Company for Networks 4) procedures for establishing e-com- (EgyNet) is installing a merce companies; 5) Small and Me- US$ 600 million Asynchronous dium Enterprise (SME) incentive Transfer Mode (ATM) network con- programs; and, 6) public awareness. necting financial institutions. It will allow them to connect their branch The MCIT is consulting with the busi- offices and provide home banking. ness community about the creation of a Federation of Information Technol- · Budding e-commerce sites. De- ogy companies. Within this federation, spite barriers (described below), it plans to establish an Egyptian Cer- there are a growing number of tificate Authority (ECA) to authenti- e-commerce web sites peddling cate online buyers and sellers. ECAs everything from cars (www. legal body could take on any of the caronnile.com) to real estate following forms: A private entity such (www.e-dar.com). Some sectors as the Society for Worldwide Interbank such as tourism are particularly Financial Telecommunication (SWIFT) well represented (see Box). or the Egyptian Banks Company (a clearinghouse); a governmental en- 4.4.1 e-commerce Plans tity, such as the Authority for Weights; or a private entity under supervision.15 The new Ministry of Communications and Information Technology rolled out Egypts government is in the process Egypts National Plan for Communica- of drafting an e-commerce law. It has tions and Information Technology. formed a legal committee from vari- With regard to electronic commerce, ous government ministries and legal the Ministrys main objectives are: entities but there is still no law for dig-

36 4. National absorption of Information and Communication Technology

ital signatures. There is also no offi- purchases and has a monthly limit of cial government position with regard between US$ 50 200. to e-taxes. The lack of on-line credit card valida- According to a paper drafted by the tion in the country is another prob- e-commerce committee of the Egyp- lem. The Central Bank of Egypt has tian Internet Society, there may not thus far resisted becoming a be a pressing need for a new law be- clearinghouse for credit card settle- cause existing laws could simply be ments. However, it is conducting a amended.16 Egyptian law is based on study on modernizing the national fi- the French legal system. Such a sys- nancial settlement system. In the tem bases court rulings on written law meantime, some Egyptian companies and the judiciary interpretation of the are using credit card validation serv- law. A judge thus rules according to ices located abroad. They are paying the law and his own interpretation of higher fees for this, which is a drain the law. With regards to e-commerce, on the national economy. The prob- there is impossibility of the availabil- lem the lack of credit card validation ity of written proof, to which the nor- poses for Egyptian web commerce is mal means of evidence can apply. reflected by the tale of a local florist Hence, Egyptian law, as it currently web site. Though it provided a popu- stands, is applicable to e-commerce lar service it was forced to close be- and could theoretically accept all cause typically flowers are ordered for means of evidence in online disputes. someone else. Thus the florist often had to make two trips for every order, 4.4.2 Challenges for e-com- one to the purchaser to collect the merce17 payment and a second to deliver the flowers. Payment One solution to the credit card prob- There are two sides to the payment lem and lack of Internet access has issue in Egypt. On the one hand, credit been to establish payment centers. cardsthe most popular way of pay- These centers have personal comput- ing for consumer purchases over the ers with Internet access to the mer- webare not widely used. On the chants web site and are equally other hand, even if they were, there equipped to receive payment. For ex- are limitations to Egyptian web sites ample, the e-dar real estate web site accepting credit card payments. Al- has established centers in several though there are over 100 licensed Cairo districts. They are used to re- banks in Egypt, the total number of ceive cash payments from individuals credit cards in use is less than half a who would like to advertise their prop- million (0.8 per cent of the popula- erty as well as allow users to search tion). This low number can be partly the e-dar web site. Another example attributed to a cash-based culture. is CarOnNile.com that sells used au- Credit card awareness in the consumer tomobiles over its web site. It has a market is still in its initial phase. On center located at a Cairo car dealer the other hand, requirements for ob- where users can go to pay for adver- taining a credit card are stringent. It tising their car on the site as well as is often the case that users must main- browse through the selection of cars tain bank deposits equivalent to available. For a fee, CarOnNile will go around twice their credit limit. This is and collect the payment. problematic for the majority of Egyp- tians. Since credit cards are the pri- Awareness mary method of settling consumer transactions on the Internet, the small Lack of awareness is a critical bar- number of credit cards necessarily lim- rier to the implementation of e-com- its the e-commerce market. Banque merce in Egypt. The limited number Misr recently introduced an Internet of Internet users in the country and credit card tailored to the local mar- hence potential consumer base, dis- ket. It can only be used for Internet courages commercial efforts to cre-

37 Egypt Internet Case Study

ate online sites for consumers to buy e-commerce arena include the World and sell. One study claims that less Intellectual Property Organization than one per cent of Internet users (WIPO), the United Nations Commis- in urban areas of Egypt have ever sion on International Trade Law made an online purchase. Instead of (UNCITRAL), the Organization for waiting for the demand (the pull), a Economic Cooperation and Develop- solution could be to provide the sup- ment (OECD) and the World Trade ply (push) of viable e-commerce Organization (WTO). One problem is sites in Arabic to break down the lan- that Egypt is not a signatory to the guage barrier and to attract poten- WTOs Basic Telecommunications and tial consumers (as well as corporate Information Technology Agreements customers). The market is at the or the WIPO copyright treaty. It is early stage of consumer adoption imperative that Egypt participate and by catalyzing awareness, the actively in the many international rate of adoption could be acceler- forums that are laying the founda- ated. tions and regulations for electronic commerce. The private sector alone cannot carry alone the burden of building aware- Logistics ness of e-commerce. The national government, NGOs, as well as inter- One factor that influences the success national organizations should encour- of the e-commerce process is age and raise e-commerceawareness fulfillment mechanisms. A client who across all sectors of society. places an order for papyrus paintings from a handicraft web site of a store The Electronic Commerce Committee in the Khan El Khalili Bazaar should of the Internet Society of Egypt was receive the purchase promptly. In or- founded in October 1997 der for this to happen, affordable and (ecom.ise.org.eg). It has organized reliable automated delivery processes various workshops, developed the e- should be in place. Relatively few busi- commerce track of the annual Egyp- nesses have the basic back-end infra- tian Internet Society conference, and structure, meaning that inventory is lobbied various groups to bring about manually processed. Furthermore, the awareness of the potential of e-com- Egyptian postal system needs to be merce for Egypt. made more efficient to handle rapid delivery. This presents a further ob- Regional and international stacle to delivery of products to cli- cooperation ents in a timely and efficient manner.

The Arab region shares a common cul- Legal ture and language and the challenges, risks and barriers are common to The legal system is in dire need of many countries of the Arab world. reform. Judges and lawyers are over- Consequently, it would be beneficial burdened with work. Although there for Arab countries to cooperate and are over 15000 judges in Egypt, on collaborate in the area of e-com- average they handle 4000 cases a merce.18 With regards to the African month (each case averages 50 pages) region, the Common Market for East- and write 1300 rulings a month. The ern and Southern Africa (COMESA), legal profession is also in dire need of of which Egypt is a member, has taken training in electronic commerce. limited action towards bringing together member countries to collabo- A joint legal electronic commerce com- rate on this issue. mittee was formed in coordination with the IDSC and the Ministry of Justice A number of international negotiations in March 2000. This committee drafted and agreements are taking place, an Egyptian cyberlaw that will be de- which are formulating the global e- bated by the General Assembly. At commerce framework. Major organi- the moment, there are no laws for dig- zations in the international ital signatures or electronic contracts.

38 4. National absorption of Information and Communication Technology

Culture Dot.com support

Another barrier is the Egyptian busi- The government still controls a large ness mentality that is resistant to portion of the economy with over change. E-commerce necessitates 50 per cent of procurement in govern- business transformation but decision- ment hands. As governments gener- makers are used to doing business in ally do not tend to be efficient or quick a certain way and do not want to to react to new technology, this has change the way they work. serious consequences for Egypts e- commerce potential. Furthermore, be- Top-level decision-makers also exert cause such a large portion of the territorial behaviour, meaning that economy has been under govern- they want to have control over their ment control, there is still not wide- business territory. They feel that they spread appreciation of the private are losing control over company as- sector. Egypt lacks a finance mecha- sets if they venture into e-commerce. nism for supporting dot.coms. Egyp- One manager, for example, made all tian banks have avoided financing his employees use one single e-mail Internet start-ups. Venture capital- account, which he had the password ists are a rarity and the government to allowed him to check all incoming has not helped in providing incen- mail. tives for e-commerce. Another problem is that companies are valued on Top management of most companies their fixed and tangible assets and in Egypt do not use e-mail because not on their intellectual property. they were not raised in the information age. Information technology is Egypt is not an information-based not part of their daily routine. This is society and lacks transparency. In- coupled with their unwillingness to information on the Egyptian market is vest in information technology due to not readily available or attainable. lack of perception of its added value.19 Since this is Egypt, I couldnt get The lower management tends to be the statistics and numbers from their more technologically adept and con- side remarks a local entrepreneur vinced of the benefits of IT. Yet an- seeking information that would help other drawback is that business in his business. Egypt is not conducted at net speed, reducing the competitiveness of the There is also a lack of managerial skills country. in local Internet start-ups. Young en-

Table 4.1: e-commerce costs in Egypt compared to other countries

,WHPÃ &RVWÃ ,QGLYLGXDOÃ6SHQGLQJÃRQÃ,7Ã 2QÃDYHUDJHÃ(J\SWLDQVÃVSHQGÃ86ÇÃÃSHUÃ\HDUÃ ÈÃRIÃLQFRPH Ã RQÃ,7ÃZKHUHDVÃWKHÃ6ZLVVÃVSHQGÃ86ÇÃÃ ÈÃRIÃLQFRPH Ã +RVWLQJÃ&RVWÃÉÃ (J\SW ÇÃÃÃÃÃÃ86$ ÇÃ 3ULFH3HUIRUPDQFHÃ 7DNLQJÃLQWRÃFRQVLGHUDWLRQÃWKHÃDYHUDJHÃLQFRPHÃWKLVÃILJXUHÃLVÃ FRVWO\ÃIRUÃDQÃ(J\SWLDQÃÃ$GGLWLRQDOO\ÃWKHÃSULFHSHUIRUPDQFHÃLVÃ YHU\ÃVORZÃ7KLVÃLVÃDQÃDGGHGÃ WLPH ÃFRVWÃLQÃLWVHOIÃÃ :HEÃVLWHÃ'HVLJQÃDQGÃ &RVWÃUDQJHVÃIURPÃÇÃWRÃÇÃWKHÃPLQLPXPÃFRVWÃVWLOOÃEHLQJÃ ,PSOHPHQWDWLRQÃ WRRÃH[SHQVLYHÃ ,QWHUQHWÃ$FFHVVÃ 86ÇÃPRQWKÃLQÃ(J\SWÃ86ÇÃPRQWKÃLQÃ86Ã 86ÇÃÃIRUÃ7ÃFRQQHFWLRQÃYHUVXVÃ86ÇÃÃLQÃWKHÃ86Ã &RPSXWHUVÃ $GMXVWLQJÃIRUÃUHODWLYHÃZDJHÃUDWHVÃDÃFRPSXWHUÃLQÃGHYHORSLQJÃ FRXQWULHVÃLVÃDSSUR[LPDWHO\ÃÃWLPHVÃPRUHÃH[SHQVLYHÃWKDQÃLQÃ WKHÃ86$Ã

Source: El-Nawaway and Ismail.

39 Egypt Internet Case Study

Box 4.4: Tourism

Tourism is Egypts primary source of foreign rev- There are individual initiatives by rising dot.com enue, which amounted to US$ 4.3 billion for the companies to build sites that provide links to glo- year ending June 2000.20 Almost five million tour- bally recognized online reservation systems (e.g., ists visited the country in 1999. Not only is Egypt the Egyptian web site www.fondok.com provides home to the second largest number of historical links to hotels through the global web site monuments in the world, it is also surrounded by www.travelnow.com). There has been no concerted the Mediterranean and the Red Sea, the latter of national effort to build an online reservation sys- which contains the worlds second largest national tem for hotels in Egypt. The Hotel Chamber of Com- underwater reserve. merce is currently working on an e-commerce project, which should be completed within the next TourismNet (www.tourism.egnet.net) is an initia- three months. tive stemming from the Information Highway Project of the IDSC. TourismNet provides an online The Ministry of Tourisms IT center is using the database of information about the tourist indus- Internet to promote tourism by partnering with try. Its busy web site has 25000 online pages, package tour operators from the region. The covering all aspects of tourism in Egypt, avail- Internet is thus used for basic e-mail exchanges able in four languages (Arabic, English, French between Egypt and other countries in the region and German). The IDSC manually compiled infor- and for jointly displaying information about tourist mation from travel agencies and hotels and pub- packages on the Internet. lished them on the web site. This includes services provided to tourists such as hotels, restaurants, Tourism holds a strong potential for e-commerce in diving centers, etc. Egyptian tourism offices abroad Egypt. A large number of tourists are from Europe also use the information, in addition to tourist of- and North America with easy access to the Internet. fices in Egypt. The Egyptian Ministry of Tourism has If Egyptian hotels and travel agents could provide its own official tourist-oriented web site online reservation services, this would increase their (www.touregypt.net). business possibilities.

trepreneurs are not trained to man- E-commerce is heavily dependent on age companies upon leaving univer- information technology: Internet sity graduate from a technical faculty access, computer utilization, web- (e.g., engineering or computer sci- hosting, etc. The relative costs of es- ence). tablishing and maintaining an e-commerce operation in Egypt are Affordability high (see table 4.1). One solution is public access centers. These centers Affordability is a critical issue in may provide services to the general Egypt, where one fifth of the popu- public or to specific industries situ- lation lives below the poverty line. ated in industry zones.

40 4. National absorption of Information and Communication Technology

1 Address by President Muhammad Hosni Mubarak to The National Conference on The Promotion of Technology and Information. 13 September 1999. www.presidency.gov.eg/html/13_9.htm. 2 www.idsc.gov.eg/awards.asp. 3 Technology: A Tool for Developing Education in the 21st Century. Arab Republic of Egypt: Ministry of Education (Technology Development Center). May 1997. 4 Egypt also has a large gender literacy gap. Some 66 per cent of Egyptian men over the age of 15 are literate compared to 43 per cent for women. See US AID Egypt, Economic Growth Activities, Education at www.usaid-eg.org/proj-ed.htm. 5 Reuters, Work Like an Egyptian, Nov. 14, 2000. 6 Cisco Systems. Egypts Ministry of Communications and IT Signs Agreement with Cisco Systems to Bring a New Generation of Internet Skills to Egypt. Press Release. 24 April 2000. www.cisco.com/warp/public/3/middle_east/education_mocit.html 7 DITnet. IBM Signs Agreement Worth More than $44 million with Egyptian Government. IT News. 3 April 2000. www.ditnet.co.ae/ITnews/newsapril2000/newsap6.html. 8 SIIA. Five Years: $59.2 Billion Lost. Press Release. 24 May 2000. www.siia.net/sharedcontent/press/2000/5-24-00.html. 9 Microsoft to Help Egypt Fight Software Piracy. Middle East Times. metimes.com/issue36/bus/04microsoft.htm 10 US AID. PSDPs Remote IT Marketing Support Office Incubator in Ireland. GTG Link. August / September 2000. www.usembassy.egnet.net/usaid/gtg/gtgsep2.htm. 11 Arab Advisors. A Recent Analysis by the Arab Advisors Group Suggests that Egypt and Jordan Should Merge their IT Labor Markets. Press Release. 17 December 2000. www.arabadvisors.com/Pressers/presser-171200.htm. 12 DITnet. Made in EgyptA New Label in Information Technology is Coming. Daily news from Comdex Egypt99. 13 May 1999. www.ditnet.co.ae/html/comdex99/thursday4.html. 13 Work Like an Egyptian. Wired News. 14 November 2000. www.wired.com/news/print/0,1294,40171,00.html. 14 One company even claims that over 80 per cent of all Egyptian business-business dealings will be online within five years. See Egypt: New JV Signals First Serious Foray into E-commerce. Business Middle East. 27 September 2000. Available on the ebusinessforum.com web site. 15 See Sherif El-Kassas. Means of Proof in the Virtual World. CAINET 99. www.cainet99.com.eg/presentations.htm. 16 Mohamed Lotfy. The Future of Electronic Commerce in Egypt from a Legal Point of View. Cainet 99. www.cainet99.com.eg/presentations.htm. 17 For an in-depth examination of Egypts e-commerce barriers see El-Nawawy, Mohamed and Ismail, Magda. Overcoming Deterrents and Impediments to Electronic Commerce in Light of Globalization: The Case of Egypt. Inet 99 Conference Proceedings. www.isoc.org/inet2000/cdproceedings/inet99/1g/1g_3.htm. 18 UNCTAD/UNDP Report on the UNCTAD/UNDP Arab Regional Workshop on Electronic Commerce, Cairo, Egypt, September 26-28, 1998. 19 Egypt has been ranked as one of the bottom ten countries in terms of IT investment as a share of GDP. The Egyptian value was less than one per cent. See IDC. EMEA IT Market Monitor. August 2000. emea.idc.com/newsletters/emm/0008emm.stm. 20 Explore Beyond the Pyramids. International Herald Tribune. 14 November 2000. www.iht.com/articles/1524.html.

41 Egypt Internet Case Study

5. Summary and Recommendations

5.1 State of the Internet · connectivity infrastructure: a in Egypt measure based on international and intra-national backbone The Mosaic Group (mosaic.unomaha. bandwidth, exchange points, and edu/gdi.html), has developed a frame- last-mile access methods; work for characterizing the state of the Internet in a nation. They consider six · organizational infrastructure: a dimensions, each of which has five measure based on the state of ordinal values ranging from zero (non- the ISP industry and market con- existent) to four (highly developed). ditions; The dimensions are as follow: · sophistication of use: a measure · pervasiveness: a measure based characterizing usage from con- on users per capita and the de- ventional to highly sophisticated gree to which non-technicians and driving innovation. are using the Internet; A definition of each dimension and its · geographic dispersion: a meas- levels is shown in Annex 2, and Egyp- ure of the concentration of the tian values for these dimensions are Internet within a nation, from shown below: none or a single city to nationwide availability; Pervasiveness is rated at level 2.5, between Established and Common. · sectoral absorption: a measure There are no known methodologically of the degree of utilization of the sound market surveys estimating the Internet in the education, com- number of Internet users. In mid- mercial, health care and public June 2000, there were around sectors; 55000 Internet subscribers. It is gen-

Figure 5.1: State of the Internet in Egypt

June 2000

Dimension Value Pervasiveness Pervasiveness 2.5 Sophistication Dispersion Geographic Dispersion 2.5 Sectoral Absorption 1.5 Connectivity Infrastructure 1.5 Organizational Infrastructure 2.5 Organizational Absorption Sophistication of Use 2

TOTAL 12.5 Connectivity

Note: The higher the value, the better. 0 = lowest, 4 = highest. Source: ITU adapted from Mosaic Group methodology.

42 5. Summary and Recommendations

erally assumed that there is an aver- Sophistication of Use is at level 2.0, age of four users per account in Egypt. Conventional. Most web sites are This would place the number of users static. The majority of businesses have at around 220000, 0.37 per cent of not yet been transformed by the the population. Internet.

Geographic Dispersion is rated at This framework has been applied in level 2.5, between Moderately to several other nations. The dimension Highly Dispersed. There were some values for other Arab nations as well 60 ISPs at June 2000 though most are as major emerging markets are com- located in Cairo. Eighteen out of pared to Egypt below. Egypt compares 26 governorates have an ISP. Internet favorably to Saudi Arabia and Jordan, is available at a single nationwide rate bearing in mind that the surveys for by dialing a standard telephone the latter two countries were done ear- number (however the price is more lier. Egypt is just behind the software than the local telephone usage powerhouse India but lags another charge). large emerging market, Mexico. Fi- nally, Egypt has some distance to Sectoral Absorption is rated at cover before catching up with Tuni- level 1.5, between Rare and Moder- sia, the highest ranked Arab nation for ate. The government has made efforts which this framework has been ap- to provide online content through the plied, see Table 5.1. IDSC. Internet connectivity at the university level is good with access pro- 5.2 Recommendations vided by the Egyptian University Network. Connectivity at the primary With about 55,000 Internet subscrib- and secondary school level is poor. ers and an estimated 220,000 users Although around one-fifth of these as of mid 2000, Egypt lies in fourth schools supposedly have Internet ac- place in the region behind Lebanon, cess hardly any have a web site. Per- Saudi Arabia and the United Arab haps one third of Egypts hospitals Emirates, in terms of Internet penetra- have Internet access but less than tion. However, at less than 0.4%, ten per cent actively use it; only Internet penetration remains relatively five hospitals and clinics out of some low. Commercial Internet services 4000 in the country have a web started into Egypt in 1996, at about page. Business use is growing but the same time as mobile services. In- still limited. deed, the costs of both services are roughly the same at around LE 150 a The Connectivity Infrastructure is at month. However, whilst the number level 1.5, between Thin and Expanded. of Internet subscribers hovers be- National bandwidth is 14 Mbit/s with a tween 50,000 and 60,000, there are national exchange connecting major now more than 2 million mobile sub- gateway operators.1 Total international scribers. bandwidth is 26 Mbit/s. Most access is via dial-up with some leased line and One of the leading figures in the Egyp- ISDN. There is no cable modem or ADSL tian Internet, Mohamed El-Nawawy, access. argues that the predominant cause for the relatively low Internet penetration The Organizational Infrastructure in Egypt remains lack of awareness, is at level 2.5, between Controlled and caused primarily by limited access to Competitive. There are theoretically personal computers in schools and no barriers to becoming an ISP. How- universities. He cites the case of one ever, ISPs are restricted in the ability leading Egyptian University that, in the to provide national and international early 1990s, had just four computers infrastructure. Some are allowed to for some 1600 students. provide it and others not. Telecom Egypt controls the bulk of international Although the government of Egypt is Internet capacity. Regulations are not cognisant of this constraint, it will need always clear or transparent. to enlist the efforts of the private sec-

43 Egypt Internet Case Study

Table 5.1: State of the Internet in Egypt compared to other economies

Date P GD SA CI OI SU Total Source

Saudi Arabia 2-99 1 1 1 1 2 1 7 Mosaic Jordan 9-99 3 1 2 1 2 1 10 Mosaic Egypt 6-00 2.5 2.5 1.5 1.5 2.5 2.0 12.5 ITU India 12-99 2 3 1 1 3 3 13 Q Mexico 12-99 3 3 2 2 3 3 16 Q Tunisia 12-99 3 3 3 2 3 3 17 Q

Note: The following dimensions are considered: Pervasiveness (P), Geographic Dis- persion (GD), Sectoral Absorption (SA), Connectivity Infrastructure (CI), Organi- zational Infrastructure (OI), and Sophistication of Use (US). The higher the value, the better (0 = lowest, 4 = highest). Source: ITU, Q: unvalidated questionnaire result from Press, Larry. "Second Internet Diffusion Survey". OnTheInternet. November/December 1999. (som.csudh.edu/ cis/lpress/gdiff/otidevnations.htm). MOSAIC Group (mosaic.unomaha.edu/gdi.html).

tor and multiply its own efforts if the nologies). This should help to Internet is to be brought to a wider bring down the high prices, es- audience, particularly one that lives pecially for international connec- outside the main cities of Cairo and tivity, which are currently Alexandria. The following recommen- hindering growth. Competition dations are proposed in the spirit of should also help to make Telecom achieving this goal. Egypt more customer-respon- sive, for instance in reducing the 5.2.1 Telecommunications and delays for providing leased lines. Regulation Continue the path of progressive · An accelerated timetable for deregulation. The path of liberaliza- the liberalization of voice tion that Egypt has been following over IP (VoIP) and fax over since the late 1990s, notably in IP. There may be sound reasons mobilephones and Internet service for allowing Telecom Egypt to provision, is now bringing rewards. retain the international fixed-line These policies should be continued and voice monopoly for a specified strengthened. In order to accelerate period, during which tariffs can be the diffusion of the Internet, it is rec- rebalanced and the privatization/ ommended that the Ministry and regu- commercialization process com- lator consider: pleted. However, these arguments are not necessarily valid for IP Te- · Full liberalization of the mar- lephony where Telecom Egypts ket for data communications, continuing monopoly and exclusive including permitting private com- deals with IP Telephony providers panies and large users to con- may hinder technological develop- struct, resell and self-provide ment and market innovation. international IP connectivity. No- tably, this should include provi- · Continuation of the liberal- sion of two-way VSAT data ized regime for ISPs. This communications, direct access to should not require licensing or international undersea cables regulatory authorization. and satellites, and construction of high-speed local networks · Avoid awarding any further (e.g., based around xDSL tech- exclusive licences and review

44 5. Summary and Recommendations

the sunset clauses on existing li- interested parties in the tele- censes. communications market and the regulatory authority. · Becoming a signatory to the WTOs basic telecommunica- Make Internet access available tions agreement and IT nationally at local call rates. The agreement, as a way of making provision by Telecom Egypt of the a public commitment to the 900 premium rate service for Internet course of liberalization. This access (with revenues shared between would also help in attracting fur- Telecom Egypt and the Internet Serv- ther foreign investment into the ice Provider) has had an immediate sector. beneficial effect in promoting Internet growth, particularly among new us- Ensure accounting separation. In ers. This should be extended on a non- the period before full liberalization discriminatory basis, for instance by of the data market, it is recom- making the service nationally available mended that existing major suppli- at the same local call rate, irrespec- ers of international Internet tive of the location of an ISPs point of connectivity (i.e., Telecom Egypt, presence. In addition, dial-up access IDSC and, shortly, Nile Online), be to Internet at local call rates should prevented from becoming full ISPs be facilitated progressively throughout as this would create a potential con- as much of the country as possible. flict of interest. Furthermore, it is recommended that where other com- Establish a timetable for issuing panies with licences to provide serv- 3G mobile licenses. Mobilephones ices in restricted markets (e.g., already outnumber Internet users in mobile operators) wish to provide Egypt by almost 5 to 1 and, in the Internet services, it must be done longer term, it is likely that mobile so on the basis of full accounting access to Internet will become increas- separation with no cross-subsidy of ingly significant, particularly for non- the services offered in the liberalized English speakers. But more bandwidth market from profits generated in the is necessary for mobile Internet to be restricted market. viable. The government should announce a timetable for issuing third Publish all licences in the public generation (3G) mobile licenses so that domain. There is currently some un- the market can prepare appropriately. certainty in the marketplace about Given the high costs and time incurred which licences have been awarded for in establishing a 3G network, it would which services and covering which be better if the licenses were awarded periods. Transparency would be en- sooner rather than later. This will re- hanced if all existing licences, in- quire more effort to be made in clear- cluding those issues earlier by ing and managing more effectively the Telecom Egypt, were made publicly spectrum required for mobile services. available, for instance by publishing them on the regulators web Continue the policy dialogue. The site. Telecom Egypts licence, once practice, introduced by the new Min- drafted, should also be made avail- istry, of holding regular meetings for able for public comment. policy dialogue on aspects of telecommunications reform (i.e., the Working Empower TRA. The Telecommunica- Groups established for Technical, Le- tion Regulatory Authority (TRA) needs gal, Business Development and Hu- to operate with full independance to man Resource Development issues) enhance transparency and bolster has been very beneficial and should confidence in the sector. Board mem- be continued in an appropriate format. bers of the regulatory authority should For instance, the initiative to announce be more representative of the tel- the 900 service came as a direct re- ecommunications market as a whole. sult of these meetings. Perhaps it may Moreover, there should be an open be feasible to create a Telecommuni- channel of communication between cations Society to mirror the excel-

45 Egypt Internet Case Study

lent work carried out by the Internet a need for clearer public endorsement Society in Egypt. of e-commerce at the highest government levels since this would induce 5.2.2 Internet and IT the proper line of control over all ministries, not just from the Ministry Promote Awareness. Much work of Economy. There is a need for gen- needs to be done in promoting aware- eral IT policy reform and specifically ness of the Internet, especially on its greater automation of workflow sys- potential use in health, education, tems within the government (e.g., lo- tourism, e-commerce etc. National gistics, customs, taxes, courier and campaigns to promote the concept of postal services). To this end, it is pro- Internet for All could help. Moreover, posed that an e-commerce task force the private sector, which has a stake be established comprising members in increasing Internet penetration from both government and private (e.g., ISPs, Chambers of Commerce, sector bodies, including trade associa- Investors associations etc), should be tions. Egypt should also participate ac- encouraged to take part in building tively in international e-commerce awareness and therefore creating a initiatives, for instance at UNICITRAL larger potential customer base for use or WIPO. of Internet services. Promote public access to the Separate out the commercial op- Internet. The existing initiatives be- erations of IDSC from its govern- ing undertaken by MCIT/IDSC are to mental functions. The Information be commended but more needs to be and Decision Support Centre of the done. One promising opportunity is to Egyptian Cabinet has played a crucial promote Internet access via Post Of- role in establishing and promoting the fices. In addition, more information Internet in Egypt. This role was par- should be collected on the number of ticularly important in the early days, cybercafés and their usage in order before commercial ISPs were well-es- to promote this form of access. tablished. As a result, the IDSC is now the major provider of Internet con- Develop an Arab regional strat- nectivity as well as being a major, if egy. The Arab world has a common inactive, ISP. This has created a po- language and culture. However, to tential conflict of interest between date there has been only minimal re- IDSCs operational functions and its gional co-operation on Internet issues role as a branch of the government. (the Regional Arab Information Tech- It is recommended that the IDSCs nology Network, RAITNET, established commercial functions as the major in 1997, is an exception). One area Internet hub be hived off, possibly to where regional co-operation would be become a not-for-profit Internet Ex- beneficial is over creation of more Ara- change, to avoid a conflict of interest bic (and perhaps iconographic) con- with the IDSCs main role, in bringing tent. The majority of content on web the government online and acting as sites in Egypt is in English and most a domain name registrar. training courses are in English. Thus, the Egyptian market may not expand Create an e-commerce task force. beyond the 2-5 per cent of the popu- While there are many barriers to the lation who speak English. If Internet development of electronic commerce, is to become pervasive in Egyptian the government has control over the society, then more effort needs to be creation of an Internet-friendly legal made to promote the availability of environment. Specifically, the issue of Internet content in Arabic and Arabic credit card verification (digital signa- portals. Government can play a role tures) should be clarified to enable e- here in making more public informa- commerce to flourish. This will require tion available in Arabic on government that the Central Bank take a lead role web sites. in endorsing the development of e- commerce and upgrading the bank- Invest in the next generation. Gov- ing communitys network. There is also ernment resources are scarce and

46 5. Summary and Recommendations

need to be used sparingly. However, wards a better understanding of pub- one area where government invest- lic and private sector needs in this area ment will bring huge future dividends and in generating new human re- is in education. The education minis- sources policies that better prepare try is already well advanced with plans students and workers to meet the to ensure that all schools are con- challenges of the emerging digital nected to the Internet, but more could economy. be done, for instance in improving the connectivity of schools and increas- Put government online. Govern- ing the number of PCs available. ment Ministries and Agencies should Where feasible, use of the Internet as be encouraged to use the Internet to a research resource should be incor- provide public access to information porated into the timetable. Giving all and services. Where private sector school students an e-mail address portals make this information avail- would help promote usage. In addi- able, efforts should be made to en- tion, Internet kids clubs are helping sure it is accurate and up-to-date. to spread awareness. Also, the Egyp- Transparency and open provision of tian universities council should be data and information should be en- given a regular budget for IT and couraged as a general government Internet activities. Private sector spon- policy. This will facilitate the process sorship or financing of Internet con- for content providers to collect and nectivity in schools and universities gather information whether in textual, should be encouraged. audio or visual format.

Support human resources devel- Conduct more market research. opment. There is already a shortage There is currently only limited and of- of trained IT professionals in Egypt and ten outdated information available on this situation is likely to get worse. A the development of the Internet mar- particular problem is in the field of ket in Egypt. The regulatory authority project management where relevant and/or the MCIT should commission a skills are lacking. In addition, the end- market research study to ascertain the user-community needs to be better true level of use among different seg- trained, especially in the government ments of the population. For instance, sector and in specialist fields, such as a periodic (semi-annual?) census of the legal community. A certification ISPs to collect basic data (e.g., system to recognize excellence in IT number of accounts, web sites hosted training institutes and to make more etc) would help to inform policy-mak- courses available in Arabic as well as ers. It is recommended that a spe- English would help to formalize the cialized research center be current training efforts. The initiative established. This center would re- taken by the MCIT to work closely with search and collect data about ICT re- the private sector through the estab- lated issues and concerns. This lishment of human resource develop- information is necessary to provide a ment working groups also provides an better understanding of the market for excellent launch pad. It will serve to- local and foreign direct investors.

1 See e-mail from IDSC to Network Startup Resource Centre, dated 4 October 1999. www.nsrc.org/db/lookup/operation=lookup-report/ID=939058779810:489020354/fromPage=EG.

47 Egypt Internet Case Study

Annex 1: List of Interviewees

1DPHÃ 3RVLWLRQÃ 7HOHFRPÃ(J\SWÃ (QJÃ$EGXOODKÃ$EEDVÃ &HQWUDOÃ'HSDUWPHQWÃ&KLHIÃRIÃ1HZÃ6HUYLFHVÃÉÃ0DUNHWLQJÃ 6DQDDÃ6ROLPDQÃ *HQHUDOÃ0DQDJHUÃRIÃ0DUNHWLQJÃ (OKDPÃ=DNDULDÃ *HQHUDOÃ0DQDJHUÃ(J\SW1HWÃ (QJÃ$PUÃ%DGDZLÃ 'LUHFWRUÃ7HFKQLFDOÃ$IIDLUVÃ (QJÃ(PDGÃ(OÃ$]KDULÃ &RQVXOWDQWÃ (QJÃ$]]DÃ7RUN\Ã 9LFHÃ&KDLUPDQÃIRUÃ,QWHUQDWLRQDOÃ7HOHFRPPXQLFDWLRQVÃÉÃ%DFNERQHÃ 7HOHFRPPXQLFDWLRQVÃ5HJXODWRU\Ã$XWKRULW\Ã (QJÃ)HNUH\DÃ$OODPÃ 9LFHÃ&KDLUPDQÃ 0LQLVWU\ÃRIÃ&RPPXQLFDWLRQVÃDQGÃ,QIRUPDWLRQÃ7HFKQRORJ\Ã 'UÃ7DUHNÃ.DPHOÃ 6HQLRUÃ$GYLVRUÃWRÃWKHÃ0LQLVWHUÃ 'UÃ6KHULIÃ+DVKHPÃ 'LUHFWRUÃ,QIRUPDWLRQÃ6RFLHW\Ã'HYHORSPHQWÃ2IILFHÃ 'UÃ$OLÃ(OÃ+HIQDZ\Ã 6HQLRUÃ$GYLVRUÃWRÃWKHÃ0LQLVWHUÃ 2WKHUÃ2UJDQL]DWLRQVÃ 'UÃ*DPDOÃ0RKDPHGÃ$O\Ã 'LUHFWRUÃ(J\SWLDQÃ8QLYHUVLWLHVÃ1HWZRUNÃ (QJÃ0RVWDIDÃ$EGHOÃ 'LUHFWRUÃ&RPPXQLFDWLRQVÃ'HSDUWPHQWÃ,'6&Ã (QJÃ&KULVWLQHÃ$ULGDÃ 6HQLRUÃ1HWZRUNÃ(QJLQHHUÃ,'6&Ã (QJÃ6D\HGÃ*KDUEDZLÃ 0DQDJHUÃ0LGGOHÃ(DVWÃ*RYHUQPHQWÃ5HODWLRQVÃÉÃ6WDQGDUGVÃ0RWRURODÃ (QJÃ$PLQÃ.KHLUÃ(OÃ'LQÃ &(2Ã7ULDQJOHÃ*URXSÃÉÃ&KDLUPDQÃRIÃ%XVLQHVVÃ:RUNLQJÃ*URXSÃDWÃ0&,7ÃÃ 6KHULIÃ.DPHOÃ 'LUHFWRUÃ5HJLRQDOÃ,QIRUPDWLRQÃ7HFKQRORJ\Ã,QVWLWXWHÃ 5,7, Ã 'UÃ*DPDOÃ(OÃ6D\HGÃÃ &KDLUPDQÃÉÃ0DQDJLQJÃ'LUHFWRUÃ(J\SWLDQÃ*HUPDQÃ7HOHFRPPXQLFDWLRQÃ,QGXVWULHVÃ +RUVWÃ.RYDFLFÃ 'HSXW\Ã0DQDJLQJÃ'LUHFWRUÃ(*7,Ã )ULHGULFKÃ3DFKHUÃ *HQHUDOÃ0DQDJHUÃ(*7,Ã :5%Ã:LJJOHVZRUWKÃ 7HOHFRPPXQLFDWLRQVÃ5HJXODWRU\Ã$GYLVRUÃ -DPHVÃ+DWFKÃ 3ULQFLSDOÃ6PLWKÃ&RQVRUWLXPÃ 0RELOHÃ2SHUDWRUVÃ (QJÃ0RKDPHGÃ(OÃ0RJ\Ã 'LUHFWRUÃ5HJXODWRU\Ã$IIDLUVÃ&OLFNÃ*60Ã 0RKDPHGÃ6KDELEÃ 'LUHFWRUÃ7HOHFRPÃ$XWKRULWLHVÃ5HODWLRQVÃ0REL1LOÃ ,QWHUQHWÃ6HUYLFHÃ3URYLGHUVÃ .KDOHGÃ%LFKDUDÃ 0DQDJLQJÃ'LUHFWRUÃ/LQNÃ(J\SWÃ 0RKDPHGÃ(OÃ1DZDZ\Ã )RUPHUÃ0DQDJLQJÃ'LUHFWRUÃ,Q7RXFKÃ $PUÃ$EXDODPÃ 0DQDJLQJÃ'LUHFWRUÃ6RILFRPÃ&RPPXQLFDWLRQVÃ :DHOÃ$PPDUÃ ([HFXWLYHÃ0DQDJHUÃ*HJD1HWÃ 1DJXLÃ$QLVÃ 0DQDJLQJÃ'LUHFWRUÃ8QLWHGÃ&RPPXQLFDWLRQVÃÉÃ6WDUQHWÃ 7DPHUÃ=DQDW\Ã %XVLQHVVÃ'HYHORSPHQWÃ0DQDJHUÃ8QLWHGÃ&RPPXQLFDWLRQVÃ 2WKHUÃ0LQLVWULHVÃ *HQHUDOÃ0RKDPHGÃ 0DQDJHUÃ7HFKQRORJLFDOÃ'HYHORSPHQWÃÉÃ'HFLVLRQÃ6XSSRUWÃ&HQWHUÃ0LQLVWU\ÃRIÃ 'UÃ7D\VHHUÃ(OÃ6DZ\Ã 'LUHFWRUÃ,QIRUPDWLRQÃ&HQWHUÃ0LQLVWU\ÃRIÃ+HDOWKÃÉÃ3RSXODWLRQÃ /HVÃ)LVKEHLQÃ +HDOWKÃ,QIRUPDWLRQÃ6\VWHPVÃ$GYLVRUÃ+HDOWKÃ3ROLF\Ã6XSSRUWÃ3URJUDPÃ ,EUDKLPÃ(]]DWÃ.DEHLOÃ 8QGHUVHFUHWDU\ÃRIÃ6WDWHÃIRUÃ,QWHUQDWLRQDOÃ7RXULVPÃ0LQLVWU\ÃRIÃ7RXULVPÃ )DWPDÃ(OÃ*DPPDOÃ 'LUHFWRUÃ3&Ã&HQWHUÃ(J\SWLDQÃ7RXULVWÃ$XWKRULW\Ã $PUÃ6DDGÃ 0DQDJHUÃ,7Ã&HQWHUÃ&DLURÃ,QWHUQDWLRQDOÃ&RQIHUHQFHÃ&HQWHUÃ0LQLVWU\ÃRIÃ7RXULVPÃ 1RKDÃ7KDUZDWÃ :HEÃ'HYHORSHUÃ&DLURÃ,QWHUQDWLRQDOÃ&RQIHUHQFHÃ&HQWHUÃ0LQLVWU\ÃRIÃ7RXULVPÃ Ã

48 Annexes

Annex 2: Framework dimensions

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7DEOHÃDÃ6HFWRUDOÃ8VHÃRIÃWKHÃ,QWHUQHWÃ 6HFWRUÃ 5DUHÃ 0RGHUDWHÃ &RPPRQÃ Academic - primary and >0-10% have leased-line 10-90% have leased-line >90% have leased-line secondary schools, Internet connectivity Internet connectivity Internet connectivity universities Commercial-businesses with >0-10% have Internet servers 10-90% have Internet servers >90% have Internet > 100 employees servers Health-hospitals and clinics >0-10% have leased-line 10-90% have leased-line >90% have leased-line Internet connectivity Internet connectivity Internet connectivity Public-top and second tier >0-10% have Internet servers 10-90% have Internet servers >90% have Internet government entities servers

7DEOHÃEÃ7KHÃ6HFWRUDOÃ$EVRUSWLRQÃRIÃWKHÃ,QWHUQHWÃÃ 6HFWRUDOÃSRLQWÃWRWDOÃ $EVRUSWLRQÃGLPHQVLRQÃUDWLQJÃ 0 Level 0 1RQH[LVWHQWÃ 1-4 Level 1 5DUHÃ 5-7 Level 2 0RGHUDWHÃ 8-9 Level 3 &RPPRQÃ 10-12 Level 4 :LGHO\ÃXVHGÃ

49 Egypt Internet Case Study

7DEOHÃÃ&RQQHFWLYLW\Ã,QIUDVWUXFWXUHÃRIÃWKHÃ,QWHUQHWÃÃ Ã 'RPHVWLFÃ ,QWHUQDWLRQDOÃ ,QWHUQHWÃ([FKDQJHVÃ $FFHVVÃ0HWKRGVÃ EDFNERQHÃ /LQNVÃ Level 0 1RQ None None None None H[LVWHQWÃ Level 1 7KLQÃ ≤ 2 Mbit/s = 128 Kbit/s None Modem Level 2 ([SDQGHGÃÃ >2 >128 Mbit/s 1 Modem – 200 Mbit/s -- 45 Mbit/s 64 Kbit/s leased lines Level 3 %URDGÃÃ >200 Mbit/s >45 Mbit/s More than 1; Bilateral or Modem -- 100 Gbps -- 10 Gbps Open > 64 Kbit/s leased lines Level 4 ,PPHQVHÃÃ > 100 Gbps > 10 Gbps Many; Both Bilateral and < 90% modem Open > 64 Kbit/s leased lines

7DEOHÃÃ7KHÃ2UJDQL]DWLRQDOÃ,QIUDVWUXFWXUHÃRIÃWKHÃ,QWHUQHWÃÃ Level 0 1RQH: The Internet is not present in this country. Level 1 6LQJOH: A single ISP has a monopoly in the Internet service provision market. This ISP is generally owned or significantly controlled by the government. Level 2 &RQWUROOHG: There are only a few ISPs because the market is closely controlled through high barriers to entry. All ISPs connect to the international Internet through a monopoly telecommunications service provider. The provision of domestic infrastructure is also a monopoly. Level 3 &RPSHWLWLYH: The Internet market is competitive and there are many ISPs due to low barriers to market entry. The provision of international links is a monopoly, but the provision of domestic infrastructure is open to competition, or vice versa. Level 4 5REXVW: There is a rich service provision infrastructure. There are many ISPs and low barriers to market entry. International links and domestic infrastructure are open to competition. There are collaborative organizations and arrangements such as public exchanges, industry associations, and emergency response teams.

7DEOHÃÃ7KHÃ6RSKLVWLFDWLRQÃRIÃ8VHÃRIÃWKHÃ,QWHUQHWÃÃ Level 0 1RQH: The Internet is not used, except by a very small fraction of the population that logs into foreign services. Level 1 0LQLPDO: The small user community struggles to employ the Internet in conventional, mainstream applications. Level 2 &RQYHQWLRQDO: The user community changes established practices somewhat in response to or in order to accommodate the technology, but few established processes are changed dramatically. The Internet is used as a substitute or straight-forward enhancement for an existing process (e.g. e-mail vs. post). This is the first level at which we can say that the Internet has "taken hold" in a country. Level 3 7UDQVIRUPLQJ: The user community’s use of the Internet results in new applications, or significant changes in existing processes and practices, although these innovations may not necessarily stretch the boundaries of the technology’s capabilities. Level 4 ,QQRYDWLQJ: The user community is discriminating and highly demanding. The user community is regularly applying, or seeking to apply the Internet in innovative ways that push the capabilities of the technology. The user community plays a significant role in driving the state-of-the-art and has a mutually beneficial and synergistic relationship with developers.

50 Annexes

Annex 3: Acronyms and Abbreviations

ICT Information and Communications Technology

IDSC The Cabinet Information and Decision Support Center

ISE Internet Society of Egypt

ISP Internet Service Provider

IT Information Technology

ITI Information Technology Institute

LE Egyptian Pounds, the currency used in Egypt. At June 30 2000, 3.48 Egyptian Pounds were equal to one US dollar.

MCIT Ministry of Communications and Information Technology

NGO Non-Governmental Organization

RITSEC Regional Information Technology and Software Engineering Centre

TE Telecom Egypt

51 Egypt Internet Case Study

Annex 4: Selected Egyptian Web sites

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52 Annexes

Annex 5: References

Kamel, Tarek. Internet Commercialization in Egypt: A Country Model. Inet 97 Conference Proceedings. http://www.isoc.org/isoc/whatis/conferences/inet/97/proceedings/E6/E6_2.HTM

Mintz, Steve. The Internet as a Tool for Egypts Economic Growth. October 1998 http://www.intlpros.com/Egypt%20Study.htm.

El-Nawawy, Mohamed and Ismail, Magda. Overcoming Deterrents and Impediments to Electronic Commerce in Light of Globalization: The Case of Egypt. Inet 99 Conference Proceedings. http://www.isoc.org/inet2000/cdproceedings/inet99/1g/1g_3.htm.

El-Nawawy, Mohamed. Profiling Internet Users in Egypt: Understanding the Primary Deterrent Against Their Growth in Number. Inet 2000 Conference Proceedings. http://www.isoc.org/inet2000/cdproceedings/8d/8d_3.htm.