Cairo, Asharq Al-Awsat—Egypt has the potential to become a regional and global digital communications hub, the chief executive of Egypt’s telecoms regulator, the National Telecommunications Regulatory Authority (NTRA), told Asharq Al-Awsat as the country prepares to offer unified telecoms licenses at the end of this month.
“If we set up local data centers in Egypt we would be able to carry out a number of applications through which we would be able to allow [companies] to use Egypt [for data storage], instead of the United States or Europe or Australia,” said Hisham El-Hayali. “This will also give users added value in terms of communications, download speeds and storage space.”
A number of underwater Internet cables currently run through Egypt’s territory, including the TE-North, owned by national telephone operator, Telecom Egypt, and the EIG cable connecting Europe and India.
“In terms of underwater cables, Egypt connects [Asia], Europe and Africa. Trade routes used to run through Egypt via camels, and then ships, and today through fiber optic cables. Egypt’s location is very important in terms of underwater cables, or in terms of [digital] cables,” Hayali said.
He added: “All this can transform Egypt into a global digital communications hub.”
According to a Cisco report, the Middle East and Africa are set to drive global Internet and mobile data traffic during the next five years, experiencing a 38 pecent CAGR (Compound Annual Growth Rate) in Internet traffic and a 70 percent CAGR in cellular Internet data traffic until 2018.
“Egypt can account for the lion’s share of this traffic, especially in light of its geographic location and capabilities,” Hayali said, referring to the report.
Hayali stressed, however, this would require setting up necessary infrastructure and legislation, which Egypt currently lacks. “This [plan] does not just comprise cables only but also requires amending necessary legislation,” he said. “We are working on this, whether in terms of amending the country’s current communications law or a law to secure networks, or activating the clauses specific to intellectual property rights.”
This comes as Egypt prepares to grant its first unified telecoms licenses at the end of June.
A license will be granted—at a cost of 2.5 billion Egyptian pounds (359 million US dollars)—to the country’s sole fixed-line telephone services operator, Telecom Egypt (TE), allowing it to provide the full roster of communications services comprising landline and cellular telephony, as well as Internet services.
TE already operates as an Internet Service Provider through its subsidiary, TE Data.
The new legislation for the licenses—overseen by NTRA—allows TE to piggyback these new services onto existing cellular networks used by Egypt’s ‘big three’ cellular operators—Mobinil, Etisalat and Vodafone Egypt.
Vodafone Egypt is part-owned by TE, which has a 45-percent stake in the UK-based Vodafone’s Egypt subsidiary, but “this stake does not allow it [TE] to become a full cellular operator,” said Hayali, who added: “It is merely a shareholder, an investor. It wants to transform itself from a [mere investor] into an operator.”
The new law governing the license requires TE to exit its investment in Vodafone a year after the license is granted.
As a result of the legislation, the ‘big three’ cellular operators will now, conversely, be able to offer landline services using TE’s existing landline network. All three already offer integrated cellular–Internet services to their customers.
Speaking of TE’s motivation for offering a fully-integrated communications service, Hayali said that the company had “fears” regarding the profit margins it derives from landline services and the demand for them in light of decreasing use in landline services and the popularity of cellular phones, “so it wants to enter into the cellular market. Conversely, the cellular companies wish to offer fixed-line telephone services.”
This comes as Egyptians are increasingly making use of cellphones instead of fixed-line services. Cellphone penetration in Egypt passed the 100-percent mark in 2012 and reached 118.2 percent at the end of 2013, according to the latest figures provided by Egypt’s Ministry of Communications and Information Technology. Currently 93 million cellphones are in use among the country’s 87 million-strong population.
Hayali said the new legislation allowing unified licenses was part of a general ‘road map’ to overhaul the communications sector in the country, which included establishing a national body to oversee the development of the sector which, he said, was in need of development. “We need large investments in this regard, because it is the ‘spine’ on which we will build all future developments in the [information technology and telecommunications] sector, so we can attain what is known as the ‘digital economy’ and the ‘digital society.’”
He added: “If we don’t have the necessary infrastructure in place we will not be able to achieve this goal. Today, this infrastructure is in the hands of TE, and TE wishes to offer cellular services as well. But one company alone—whether financial or technical—cannot possibly work in all these different directions [without assistance].”