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With the ratification of Telecom Act 10/2003 the National Telecommunication
Regulatory Authority (NTRA) was awarded a new mandate and a more
empowered presence within Egypt’s telecom sector. Five years
earlier, the NTRA had been born as a fledgling institution eager
to lead the sector along the path of regulatory reform. It is
now a robust and versatile institution with the maturity and aptness
required to set and enforce the right policies at the right pace.
The ideal commanding the activities of the NTRA is for it to
become an active pace-setter within the telecom sector, building
the capacity and reputation that allows it to be an independent
and prudent arbiter among the different stakeholders: the industry,
the state and the consumer.
In 1991, the Egyptian government instituted an Economic Reform
Program that has successfully transformed Egypt into a prosperous
emerging market. The program was launched to achieve more deregulation
in various economic sectors, spearheaded by the telecom sector.
Its implementation brought about a set of economic policies targeting
growth and employment creation, at the same time decreasing centralization
and public sector domination of the economy. Today, there is universal
recognition that Egypt has become one of the most stable emerging
markets.
In 1998, Egypt took the first steps towards liberalizing its
telecommunication sector, restructuring the legal entity of Telecom
Egypt (TE) to a state-owned joint stock company and establishing
an independent regulatory authority by virtue of Law 19/1998 and
Presidential Decree 10/1998.
In the same year, the Egyptian regulator granted two mobile licenses
in order to pave the way for more liberalization and enhance market
forces.
In 1999, the Ministry of Communications and Information Technology
(MCIT) was established with the goal of developing and implementing
a complete strategy for the ICT sector in Egypt with strategic
objectives to establish an information-based society and turn
the country into a regional ICT hub. To this end, MCIT sought
to comply with international standards, enhance development, promote
liberalization and grasp investment opportunities. This liberalization
process became a national goal adopted in line with the general
strategy of liberalizing Egypt’s economy to sustain a significant
position within a global market economy streamlined through the
framework of World Trade Organization (WTO) regulations and worldwide
best market practices.
As one of the founding members of the WTO, Egypt was an early
signatory of GATS. In 2002, it voluntarily acceded to the Basic
Telecommunications Agreement (BTA), thereby committing itself
to dismantling the governmental monopoly on the provision of telecommunication
services.
Egypt’s international obligations have been reaffirmed
through the promulgation of the Telecom Act of 2003 (Law 10/2003),
which further empowered the independent NTRA and set definite
timelines for liberalizing basic telecom services. The act outlines
the provisions by which Egypt pledges to safeguard the publication
of information, the protection of free competition, the provision
of universal service and the protection of consumer rights. It
also sets the rules for licensing new service providers and allocating
frequency spectrum bands.
The Telecom Act is a milestone in the course of the liberalization
of Egypt’s economy in general. Other important new laws
include Investment Law 13/2004, E-Signature Law 15/2004, and the
Antitrust and Competition Law passed by parliament in January
2005. The chief benefits of liberalizing the market are:
Improved access to information
and communication infrastructure and technologies
Promotion of international
and regional cooperation through the encouragement of foreign
direct investment
Encouragement of the design
and production of affordable and easily accessible ICT equipment
and services
Support of research and
development of new technology-based services for the benefit of
all stakeholders
Promotion of the benefits
of international trade and the use of e-business models in developing
countries and countries with economies in transition
Encouragement of the development
of local content and software specific to the needs of local communities
In 2005, in accordance with the Telecom Law, the NTRA eliminated
the monopoly in fixed telephony. Starting 2006, the provision
of fixed line services is open to new market entrants, and the
resale of Telecom Egypt’s domestic service is allowed.
At the end of 2005, TE sold 20% of its shares, and may continue
the privatization up to 49% of its shares in subsequent stages.
Among the conditions set by the NTRA is that all licensees must
be companies registered in Egypt, and all must train local human
resources.
As for international voice services, the NTRA has initiated liberalization
of Egypt’s international gateways, and the resale of TE’s
international voice and data services has been allowed.
Until 2006, the NTRA had granted two mobile licenses. In February
2006, the authority issued a request for proposals for a third
mobile network in Egypt, with the aim of eliminating the existing
duopoly and increasing market competition. Eleven consortia of
international companies with Egyptian partners applied for the
third network, which is permitted to employ both second- and third-generation
technology.
The NTRA formed a high-level committee to conduct the technical
evaluation of bids, composed of experts from the NTRA, the Ministry
of Investment and Finance, administrative control agencies, academia
and the State Council.
For a consortium to advance to the financial bidding process,
it had to receive a minimum score of 700 out of 1,000 for its
technical proposals, and all scores had to be no less than 85%
of the highest technical grade awarded.
The process concluded with the licensing of the third mobile
network to the consortium led by Etisalat of the United Arab Emirates,
with Egypt Post, National Bank of Egypt and Commercial International
Bank (CIB), which offered the highest bid, EGP 16.7 billion.
The network is scheduled to start operating by the end of the
first quarter of 2007. National roaming and number portability
will give the third operator a fair chance within the market.
The NTRA has already developed rules and procedures for the licensing
of Voice over Internet Protocol (VoIP) services following detailed
consultation and discussion over policies, regulations and technical
issues. With the liberalization of international gateways, it is expected that many companies will be attracted
to the prospects of investing in international VoIP services within
the Egyptian market.
With 3G networks in mind, the NTRA and the Ministry of Information
are studying media-telecommunications convergence. It is expected
in the near future that the NTRA will establish licensing policies
to enable cable TV companies to offer converged services ranging
from video on demand to broadband access, and perhaps voice telephony
at a later stage.
Payphone services were opened to competition in 1998, and there
are currently three providers in this market including Telecom
Egypt. As part of the NTRA’s national Universal Service
Plan there are still more opportunities for expansion in this
market segment.
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