Indicators of Internet Penetration in Egypt



Every month, the Egyptian Ministry of Communication publishes[1] up-to-date ICT indicators displaying the state of technology adoption in Egypt (e.g., mobile subscription and penetration, mobile internet usage, ADSL and fixed telephone line subscriptions). From these figures, we can draw a portrait of the capability of the Egyptian people to connect to the internet, and from other resources, the low penetration rate can be explained.

The August 2015 report[2] shows that ADSL subscriptions are limited to 3.57 million subscribers, while the same report states that fixed telephone lines reached 6.36 million subscriptions, meaning that 56% of fixed telephone lines also have ADSL service. In a population of 90+ million, the ADSL penetration is quite modest at only 4.13%.

When looking to internet usage through mobile phones and mobile USB modems, the figures differ; Egypt has 97.66 million mobile subscriptions with a mobile penetration of 114.51%,[3] and mobile internet subscriptions are at 24.72 million, indicating that 25.31% of mobile devices are connected to the internet, taking into consideration USB modems, which reached 4.07 million users.

Despite higher rates, limited usage capacity, and narrow capabilities for mobile internet, more Egyptians are connected to the internet via mobile connections than ADSL, which leads to the question: Why do Egyptians not sufficiently enjoy online access via ADSL? At first, we should question the numbers. Are only 4.13% of Egyptians really connecting to 
internet via ADSL?

We can, with enough confidence, answer “no”; the numbers don’t quite reflect reality. This is because Egypt witnesses the phenomena of shared internet connections between households. Due to high tariffs for ADSL subscriptions, a subscriber connects three or four neighbors to his modem, possibly even more if it’s purely run for profit, creating a LAN (local area network) sharing the same internet connection in return for a monthly fee.

This phenomenon, called “
wasla” (“link” in Arabic), is so widely adopted in Egypt that the previous Minister of Communication mentioned it[4] on many occasions,[5] blaming it as the cause of the low “official” internet penetration rate. Later, his successor mentioned the existence of 8.5 million undocumented users connecting to internet through wasla,[6] which means that the true number of ADSL internet users – not calculated based on official subscriptions – may jump to 12 million, with a penetration rate of 13.88% instead of the official 4.13%.

This low official figure can be blamed on how ICT policies and legislation are designed in Egypt, since with the state monopoly on infrastructure; the cost of internet is highly affected by the lack of alternatives, causing the low penetration rate.

Monopoly Over Infrastructure

It is unavoidable to discuss the state of infrastructure governance in relation to internet penetration. The Egyptian situation shows how limiting legislation and policies can severely affect the right to internet access.

The national (80% state owned)[7] company Telecom Egypt was given by Article 60 of the Telecommunication Law[8] the exclusive right to build, own, and operate landline telecommunication infrastructure in Egypt. This made its subsidiary company “TE Data” – 100% owned by Telecom Egypt[9] – the biggest internet service provider (ISP) in Egypt, with a market share of 67.3% of ADSL subscriptions,[10] leaving the other six companies – which rent their infrastructure equipment from Telecom Egypt – to share the remaining percentage.[11]

This kind of monopoly affects both private ISPs and consumers, and the year 2015 was characterized by a continuous crisis between private ISPs, TEDATA, the national regulator (NTRA), and the Ministry of Telecommunication. The Ministry of Telecommunication policy has been to lower the cost of monthly subscription rates in order to increase the official figure for internet penetration, and to drastically decrease the download capacity of residential subscribers in order to stop the phenomenon of internet connection sharing. This caused a fierce battle between different stakeholders as private ISPs demanded to lower the infrastructure rent cost collected by Telecom Egypt in exchange for lowering monthly fees. This was greatly opposed by the latter as it meant a decrease in its revenues from infrastructure rental.

Monopoly over infrastructure hinders and criminalizes the different creative forms Egyptians are using to connect to
Internet; wasla is being criminalized as “illegal networks” instead of being adopted as a form of small business enabling people to connect to the internet at a reduced cost. Another alternative I personally witnessed and enjoyed when I was living in Hurghada, an Egyptian city by the Red Sea where telephone landlines are barely existent, is the creation of a series of WiFi modems that all share a balanced number of internet connections, and are able to provide the internet to several hundred users.

This unlicensed project was run on a commercial 
basis, and was able to deliver the internet to a growing number of inhabitants. Unfortunately, the state of infrastructure monopoly is depriving such initiatives of the ability to grow into a sound business model, as well as depriving the majority of Egyptians from enjoying their right to internet access.

The state of internet access in Egypt is greatly affected by the deficiency of legislation and policies governing the internet, especially with regards to the infrastructure monopoly that causes major difficulties in the evolution of existing private business models, and hinders other new alternatives from developing.

These models cannot develop without a clear vision for shaping legislation and policies regarding internet governance in Egypt. The Egyptian state should embrace an open model of internet governance that creates an equal opportunity for different models to develop and that implements different approaches to connectivity. This will both benefit the ICT economy and citizens’ ability to participate in the growing opportunities of the internet, allowing them to truly enjoy the freedoms that the internet provides.
 
 
Author: Mahmoud Banhawi 

References:
 
[1] Check the publication section at: http://www.mcit.gov.eg/Publications
[2] ICT Indicators in Brief August 2015 monthly issue, MCIT, available at: http://www.mcit.gov.eg/Upcont/Documents/Publications_2112015000_ICT_Indicators_In_Brief_E.pdf
[3] Based on the 2010 census that set the Egyptian population to 85.62 million inhabitants
[4] Ministry of Telecommunication calls the WASLA users to legalize their internet subscriptions. Available at: http://www.masrawy.com/News/Tech-repo... 
[5] Minister of Telecommunication: Wasla is “inappropriate and Haram” – Available at: http://onaeg.com/?p=2258015
[6] Ministry of Telecommunication: about 8 million unlicensed Wasla in Egypt, available at: http://www.dostor.org/903046
[7] TelecomEgypt Ownership Structure. Available at: http://ir.te.eg/Ownership_Structure
[8] Telecommunication Law 10/2003. Available at: http://www.tra.gov.eg/uploads/law/law_en.pdf
[9] TE Condensed Consolidated Interim Financial Statements For the six months ended June 30, 2015 And the Limited Review Report. - Group Entities - Page 24. Available at: http://ir.te.eg/upload/Consolidated%20Interim%20Financial%20Statements%20For%20the%20three%20months%20ended%20June%2030,%202015%20And%20the%20Limited%20Review%20Report..pdf
[10] NTRA orders TE Data to decide date on new internet prices. Available 
http://www.telecompaper.com/news/ntra-orders-te-data-to-decide-date-on-new-internet-prices--1094717 a
[11] List of Class A licensed ISP companies available on (in Arabic): http://www.tra.gov.eg/presentations/TelecomLicensedCompanies.pdf