Telecommunication Reform and Internet Evolution

Following the establishment of the Ministry of Communications and Information Technology (MCIT) in October 1999, the National Telecommunication Regulatory Authority (NTRA) has developed a new licensing framework regarding Internet service provision in Egypt. According to this new scheme, there are three categories of service providers, classified as Class A, B and C. Both Class A and B can build and own infrastructures, as well as co-locate equipment within TE exchanges. While Class A providers have an agreement with TE to acquire international bandwidth capacity via one of the cable operators, Class B providers have to go via one of their Class A counterparts to get international access. Another difference between Class A and Class B is that the former offer services either to other providers (wholesale) or to end-customers (retail), whereas the latter can only sell to end-customers. Both Class A and B are usually referred to as Network Service Providers (NSPs). On the other hand, Class C ISPs do not have the right to build infrastructures nor do they have direct access to international bandwidth. Instead, they lease ports and capacity from NSPs and provide services to end-customers. It is most likely that Class C providers work as resellers for NSPs in remote areas where the latter do not have a presence. To date there are four Class A providers, five Class B (four of which are currently operational), and around 200 Class C providers.¹¹

The number of Internet users in Egypt is now estimated to be around 5 million.¹² The exponential increase in the number of users is a result of regulatory reforms in this sector as well as an unparalleled support offered by the government. The regulatory reforms were partially addressed in the licensing frameworks in which the relation between Telecom Egypt and the NSPs are described and monitored by NTRA. Also, such reforms were mostly reflected in the Telecommunication Act number 10 of year 2003, which defines in eighty seven articles all regulations concerning the provisioning of any telecommunication services in Egypt.

At the same time, the government’s support has been articulated through initiatives promoted by the MCIT. Examples here include: "Free Internet," which allows dial-up Internet access with the cost of local phone call (US$0.21 per hour); "PC for every home" and "Laptop for every professional," which provide affordable means for individuals and businesses to acquire computers through monthly installment payment; "IT Clubs" that makes basic computer training and Internet access available in rural and deprived areas; and "Broadband Access," which has brought asynchronous digital subscriber line prices down by fifty percent and promoted broadband wireless services as well.

Telecom Egypt, which is wholly owned by the government, has also developed special pricing schemes for NSPs as regards local and international bandwidth. Over the past five years, a number of discounts have been applied on bandwidth capacity, which cumulatively represents seventy five percent and sixty percent of local and international bandwidth, respectively.