Development through ICT:Egyptian Information Society Initiative

Amr HASHEMMinistry of Communications & Information TechnologyArab Republic of Egypt

Agenda

Introduction Egypt’s Outlook Information Society

Initiative ICT Industry

Creating Favorable Environment

WTO Commitments Way Forward

National Action Plans

Regional & International Coordination

Egypt Today

A unique location linking major economic regions: Mediterranean, Europe, Asia, Africa, and Arab World.

Investing $80 billion over 21 years in modernization of infrastructure.

Egypt Today

65% under age of 25 Preparing young

generations by investing in: education, skills development,

and professional training.

Ranking 17th worldwide in number of yearly graduates

Egypt Today

Egypt is reincarnating into a modern, liberal & private sector led market driven economy.

A remarkable recovery through an extensive economic and social reform programs

Coordinating the efforts of the Government, the business

sector and the Civil Society in deployment and utilization of ICT for economic and social

development through various forms of Public-Private-

Partnerships

Egyptian Information Society Initiative

ICT & Economic Growth Higher productivity:

making it possible to adopt different structures and locations

New technologies allow for new methods of production Social Services:

social services promoting economic growth, such as health and education.

Investment: Investment in ICT is also significantly correlated with

growth (Easterly and Rebelo,1993) Rural Development:

There is evidence that teledensity is positively correlated with the level of income.

Teledensity & Income in Egypt

0

2,000

4,000

6,000

8,000

10,000

12,000

0 10 20 30

Teledensity

Inco

me $

E-ReadinessE-Readiness

Egyptian Information Society Initiative

Egyptian Information Society Initiative

E-Government

E-Government

E- Society

Civil SocietyE-Health

- - -

E- Society

Civil SocietyE-Health

- - -

E-Knowledge

E-LearningE-HeritageE-Content

E-Knowledge

E-LearningE-HeritageE-Content

E-Business

E-Business

CIT Industry Development CIT Industry Development

Legal ICT Framework

1997:Investment Incentives Law 1998:Separation of Operation and Regulation

Establishment of an Independent Regulatory Authority

1999:Establishment of Ministry of Communications & Information TechnologyDevelopment of 1st National CIT-Plan

2002:Intellectual Property LawWTO- Basic Telecommunications Agreement

2003:New Telecom LawWTO-Information Technology Agreement

2004:E- Signature Law

Basic Telecom Agreement (BTA) Arab Countries with BTA Commitments

Morocco (Apr. 94, Apr. 97, Oct. 00) Tunisia (Apr. 97)Jordan (Oct. 00) Oman (Dec. 00)Egypt (Jun. 02) Bahrain

MCIT and TRA studying the requirements of BTA (Winter/Spring 2001)

MCIT, TRA, MoFA and MoE Preparing the Final Draft of BTA proposal (June 2001)

Clarifying issues related to the BTA proposal (Fall 2001/Winter 2002)

Meetings for discussing Egypt’s BTA proposal (February 2002)

BTA proposal circulated among WTO members for approval (April 2002)

BTA commitments integrated into Egypt’s schedule (June 2002)

BTA Commitments (Cont.)

Reference Paper on Regulatory Principles

Table of Specific Commitments Grace Period for Market Reform Technology-Neutral approach to servicesDevelopment of Local IndustryNo Limitations on Foreign CapitalOpening up the market for new services

Competition in ICT

1996: Internet services provision 1997: public payphone services 1998: mobile telephony services - GSM 2000: provision of public data services

for business sector 2000: VSAT services 2002: Internet backbone infrastructure

rollout and wholesale services

2003: high-speed access – xDSL 2004: pre-paid calling cards

Fixed Services Annual Investments of

almost EGP 3 Billion since 1997: modernization of core

network adding almost 1 million

new access lines annually Introducing new services

Revisiting the Business Model: Consultation with

stakeholders Tariff rebalancing to

eliminate cross-subsidies Introduction of USF to

finance service provision in rural areas

0

2

4

6

8

10

12

99 2000 2001 2002 2003 July-04

No. of subscribers

No. of fixed lines

Millions

Mobile Telephony

2 Egyptian-International consortia: Vodafone: Vodafone PLC +

Egyptian Investors MobiNil: Orange + Egyptian

Investors (Orascom Telecom + others)

Impact of deregulation: Employment: 4000 jobs Investments: EGP 10 Bil. Wealth Creation: EGP 16

Bil. Governmental proceedings

of almost: EGP 7.4 Bil.

0.08

0.93

2.35

3.44

4.50

5.80

6.50

0

2

4

6

8

1998 1999 2000 2001 2002 2003 Jul-04

Millions

Internet Access

Subscription-Free Internet Services: Launched in Jan ’02 Interconnection between NSP and TE Internet at cost of local calls(0.2 $ per

hour) Improved QoS - Reduced Costs -

Utilization Growth Broadband Initiative

Launched in May ’04 Unbundling of the local loop Increase ADSL Penetration – Promote WiFi

Hotspots 50,000 ADSL Subscriber during First Year

Free Internet Nationwide

Minutes / Month 760 M

International Capacity

1.2 GbpsMil. Min. of Use International Capacity in Mbps

Total Unique Calling Numbers

1 M

Estimated Number of Users 3.6 M

Internet Service Providers 174

0

100

200

300

400

500

600

700

800

900

Jan 02 Jul 02 Jan 03 Jul 03 Jan 04 Mar 04 May 04 Jul 04 Q1 02 Q3 02 Q1 03 Q3 03 Jan 04 Mar 04 May 04 Jul 04

Info Technology Agreement (ITA)

Extension of the implementation for developing countries till 2005

MCIT, MoF, MoI&FT and MOFA studying the ITA in respect to: Impact on the sovereign income of taxes Impact on industry development

Reaching an initial proposal for phasing-in the items under the ITA

The goal is to promote the ICT sector by: Reducing producers’ costs of deploying ICT Encouraging consumer demand Encouraging innovation and development Creating job opportunities

ICT Imports TariffsTotal Customs

12%

Gov. RevenueSource: Monthly Economic Digest, November 2003 MOFT

776

441

964

472

1273

623

0

200

400

600

800

1000

1200

1400

1997 1998 1999

Imports Customs

Scheduling ITA commitments

Spare Parts,

Components

19%

Electronic Devices,

Equipments

33%

Communication

Switches, Cables,Semi Conductors Equipments

35%

Electric Cables,

Electric AC Switches

13%

Scenario 1:Phasing-in Implementation using a ‘Sudden-Death’: Year 1: Spare Parts &

Components Year 2: Electronic

Devices & Equipment Year 3: Electric Cables,

Electric AC & Switches Year 4: Communication

Switches, Cables & Semi Conductor Equipment

Reductions in ICT Customs

Scenario 2:‘Progressive’ Approach:Annual equal reductions on tariffs for ITA items

15.6

8.8

2.0 1.90.0

0.0

4.0

8.0

12.0

16.0

Ta

riff

%

Base rate GATT 2004 New Tariff2004

GATT 2005 2007

Promoting E-Access Buying a PC on monthly installments and no advance

payments Using the phone line as a collateral Highly efficient PCs manufactured or assembled locally 75 thousand PCs were sold since December 2002 Target to reach 200,000 households within a year

1500

2000

2500

3000

3500

4000

4500

09.01.01 28.07.01 13.02.02 01.09.02 20.03.03 06.10.03 23.04.04 09.11.04

3.50

4.00

4.50

5.00

5.50

6.00

6.50

C1700 LS15 Bingo 250

P2000LS Bingo 430

Exchange Rate

2004 Tariff Reforms

0.8

1.8

3.1

3.1

0.0 0.1

1.9

0.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Spare Parts,Components

ElectronicDevices,

Equipments

CommunicationSwitches,

Cables,SemiConductorsEquipments

Electric Cables,Electric ACSwitches

New Tariff %

Tariff 2004 %

239

371

558

783

964

11331187

0

200

400

600

800

1000

1200

1998 1999 2000 2001 2002 2003 May2004

Source: The General Authority For Investment & Free Zones

No. of IT Companies

No. of IT Companies

10244

14183

19890

26132

3034732763 33941

0

5000

10000

15000

20000

25000

30000

35000

98 99 2000 2001 2002 2003 May2004

Source: The General Authority For Investment & Free Zones

No. of IT Labor Force

Alliance with MNCs

CompanyTotal

Investments (in USD Million)

Exports2002-2006

(in USD Million)

Increase in job

opportunities

Alcatel (French) 135 153 262Ericsson (Swedish) 112 106 448Siemens (German) 77 116 515

Nortel (Canadian) 6 15 28Oracle & their local partners (US) 50 123 3000

IBM (US) 40 99 500

Equant (French) 20 20 400

Total 440 632 5153

Expectations of Liberalization

Higher customer focus Bringing-in new services to cater to the

needs of various segments More efficient service delivery as a result of

the technology neutral-approach to regulation

Stronger Industry Promotion High-yield job creation as a result of market

growth and development Export-oriented industries through transfer

of know-how and innovation

Way Forward

Dialogue within the international community to promote technology transfer and facilitate participation of developing countries in the global information society

Regional coordination to promote economic integration and generate opportunities for regional players

Ongoing national consultation with market players and stakeholders to resolve various issues of concern regarding further market development

Thank you

AHashem@mcit.gov.eg