National Broadband Plan

National Broadband Plan

EGYPT2011eMISRNational Broadband Plan

National TelecomRegulatory AuthorityMISRNational Broadband PlanPhase 1A Framework for Broadband DevelopmentEgypt 2011

Message from the Minister of CITIn today‟s world, the generation and dissemination ofinformation is a key indicator for the developmentalprogress of a country, since it serves as a roadmap foreconomic and social reform. Countries that seize theopportunity to act upon this information andcommunication pillar will inevitably prosper in the 21stcentury.The spread of information and knowledge requires acapable telecom infrastructure and a healthyInformation and Communications Technologies (ICT)sector with conducive policies and regulations in placeto empower all stakeholders and fulfill policy goals.Egypt has already taken many steps to establish itself asa regional role model for ICT. However, the rapid paceby which the ICT ecosystem changes makes itnecessary to revise and adjust national strategies, inorder to keep this sector on track and maintain aleading role.Now is the time for Egypt to formulate its NationalBroadband Plan, by aligning with broadband standardsworldwide, to take the Egyptian society into the 21 stcentury and compete in the information ageeconomies. The effect of this National Broadband Planwill extend beyond the telecom sector, as it willpositively impact key sectors of the Egyptian economy:education, health, business, and others.I firmly believe that the eMisr National Broadband Plan,supported and implemented by all sectors, will supportEgypt‟s reform path and will create the necessarymomentum for the society to develop and prosper.With its ever growing role among Egyptians, broadbandwill be increasingly used as an effective tool to achievesocio-economic development, by empowering citizensand connecting them to each other and to the vastresources of the information age.Dr. Mohamed SalemMinister of Communications & Information TechnologyeMisr National Broadband Plan Foreword 1

Message from the Executive President of NTRATelecommunication and information services havebecome a basic right and a vital need for all citizens.Communication and information technologies linksocieties and cultures together in an ever-growingubiquitous network. A healthy telecom sector is the keyto leverage the benefits and realize the advantagesthe information era is offering us.Egypt, as one of the largest telecom markets in Africaand the Arab world, has all the potential and thenecessary assets to change in this digital era. Theinformation and telecom infrastructure assets that Egypthas, combined with a proper regulatory framework arethe necessary elements needed to unlock the potentialthat we have.Since its establishment in 2003, The National TelecomRegulatory Authority (NTRA) has undertaken its role toreform the ICT sector and to promote private sectorcontributions, which is helping establish a promisingcompetitive market. This goes hand in hand with thefulfillment of all social aspects through a clear UniversalService Policy.It is my belief that with Egypt standing at the crossroads,we must establish a good foundation in order to attainsustainable development nationwide. These endeavorsmust include wide adoption of broadband andinformation technology as a top priority.I deem the eMisr National Broadband Plan a livedocument that will convey our perception and ideastoward a better-performing ICT sector. With theimplementation of appropriate strategic directions anddecisions, the reformed telecom sector will become arole-model for other economic sectors in Egypt and theregion.Dr. Amr BadawiNTRA Executive PresidenteMisr National Broadband Plan Foreword 2


The National Telecom Regulatory Authority (NTRA) of Egypt wishes to acknowledgethe work done by the Research and Studies Unit at the Egyptian Ministry ofCommunications and Information Technology (MCIT), which has contributed to thebroadband demand applications perspective of the eMisr National BroadbandPlan.The NTRA wishes to express its gratitude to the Egyptian Central Agency for PublicMobilization and Statistics (CAPMAS), for providing the NTRA with the required datanecessary to develop the economic and technical models used in this Plan.The NTRA also acknowledges the technical assistance and consultation in the areaof broadband, provided by the World Bank and its team of experts and consultants;and conducted as part of the Reimbursable Technical Assistance Program betweenthe Arab Republic of Egypt and the World Bank in the area of communications.The NTRA further acknowledges the technical assistance and consultation providedby the expert team at Detecon International GmbH/Varkon, as part of theConsultancy Agreement on Broadband Strategic Development for Egypt.In addition, the NTRA would also like to express its appreciation for the feedbackprovided by the Egyptian Market, represented in the Egyptian Industry Committee,as well as all Telecom Operators, Internet Service Providers, Vendors and AcademicInstitutions. Their informative insights and valuable views have significantlycontributed to the quality of the Plan.The eMisr National Broadband Plan was drafted by the Broadband Team at theNTRA and was prepared through market studies and researches over the course ofthe past two years. Special thanks are due to Ms. Sandy McNabb for reviewing andediting this document.eMisr National Broadband Plan Acknowledgement 4

Table of ContentForwardAcknowledgementExecutive Summary ........................................................................................ 9Preface ............................................................................................................. 13Chapter 1: Broadband Market Status .......................................................... 15Chapter 2: Vision and Targets ....................................................................... 29Chapter 3: Gap Analysis ................................................................................. 33Chapter 4: Market Modeling and Feasibility Study ................................... 47Chapter 5: Strategic Options ......................................................................... 60Chapter 6: Benefits and Outlook .................................................................. 89Chapter 7: Implementation ........................................................................... 98Annexes ............................................................................................................ 102eMisr National Broadband Plan Table of Contents 5

List of FiguresFigure ‎1.1 - Fixed line Broadband Subscribers Worldwide, Q2 2011 ....................................... 15Figure 1.2 - Fixed telephone lines per 100 inhabitants for years 2000 – 2010 .................... 16Figure ‎1.3 - Mobile cellular subscriptions per 100 inhabitants for years 2000 – 2010 ....... 17Figure ‎1.4 - Evolution of ADSL Subscribers over the Last Decade ............................................ 19Figure ‎1.5 - Evolution of Mobile USB Subscribers over the Last Decade ................................. 21Figure ‎3.1 - Projected Growth in Broadband Subscribers .......................................................... 33Figure ‎3.2 - Affordability of DSL and CPE ...................................................................................... 37Figure 3.3 - Illiteracy Rate by Governorate ................................................................................... 38Figure 3.4 - Literacy vs. Broadband Penetration .......................................................................... 38Figure 3.5 - Reasons for Not Owning a Computer ....................................................................... 39Figure 3.6 - Computer Literacy in Schools .................................................................................... 40Figure 4.1 - Investment required (USD billion) for different Strategic Options ....................... 50Figure 4.2 - Investment Split Ratios – Incumbent based ........................................................... 51Figure 4.3 - Investment Split Ratios – SPV Setup ....................................................................... 53Figure 4.4 - Investment Split Ratios – Utilities in SPV Setup ..................................................... 55Figure 4.5 - Broadband Revenue Projections ............................................................................... 56Figure 4.6 - Broadband Subscribers Adoption .............................................................................. 57Figure 4.7 - Broadband Revenue Projections–Faster Subscriber's ServiceAdoption Speed .......................................................................................................... 58Figure 4.8 - Broadband Subscribers Adoption–Faster Subscriber's ServiceAdoption Speed .......................................................................................................... 58Figure 5.1 - Drivers of Broadband Diffusion ................................................................................. 60Figure 5.2 - The Supply Chain for Broadband Infrastructure ..................................................... 61Figure 5.3 - Egyptian Broadband Market Structure in the Future ............................................. 62Figure 7.1 - Cluster Chart ................................................................................................................. 99eMisr National Broadband Plan Table of Figures & Tables 6

List of TablesTable ‎1.1 - Main Economic and Infrastructure Indicators .......................................................... 18Table 4.1 - NPVs of different Technology Market CombinationsIncumbent Based Approach ....................................................................................... 51Table 4.2 - NPVs of Different Technology Market CombinationsSPV Approach ................................................................................................................ 53Table 4.3 - NPVs of different Technology Market CombinationsUtilities in SPV Approach ............................................................................................. 55Table 4.4 - Estimated ARPUs .......................................................................................................... 56eMisr National Broadband Plan Table of Figures & Tables 7

Executive Summary

ICT has been a part of Egypt‟s national development strategy for the past decade,and the Government has been developing a framework to move the country intothe information age, through promoting partnerships of public, private, civil societyand multilateral stakeholders. However, the reform wave has stimulated theEgyptian government to speed up the deployment of services and enhance thecurrent broadband infrastructure. The tremendous demand for more bandwidthcoupled with consumers‟ appetite for video-content, news, and multi-mediaservices have led the NTRA to introduce a new ICT strategy for broadband: the“eMisr National Broadband Plan”.Since 2002, national initiatives allowed manufacturers to provide PCs at affordableprices and with flexible payment terms to schools and households. In 2004 thegovernment launched a Broadband Initiative which increased the number ofbroadband connections ten folds within four years and brought 24 Mbps ADSL2+access to residential households. However, despite its successes, Egypt still lagsbehind international standards. Mobile and Internet penetration rates are relativelylow in comparison with the rest of the world. By the end of 2011, the number of ADSLsubscribers in Egypt will amount to 1.8 million subscribers and the number of mobilebroadband subscribers will amount to 2.5 million subscribers.Policy makers in Egypt consider broadband as the engine for development,especially after the recent political and social reform waves. This vision is inaccordance with the increasing dependence of citizens' on broadband. On theother hand, challenges that face the Egyptian society on an economic level requireadopting a strategy across different sectors that is mainly dependent on ICT. Manysectors of the society will require both sufficient broadband infrastructure and theappropriate applications, to implement national initiatives and projects, such as: e-education, e-health, e-government, e-civic engagement, ICT in business, e-commerce, and e-content.eMisr is a National Broadband Plan that proposes different strategic directives tomeet Egypt‟s broadband service needs. To develop eMisr, NTRA has conductedstudies, consultations, workshops and meetings with relevant stakeholders. A jointstudy performed by NTRA and Qualcomm addressed consumers‟ affordability forbroadband services in Egypt. Another study with Detecon built a model to forecastthe broadband market growth and to investigate stimulation effects on thebroadband market. World Bank, under a signed agreement with MCIT and NTRA,has undergone two studies; one to assess strategic options taken by internationaldecision makers to allow for a proper broadband diffusion, and another to build amodel assessing the viability of different broadband technologies and estimatingthe macroeconomic impact of broadband diffusion in Egypt.The key strategic objectives of the eMisr Plan aim to: 1) Recognize Egypt as a frontrunnerin digital communications, 2) Increase job opportunities, 3) Stimulateeconomic growth nationwide and foster social cohesion, 4) Harmonize with othereMisr National Broadband Plan Executive Summary 9

FixedMobileFixedMobilesectors in the Government to improve the quality of life for all citizens, and 5) Avoidan increased digital divide within Egypt.In order to achieve these objectives, multi-dimensional targets need to be attained.The first set of targets addresses availability and focuses on expanding thegeographical coverage of the broadband infrastructure. This will allow citizens incoverage areas to subscribe to broadband services whenever needed. The secondset of targets focuses on penetration and aims to increase the number of thebroadband subscribers base. This is vital to reach the required critical mass that willlead to a sustainable growth cycle. Social targets are the third set of targets thatfocus on providing citizens in rural and non-economically viable areas with means toaccess broadband services. This aims at minimizing the digital divide within Egypt.Targets Short Term (2015) Long Term (2021)Availability Targets75% of households haveaccess to Broadband(2 Mbps)90% of households haveaccess to Broadband(25 Mbps)98% of population with 3Gcoverage90% of population with4G/LTE coveragePenetrationTargets4.5 million (22%) householdssubscribed to broadbandservices8 million (10%) citizenssubscribed to mobilebroadband services9 million (40%) householdssubscribed to broadbandservices14 million (15%) citizenssubscribed to mobilebroadband servicesNational/Social Targets50% of Egyptiancommunities connectedto 25 Mbps50% of 3 rd level Egyptianadministrative localities(Sheyakha and Village)served with at least onePublic Access Point with25 Mbps100% of Egyptiancommunities connectedto 25 MbpsEach 3rd level Egyptianadministrative locality(Sheyakha and Village)served with at least onePublic Access Point with25 MbpsAnalyzing the broadband ecosystem in Egypt, it is clear that many constraints, if notaddressed properly, will prevent the sector from meeting those national targets.These constraints can be divided into supply and demand constraints. Supplyconstraints have a direct effect that reduces the diffusion of broadband services.They include: 1) Limited effective competition in fixed broadband, 2) ServiceeMisr National Broadband Plan Executive Summary 10

availability, 3) Illegal line sharing, and 4) Right-of-way and civil work. Demandconstraints similarly limit the penetration of broadband services. They include: 1)Service affordability and Customer Premises Equipment (CPE) penetration, 2)Illiteracy, 3) E-Literacy, and 4) Local content availability.According to the eMisr National Broadband Plan, the projected short-termsubscriber numbers for broadband services will surpass 12.5 million subscribers.Annual revenues from broadband services in Egypt are projected to amount to EGP17.2 billion (USD 2.88 billion) in 2015. The estimated investment required over the 4year forecast period - to achieve the set availability, penetration, and social targets- are projected to be in the range of EGP 14.4 billion - 23.6 billion (USD 2.40 billion -3.95 billion).It is worth mentioning though that these estimated figures represent the totalinvestment needed by the sector, and will depend on the infrastructuredeployment/leasing options. In addition to private sector investment, governmentstimulation may be needed to encourage investment in areas where deployingbroadband services may not be economically viable. To encourage investment insuch areas, it is assumed that government stimulation of up to 20% of the totalneeded investment would be required. On the other hand, and in order to stimulatethe demand needed for a successful broadband diffusion, an investment in therange of EGP 2.1 billion (USD 350 million) will be needed, as per the Ministry ofCommunications and Information Technology, over four years.This overall investment needed to develop the broadband market, is expected tohave a positive impact on the Egyptian economy in terms of productivity (GDP) andjob creation. It is estimated that by achieving short term targets alone, broadbandwill create 6,650 to 17,500 direct jobs on average per year, and will result in anincremental cumulative contribution to GDP of EGP 24.9 billion (USD 4.17 billion).There is also a spillover effect on the employment in other sectors, but this dependson the political harmonization among other sectors in the country.The eMisr National Broadband Plan is a two staged plan to address thedevelopment of the broadband market in Egypt. Its first phase, “A Framework forBroadband Development”, proposes a list of strategic options andrecommendations to achieve set targets by addressing supply and demandconstraints. As a second phase, a “Broadband Action Plan”, is to follow in Q2 2012and will be the execution arm of eMisr. It will detail, based on eMisr, a list of actionitems with timelines and responsibilities needed for the execution of the plan. This isexpected to be done, through different task forces and in collaboration with allstakeholders of the Egyptian broadband industry. The plan is envisaged to create arobust national broadband ecosystem to meet Egypt‟s needs for 21st century.eMisr National Broadband Plan Executive Summary 11


Egypt has successfully established a distinguished regional position in thedevelopment of its ICT sector by encouraging local stakeholders to develop andextend national telecommunications networks. Over the last decade the Egyptiangovernment has adopted clear and specific steps to include ICT as part of itsnational development strategy, by establishing frameworks to promote partnershipsamong public, private, civil society and multilateral stakeholders. However,triggered by a new vision towards promoting innovation and addressing the needsof citizens, specifically those of intermediary public sectors like education andhealth, it is clear that the time has come for the Government of Egypt to review itspolicies, in order to enhance the availability, quality and penetration levels ofbroadband services throughout the country.A well developed ICT sector is an enabler for citizens, for government and forbusinesses alike, and is a pre-requisite for attracting investment. It affects the lives ofEgyptians significantly, through facilitating access to information, as well as being anincubator for innovation. A platform of a well developed infrastructure andapplications opens up the channel for interaction among government andpopulation through efficient public services and at a much lower costs. On theother hand, an ICT-enabled ecosystem promotes investment, by facilitatingconnectivity and access, to reap the benefits of globalization.The recent political and social reform waves, which were led by young people, weremade possible and supported by ICT. This has stimulated the Egyptian governmentto further promote ICT services and enhance the existing broadband infrastructure.In accordance with this vision as well as the tremendous demand for morebandwidth triggered by an increased consumer-appetite for video-content, instantnews, and multimedia services has led MCIT and NTRA to introduce a new strategyfor broadband.Furthermore, challenges facing Egypt on social and economic levels are mandatingthe adoption of sector-based ICT reform strategies that would accelerate the reformin these sectors as well as increasing the productivity, efficiency and quality ofservices provided to citizens. The Egyptian government has identified the prioritysectors to include the sector-based ICT strategies: the Education sector, the Healthsector, Government administration and public services, Small and Mediumenterprises, Culture and Tourism. Adoption and integration of ICTs in these sectorsrequire sufficient broadband infrastructure, appropriate applications, as well as anenabling environment for a satisfactory implementation.The eMisr National Broadband Plan is a two staged plan to address thedevelopment of broadband services in Egypt. Its first phase, “A Framework forBroadband Development”, proposes a list of strategic options andrecommendations to achieve set targets by addressing supply and demandconstraints. As a second phase, a “Broadband Action Plan”, is to follow in Q2 2012and will be the execution arm of eMisr. It will detail, based on eMisr, a list of actionitems with timelines and responsibilities needed for the execution of the plan. This isexpected to be done, through different task forces and in collaboration with allstakeholders of the Egyptian broadband industry. The plan is envisaged to create arobust national broadband ecosystem to meet Egypt‟s needs for 21st century.eMisr National Broadband Plan Preface 13

1Broadband MarketStatus

The Egyptian broadband market is a complex ecosystem that includes a wide rangeof players. Adopted broadband technologies affect, and are affected by, anumber of beneficiary sectors that touch upon all aspects of the citizen‟s life. Thosesectors represent the demand force needed for the development of thebroadband market. This chapter gives an overview on the current broadbandmarket status, with a snapshot on its historical development, adopted technologies,regulatory environment, key market players, as well as the main beneficiary sectors.1.1. Global PerspectiveSince the last decade, the growth of broadband subscribers has increasedtremendously. It has been evident that there is a continuous shift in the consumers'behaviors. Originally, cable modem and Digital Subscriber Line (DSL) technologieshad gained a lot of momentum. More recently, mobile broadband has beenbidding for supremacy based on 3G and 4G cellular mobile standards. Technologycompetition, both within and between platforms, has helped turn broadband into avibrant market sector.By the end of Q2 2010, the number of fixed linebroadband subscribers amounted to 497.77million worldwide. In addition, by the end of Q22011, the figure evolved to some 557.81 millionsubscribers with a 12% growth. Figure 1.1, showsthat in Q2 2011, the number of DSL subscribersaccounted for some 63% of the global installedbase. In addition to the DSL subscribers'percentage, there are cable modems witharound 20 percent. However, this is not thecase in the North America, where cablemodems have represented a majority in themarket. The remaining 17% comprises FTTxtechnologies, which form around 14%; and otherFigure 1.1 - Fixed line BroadbandSubscribers Worldwide, Q2 2011 1technologies like metro Ethernet, free space optics and other high speedconnections that form the remaining 3%. Currently the global trends are movingtoward FTTx as a future-proof infrastructure capable of supporting the highbandwidth that will consume the estimated future consumer services. In someleading markets, DSL subscribers are now beginning to decline as more subscribersswitch to FTTx technologies.In the early days of broadband, typical consumer usage patterns required fasterdownloading speeds but not high uploading speeds (for email, web-browsing, videostreaming, etc.). However, today, broadband applications demand higheruploading speeds (for instance, for voice and video calls, user-generated contenteMisr National Broadband Plan Broadband Market Status 15

uploads, games, etc.). Future broadband network architectures likely tend towardcreating symmetry between download and upload capacities 1 .In fact, global markets witnessed another consumer experience shift that has led toa clear swing from fixed to mobile cellular telephony. This has taken place for morethan a decade especially since the beginning of the year 2000. By the end of 2010,there were over four-fold increase in the number of mobile cellular subscriptionsmore than fixed telephone lines. In contrast to the growth in the mobile sector, fixedtelephony has witnessed nearly no growth in the last decade. Indeed, the globalfixed line penetration has been stagnating at just below 20% for the last decade 2 .While the number of fixed telephone lines is actually decreasing in many developedcountries, it tends to show very small growth rates in developing countries, whereaverage penetration rates stand at 14%. Figure 1.2 shows the fixed telephone linesper 100 inhabitants for the years from 2000 till 2010.Figure 1.2 - Fixed telephone lines per 100 inhabitants for years 2000 – 2010 3In contrast, the number of mobile cellular subscribers has been growing, with yearon-yeargrowth averaging 24% between 2000 and 2010. Figure 1.3 shows the mobilecellular subscriptions per 100 inhabitants for the years from 2000 to 2010.1"Strategic Options For Broadband Development", a specialized report developed by World Bankaccording to a consulting agreement with NTRA, 20102ITU World Telecommunication/ICT Indicators Database, World Telecommunication/ICT Indicators database, The developed/developing countryclassifications are based on the UN M49, National Broadband Plan Broadband Market Status 16

Figure 1.3 - Mobile cellular subscriptions per 100 inhabitants for years 2000 - 2010 4The major trend in mobile services is the mix of voice and data services. TheAverage Revenue per User (ARPU) for voice services has declined while there hasbeen a significant increase in the demand for mobile data services. Consumersworldwide are embracing a new generation of mobile data applications and highendservices, such as mobile Internet, mobile gaming, GPS, mobile money, andother innovative mobile applications.In order to support these new mobile data services, mobile operators must roll outexpensive mobile broadband networks: (3G, HSPA, EVDO, WiMAX, and LTE networks)in order to attract consumers who have a previous experience with similar ICTservices, comparable to their residential broadband services. These new mobilebroadband networks also require more spectrum; a scarce resource which cansometimes be difficult to secure. Hence, some efforts have been observed in theglobal market regarding the fixed- mobile technologies convergence, with the aimof provision of integrated services. This approach has proved itself to be useful ingenerating other revenue streams for operators.As the global market is evolving toward broadband, with its two major flanks: fixedand mobile services, Egypt is no exception. The following section highlights thecurrent Egyptian broadband market status, with a brief historical review of thebroadband evolution in Egypt, the current licensing procedures governing thesector, and an overview of the key sectors with large demand for broadbandservices.4ITU World Telecommunication /ICT Indicators database, The developed/developing countryclassifications are based on the UN M49, National Broadband Plan Broadband Market Status 17

1.2. Domestic PerspectiveBy the end of 2010, Egypt‟s fixed-line penetration rate amounted to 12.24%,compared with 11.90% of other Developing Countries (See Table 1.1). However, inconsistency with the global trends, the fixed-line penetration rate has beendecreasing, reaching 11.72% in Q2 2011.ICT Sector: Infrastructure Indicators Q4 2009 Q4 2010 Q2 2011Mobile subscription million 55.35 70.66 76.43Mobile penetration % 72.13 90.44 95.07Fixed line subscription million 10.31 9.62 9.27Fixed line penetration % 13.42 12.24 11.72Internet users million 16.64 23.02 25.87Internet penetration % 21.68 29.47 32.18ADSL subscribers million 1.027 1.402 1.604ADSL penetration % 1.34 1.42 2.05International Internet bandwidth Mbps 97,242 122,296 134,717Table ‎51.1 - Main Economic and Infrastructure Indicators (Source: MCIT quarterly reports)Egypt‟s Mobile penetration rate in 2010 was significantly higher than the global anddeveloping countries average: 90.44% compared to 78% (global average rate) or70.1% (developing countries average rate). By the end of Q2 2011, the mobilephone penetration rate has increased to 95.07%, approaching the penetration rateof developed countries (114.2%), (See Table 1.1).1.2.1. Internet and Fixed Broadband History and EvolutionIn January 2002, the Egyptian Ministry of Communications and InformationTechnology (MCIT) launched the Free Internet Initiative providing access to theInternet across the country at the same price as a local phone call. The Initiativewas essentially based on a subscription-free Internet connectivity model, whereLicensed Internet Service Providers (ISPs) built PoPs and collocated accessequipment at local exchanges owned by the National Incumbent Operator,Telecom Egypt. Free Internet numbers with specific prefixes (0777 – 0707) wereadvertised and used nationwide. The PSTN network was offloading, by routing datacalls automatically to the ISP access infrastructure present within the exchange. Inreturn, revenues from Free Internet calls were shared between TE and the ISPs, on a70/30% share, based on the offloading scheme. By September 2002 the Initiativewas extended to cover the whole country. The Free Internet Initiative was markedas a national mega-project that was based on public-private-partnership and whichhas laid the foundation for the information society in Egypt.Shortly after the launch of the free Internet initiative, partial unbundling of the localloop was introduced in April 2002 by NTRA. ISPs were allowed to share the local loopeMisr National Broadband Plan Broadband Market Status 18

with TE to provide broadband Internet services using the ADSL technology; whilemaintaining TE rights over voice services. The Local Loop Unbundling (LLU) pavedthe road for the introduction of broadband services in Egypt.The development of the broadband has witnessed many stages that added a newdimension to the successful home-grown Free Internet model introduced in 2002.These can be highlighted as follows: September 2004: the first broadband initiative where prices were reduced by50% to reach 150 EGP/month for 256 Kbps. July 2006: the lowering of the basic monthly subscription by 36%(95 EGP/month for 256 Kbps). September 2007: where prices were halved once again (45 EGP/month forlimited 256 Kbps). August 2009: this year witnessed the NTRA‟s regulation of the floor prices forsome unlimited packages and thus leaving a space for competition betweendifferent service providers.Supported by the current regulatory scheme, these initiatives promoted competitionin the fixed broadband market. This, in turn, propelled the emergence of a varietyof packages that addressed different user needs. Currently, ADSL packages inEgypt cover speeds ranging from 256 Kbps to 48 Mbps, limited (bit-caped) orunlimited.The number of broadband subscribers has also witnessed a boom as demonstratedin Figure 1.4. By the end of Q2 2011, the number of ADSL subscribers amounted to1.6 million subscribers. Since 2008 until to-date, an average growth of about 30,000new subscribers per month is being sustained.Figure 1.4 - Evolution of ADSL Subscribers over the Last DecadeWith respect to WiFi, NTRA has set, back in 2004, recommendations and guidelinesfor the establishment of public hotspots. WiFi devices have been granted a classeMisr National Broadband Plan Broadband Market Status 19

license which resulted in the wide spread adoption of the technology and of itscorresponding broadband services.In 2005, in the first step towards a more encompassing broadband wireless program,a WiMAX field trial was initiated by MCIT as a short term action on the broadbandroadmap. The field trial took place at the Smart Village and lasted for six months.Five buildings within Smart Village (20km outside of central Cairo) were connectedto the Internet and to MCIT offices downtown Cairo, in addition to two other remotelocations using WiMAX technology.Later, in May 2007, two WiMAX pilots were launched to establish trial WMANs intouristic areas inside Luxor and Sharm El-Sheikh governorates. The two pilots werecarried out through a partnership between MCIT and NTRA in cooperation withUSAID, and two ISPs selected through a beauty contest. NTRA assigned thenecessary spectrum for those trials and pilots on a free basis for the sake of thosepilots. This allocated experimental band was equally used for other pilots bydifferent vendors, to test broadband connectivity to selected schools and hospitalsin rural areas.In October 2009, in order to increase the diffusion of broadband and to allow fornew services to enter in the market, NTRA announced an invitation for the interestedcompanies to bid for two licenses to install and operate access telecommunicationsnetworks in closed compounds. These licenses allowed for the introduction of newinnovative services, including triple play, through fostering investment in FTTxnetworks. It is expected that the licenses would attract an expected investmentwith a net worth of EGP 5.98 billion (USD One billion) over five years. Although thelicensees were not required to make an upfront payment, as in an auction, the twooperators who were granted the license were required to provide a share of 8% ofrevenues.1.2.2. Mobile BroadbandThe mobile market in Egypt is quite mature. In Q2 2006, NTRA granted the first licensefor the provision of 3G services and the third mobile license in Egypt to a consortiumled by Etisalat of UAE for USD 3 billion. In Q1 2007, NTRA granted a similar 3G licenseto the existing mobile operators. The investment in these 3G networks reflects theinterest of international operators in the Egyptian 3G market and the potential ofbroadband development through the 3G services.The intense rivalry in the mobile market boosted the mobile broadband evolution.By 2008 people became more acquainted with mobile broadband services andprices became more affordable by the virtue of providing a variety of packagesand services. The entrance of the third mobile operator has stimulated the marketstructure and intensified competition among the existing players. In response,mobile operators reduced their tariffs, introduced multiple packages, and improvedeMisr National Broadband Plan Broadband Market Status 20

their service quality. By the end of Q2 2011, the mobile penetration has amountedto 95%.As of Q2 2009 and till Q2 2011 there has been a sustainable growth in mobilebroadband with a CAGR of 36% per quarter, reaching 2.2 million subscribers by June2011. Figure 1.5 illustrates the evolution of mobile broadband subscribers over thelast three years.Figure ‎51.5 - Evolution of Mobile USB Subscribers over the Last Decade1.2.3. Data Services Licensing FrameworkNTRA has set out a licensing framework for telecom services to create a transparent,healthy, and predictable sector to stimulate growth. It also developed a licensingprocess for networks and services covering individual licenses and/or class licensesfor all telecommunication applications.1. Data and Internet provisioningData Services Providers in Egypt are divided into three classes: Class A, Class B andClass C (virtual Operators). The licenses for the three classes were first awarded in2000. Currently, there are 7 companies in Class A, 4 companies in class B, and 76companies in Class C. The license term is 5 years for both Class A and Class Blicenses, and is only 1 year for Class C companies. The Class A license gives theoperators the right to set up, manage and operate the core infrastructure necessaryfor offering Internet services for the end users in Egypt and connecting them to theinternational web. The Class B license gives the operators the right to set up,manage and operate the core infrastructure necessary to provide dataconnectivity to the end users (no international connectivity). The Class C licensegives the operator the right to offer free Internet services at the same tariff of fixedtelephony calls. It is worth mentioning that TE is the only operator who has beeneMisr National Broadband Plan Broadband Market Status 21

awarded the license to offer voice telephony services, as this service is not includedin the Class A, B, or C license. The current licensing scheme for Internet and dataprovisioning is being revised by the NTRA 5 .2. Global peeringThe license for Global Peering gives the licensee the right to build and operate theinfrastructure necessary for connecting between Class A licensees, Class B licensees,electronic content providers, domain name providers, and data centers. There isonly one company that has acquired this license in 2006.3. International ServicesInternational services are classified into two different types of licenses: 1)International Services and Gateway license, and, and 2) International SubmarineCable license. The International Services and Gateway license gives the operatorthe right to set up, operate and rent the core infrastructure necessary for establishingInternational Telecommunications Gateways, in addition to offering internationaltelephony service. Currently, TE and Etisalat 6 are the only two companies that haveobtained this license that is valid for 15 years, ending in 2021 and 2022 respectively.The International Services and Gateways have been liberalized in mid 2006 with theaim of attracting foreign investments and promoting competition in the area ofinternational telecom cables.The International Submarine Cable license gives the operator the right to set up,operate and rent a submarine cable network and the core infrastructure necessaryfor establishing International Communications. The Arabian Company for SubmarineCable, TE and MENA are currently the only operators that hold this license that isvalid for a term of 20 years and renewable for an additional 5-year term only.1.2.4. National Broadband Applications Priority Areas in EgyptThe demand side of broadband is led by the users. Accordingly, plannedapplications should be geared to real public needs through a bottom-up approach.This approach has gained momentum in stimulating ICT development in ruralregions, not as a replacement for top-down policies, but as a powerful addition inrural areas where there is insufficient demand for the private sector to invest. Top-Bottom approaches in stimulating broadband applications should rest on thoroughpre-project assessments to ensure that the planned broadband applicationsrespond to actual demand and to monitor new demands. In all these areas, werealize that broadband development is increasingly led by users. “Demand- side5More details can be found at: Etisalat has this license to serve its own customerseMisr National Broadband Plan Broadband Market Status 22

measures should take advantage of this trend and allow citizens participation andcrowd- sourcing in as much as possible” 7 .Facing the challenges of the Egyptian community, the Education sector and theHealth sector have been recognized as priority domains for ICT integration for thepast decade as they relate to basic needs of the citizenry. E-Government has gonethrough incremental phases of development. Albeit challenges of transparencyand security, e-Government is nowadays looking to fulfilling the demands of e-civicparticipation, a field that has become a point of high demand. E-commerce is anessential tool for the development of the economy and particularly for empoweringSMEs. E-commerce is indeed one of the main solutions for employment generationand the generation of new areas of work. Between the establishment of the suitablelegal framework and regulatory steps, e-commerce in Egypt is a promising field thathas not yield its full results yet. “ICT and environment” is a relatively new field of workclosely related to sustainable development that figures on the country‟s mediumand long term plans. E-content development has been a priority of work for thepast decade. Several initiatives have been adopted to trigger a momentum inArabic e- content production and availability in the different sectors.A thorough analysis of the last 10 years can show that the mentioned fields havegone through different phases of uptake and maturity. A clear diversity in adoptionspeed and depth can be noticed. In e- education, a number of national initiativeswere adopted, exploiting the potential of existing Broadband, targeting access tostudents, teachers and administration, full re-engineering of schools as learningcenters, and the introduction of state of the art ICT applications. Between ambitiousnational projects, pilots and proofs of concepts, a full scale mainstreaming of ICTsinto schools is still a long term plan that has to cope with challenges of connectivityand capacity building. Health is another sector benefitting largely from broadbandavailability. Nevertheless, the full integration of ICTs into national health strategies isa future step which requires suitable allocations of funds, and a full scheme forscalability. Indeed, as some observers have accurately noted, there is e-health'"pilotitis" in developing countries - a wealth of small scale pilots often not adequatewith the size of the problem tackled - with no repository of information knowledgeabout the results of the initiative. Egypt is no exception and despite the success ofthe pilot projects, a broad range of challenges remains to wider implementation 8 .e-Government has been one of the most ambitious sectors in exploiting Broadbandpenetration, however, in this particular area, a continuous and fast adaptation toconsumers‟ needs becomes a prerequisite especially with the rising public demandsfor accountability and transparency in governmental entities. On the other hand,ICT in the environment has started its work with a clear strategic direction at the7Socio- Economic Assessment of Broadband Development in Egypt, p 1238 I. Iakovidis (1998) Towards Personal Health Record: Current situation, obstacles and trends inimplementation of Electronic Healthcare Records in Europe, In International Journal of MedicalInformatics, vol. 52, no 123, pp 105 –117.eMisr National Broadband Plan Broadband Market Status 23

government level that is still in need for decisions concerning the sustainability of ICTin environment projects. The search for sustainability and viable business model hasalso been the main obstacle in e-Content which had also adopted a number ofsuccessful but limited projects in terms of scaling up. With wider broadbandavailability, e-Commerce should be taking off, provided higher e-Literacy and senseof trust is cultivated based on clear policies and regulations.The following sections present the status of key broadband applicationsimplemented in the government for the last decade, responding to short and longterm needs of the Egyptian economy. A complete description of the projects andinitiatives implemented can be found in Annex 1.1. e-EducationThe Government of Egypt (GoE) has given educational reform high priority on itsagenda since it is the backbone of development. The goal is to empower youngcitizens to live and learn in the continuously-changing environment and to enablethem to effectively interact in a global marketplace. e-Education, also known alsoas tele-education or distance learning, as defined by ITU, is about delivering theservice of training or teaching by using the Internet or intranets 9 .Over the past decade MCIT has initiated many projects to ensure the integration ofICT with education. These projects included: curriculum development, teachertraining, development of management systems and educational institutions,support for the concept of learning and continuous training, and enabling citizens atdifferent levels to acquire technological skills necessary to create a knowledgecommunity. Egypt‟s e-education initiative aims to continue to promote the use ofICT in education in order to develop a new generation of technology-savvy citizenscapable of mastering ICTs in their daily lives.2. e-HealthAs a part of Egypt‟s sustainable and comprehensive development, nationwidehealthcare reform is a high priority focus area for the GoE. The vision for thehealthcare reform program is to improve all citizens‟ access to affordable and highquality healthcare services. Accordingly, the GoE and its Ministry of Health haveestablished several e-Health health programs to provide better diagnostic andhealth services to a wider segment of the Egyptian society. MCIT has facilitated theintegration of ICT in health services and the provision of medical education toremote or underserved areas of Egypt. The e-health initiative is inspired by pursuingequal opportunities for health services anywhere in Egypt, and expanding medicalinsurance to all citizens.9ITU Broadband Commission report- Broadband: A platform for ProgresseMisr National Broadband Plan Broadband Market Status 24

3. e-GovernmentMCIT was instrumental in introducing e-government in Egypt and extending ICT intopublic services, in close collaboration with the Ministry of State for AdministrativeDevelopment. As a general mandate, MCIT supports other ministries in facilitating e-government programs and services as part of the Egyptian Information SocietyInitiative (EISI). One of the core objectives of the initiative is to modernize the waycitizens interact with their government by introducing ICTs to the internal operationsof government departments and to their interface with the public.MCIT partnered with other ministries and government agencies to support theirefforts to improve services, boost efficiency and reduce costs by integrating ICT intotheir operations. The ministry has developed a number of projects to buildinfrastructure; upgrade the skills and training of government employees, digitizedata, improve interagency communication and data transfer, increase governmentefficiency and effectiveness, and enhance communication and service deliverybetween the government and citizens.4. e-Civic Engagement"Civic engagement has been defined as individual and collective actions designedto identify and address issues of public concern” 10 . E-civic engagement is a multiwayrelationship: between government and citizens (C2G); and among citizens(C2C). In past years Egypt has taken several steps to strengthen citizens‟participation in both directions.Designing a clear strategy for e-civic engagement has become a necessityparticularly in emerging countries and countries in political transition, such as Egyptthat are currently witnessing an outburst of civic interest in the public sphere. E–civicengagement is geared to fulfilling transparency, accountability and equalopportunities in public participation. Different phases mark the development of thisimportant set of applications, starting with simple e-government services that caterto public needs, to more interactive processes transparent enough to allow forpublic feedback, to availing online consultations applications.5. ICT & EnvironmentThe most recent results presented by climate scientists are alarming. Theaccumulation of greenhouse gases (GHG) in the atmosphere is growing faster thanoriginally predicted.It is estimated that ICTs contribute with around 2% to 2.5% of GHG emissions everyyear. The ICT sector‟s emissions are expected to increase to nearly double – to10Civic engagement, From Wikipedia, National Broadband Plan Broadband Market Status 25

about 4% – by 2020 11 . But on the other hand the ICT sector has a high potential thatcan lead to emission reductions five times the size of the sector‟s own footprint, up to7.8 GtCO2e, or 15% of total BAU emissions by 2020 12 . In economic terms, the ICTenabledenergy efficiency translates into approximately 600 billion Euros (USD 946.5billion) of cost savings 13 .As a Country not included in Annex 1 of Kyoto protocol 14 , Egypt is not required tomeet any specific emission reduction or limitation targets in terms of commitmentsunder the United Nation Framework Convention on Climate Change (UNFCC), orthe Kyoto protocol. However policies, initiatives, projects and programs that targetmeasures for mitigating and adapting to climate change are in progress in Egypt.The Egyptian ICT sector recognizes its responsibility in adapting and mitigatingclimate change threats and effects, as well as in decreasing the negativeenvironmental impact of ICTs. In this regard the Egyptian ICT sector identified theissue of “ICT & Sustainable Environment” in three main areas: 1) ICT applications foradapting to climate change effects; 2) ICT applications for mitigating climatechange effects; and 3) towards a sustainable ICT sector.6. ICT Diffusion in BusinessThe role of ICTs in advancing the growth of national economy through enhancedefficiency and productivity, and expanded market reach is both undisputable andirreversible. These new opportunities provided by ICTs are not purely limited andaccessible only by the larger corporations within the national economy. Asnumerous reports have indicated, M/SMEs constitute 60% of the work force in Egypt,and produce over 80% of the national GDP. They directly serve as the backboneand driver of the national economy.SMEs usage of ICT ranges from basic technology (such as fixed telephone lines) tomore advanced technology (such as email, e-commerce, and informationprocessing systems). Using advanced ICT to improve business processes falls into thecategory of e-business. However, not all SMEs need to use ICT to the same extent ofcomplexity.Larger businesses are more likely to have the capacity to use ICTs for comparativeadvantage. SMMEs, on the other hand, are less likely to have this capacity. Yet thesesmaller enterprises are the engines of employment and are on the front lines in the11ITU (2009) ICTs and Climate Change, background paper for the ITU Symposium on ICTs and ClimateChange, Quito, Ecuador, 8-10 July12Gesi initiative(2008), SMART 2020 report ”Enabling the low carbon economy in the information”13Stern, N (2008), Key Elements of a Global Dealon Climate Change, London School of Economics andPolitical Science: National Broadband Plan Broadband Market Status 26

fight against poverty. Strategies that strengthen the capacity of SMMEs are alsostrategies that support poverty reduction.7. e-CommerceE-commerce refers to the purchase and sale of products or services over electronicsystems such as the Internet and other computer networks. However, the term mayrefer to more than just buying and selling products online. It also includes the entireonline process of developing, marketing, selling, delivering, servicing and paying forproducts and services.B2B: Electronic commerce that takes place between businesses is referred toas business-to-business or B2B. B2C: Electronic commerce that takes place betweenbusinesses and consumers, on the other hand, is referred to as business-toconsumeror B2C.Internet penetration has grown rapidly since 2000, mainly because of a number ofgovernment and private-sector incentives. Nevertheless, electronic commerce is inits infancy in Egypt 15 . The necessary policies, regulations and legislations are stillneeded. More specifically, a substantial uptake of e- commerce in Egypt will requireclear Policies, laws and regulations, and a secure environment for transactions, aswell as a well targeted incentives and awareness campaigns.8. e-ContentE-content, also known as the digital content, is defined as digital informationdelivered over network-based electronic devices. E-content allows for userinvolvement and may change dynamically according to the user‟s behavior.In one of its publications, OECD presents an analysis that reflects the positivefeedback cycle between infrastructure, content and skills. It suggests that theavailability of broadband networks contributes to digital content development,while broadband digital content applications and services are predicted toencourage the understanding and effective use of information and communicationtechnologies (ICTs), to power broadband development 16 .Enhancing the availability of relevant content in Arabic on the Internet and otherforms of ICTs (such as mobile devices) is of central importance to promote greaterup-take of ICTs in Egypt. At the same time, the development of such content alsorepresents a growth opportunity, as much of it could potentially be generatedlocally for the Egyptian market and beyond. The expansion of the “e-contentindustry” would therefore not only help to reduce the digital divide between Englishand Arab speakers but also provide employment and export opportunities.15Egypt: Overview of e-commerce from THE ECONOMIST INTELLIGENCE UNIT, at:, p.6eMisr National Broadband Plan Broadband Market Status 27

2Vision and Targets

With the objective of aligning Egypt‟s broadband market with internationalstandards, eMisr has set an ambitious plan for deploying high-speed broadbandservices across the country. National broadband targets are set on the mediumand long terms for fixed and mobile broadband sectors. The targets are set to meetthe below mentioned strategic objectives and are aligned with the projecteddevelopment of future market trends in terms of technologies, services, data ratesand user needs.2.1. Strategic ObjectivesIt is obvious that a global shift in the consumer's behavior for digital applications ande-services is taking place. In Egypt, this is may be even more apparent and truethan elsewhere. The effect of the Internet and social media on the lives of Egyptiancitizens has proved to be tremendous. This was made evident during the recentpolitical and social reforms that took place at the beginning of this year, 2011, andthat are still transforming the Egyptian society. Today, world-class broadbandservices are not any more viewed as a commodity or luxury for a specific segmentof the society. Broadband is rather considered the engine for societaltransformation and socio-economic development and hence a necessity for allsegments of the society.The key objectives of eMisr National Broadband Plan aim to:Position Egypt as a front-runner in digital communications;Increase job opportunities;Stimulate economic growth nationwide and foster social cohesion;Cooperate with other sectors in the state in order to improve the quality of lifefor all citizens;Avoid an increased digital divide within Egypt.2.2. National TargetsIn order to achieve the strategic objectives set by the eMisr Plan, multi-dimensionaltargets are required. The first set of targets is the availability target-set that focuseson expanding the geographical coverage of a broadband-enabling infrastructure,making broadband services available to citizens wherever and whenever needed.The second set of targets is the penetration target-set which aims at increasing thenumber of broadband subscribers to reach a critical mass that would stimulate aself-sustaining growth cycle. National and social targets are the third set of targetswhich intend to bridge and minimize the digital divide in Egypt by reaching out tocitizens in rural and non-economically viable areas allowing them to have access tobroadband services. For each set of targets, specific measurable and scheduledgoals are defined.eMisr National Broadband Plan Vision and Targets 29

2.2.1. Availability Targets‣ Goal 1:‣ Goal 2:75% of Egyptian households have access to broadband serviceswith a minimum speed of 2 Mbps by 201590% of Egyptian households have access to broadband serviceswith a minimum speed of 25 Mbps by 2021‣ Goal 3: 98% of the population to be covered by 3G by 2015‣ Goal 4:90% of the population to be covered by 4G (LTE and beyond) by2021Achieving availability targets require the deployment of appropriate infrastructure ineach region, to enable Egyptian citizens with access to broadband services in thoseregions. On the short term, i.e. by the end of 2015, 75% of households should be ableto access broadband services with speed rates of at least 2 Mbps. This percentageis to increase to 90% by 2021, with speed rates increasing to 25 Mbps.The eMisr Plan also includes explicit roll-out targets for 3G and LTE. By 2015, at least98% of the population should be covered by 3G mobile networks. On the long term,i.e. by 2021, 90% of the population should be covered by 4G networks (LTE andbeyond).2.2.2. Penetration Targets‣ Goal 5:‣ Goal 6:‣ Goal 7:‣ Goal 8:4.5 million Egyptian households (22% of total households)subscribed to broadband services by 20159 million Egyptian households (40% of total households)subscribed to broadband services by 20218 million (10% of total population) mobile subscribers ofbroadband services by 201514 million (15% of total population) mobile subscribers ofbroadband services by 2021Broadband diffusion requires a critical mass of subscribers to reach a sustainablegrowth cycle. When this critical mass is attained, the diffusion of broadband servicesbecomes easier and the role of governmental intervention starts to decline. Theplan is targeting to have 4.5 million Egyptian households subscribed to fixedbroadband services by 2015. This target is increased to 9 million households by 2021.As for mobile broadband, the target is to have 8 million mobile broadbandsubscribers by 2015, increased to 14 million mobile broadband subscribers by 2021.eMisr National Broadband Plan Vision and Targets 30

2.2.3. National and Social Targets‣ Goal 9: 50% of Egyptian communities connected by 25 Mbps by 2015‣ Goal 10: 100% of Egyptian communities connected by 25 Mbps by 2021‣ Goal 11:‣ Goal 12:50% of 3 rd level Egyptian administrative localities (Sheyakha and Village)served with at least one Public Access Point connected with 25 Mbps by2015Each 3 rd level Egyptian administrative locality (Sheyakha and Village)served with at least one Public Access Point connected with 25 Mbps by2021With the support of the Government of Egypt within the framework of the eMisr Planand its willingness to act as the anchor tenant for broadband services nationwide,the existing roll-out program of public online services will be expanded to enable alarger segment of the society. This will be achieved by working on two main axes.The first is to connect Egyptian communities such as schools, hospitals, publiclibraries, local government offices, police and fire stations, etc. to broadbandservices. The second is to create Public Access Points (PAPs) with high speedconnectivity in deprived localities and areas which are economically non-viable.Reaching out to the PAPs in those localities using a Fiber infrastructure is to lay thefoundation for a future-proof nationwide telecom infrastructure, while providing thelarge communities in those areas with the needed access levels.The eMisr Plan is targeting to connect 50% of Egyptian communities with abroadband connection of at least 25 Mbps by 2015 and to increase this percentageto cover all Egyptian communities by 2021. In addition, the Plan targets to equip50% of 3 rd level Egyptian administrative locality (Sheyakha and Village) with at leastone Public Access Point connected with 25 Mbps by 2015, and increasing thispercentage to cover all 3 rd level localities by 2021.eMisr National Broadband Plan Vision and Targets 31

3Gap Analysis

Million SubscribersA closer look at the evolution of Egypt‟s broadband market, suggests a wideninggap between the desired performance levels and the expected market projections.This gap is attributed to many constraints existing in the current broadbandecosystem, whether on the supply or the demand levels. The main purpose of thischapter is to identify and examine the most significant constraints that challenge thesteady diffusion of broadband services in Egypt and hinder the attainment of thedesired targets as set out in Chapter 2.The projected growth in broadband subscriber numbers, over the period 2012-2021,is depicted in Figure 3.1. The forecast assumes steady growth rates are maintained,both on the level of fixed services as well as for mobile services. The total number offixed broadband subscribers (measured by number of households) is predicted torise to 3.7 million in 2015 and amount to 8.4 million by 2021. On the other hand,mobile broadband subscribers are anticipated to rise to 6.1 million subscribers in2015 and amount to 11.3 million by 2021. This forecasted growth seems to beconsiderably close to or slightly lagging behind the previewed broadband targets in2015 and 2021. Projections may also indicate a satisfactory growth rate, for bothmobile and fixed services. However, a thorough analysis of the current marketconditions suggests a rather conservative growth, thus challenging the targets set bythis plan, especially those related to broadband penetration.1210Fixed BB SubscribersMobile BB Subscribers86420Figure 3.1 - Projected Growth in Broadband SubscribersThe claim for a rather modest evolution of broadband services is based on existingconstraints that span across supply and demand. Clear examples are 1) limitationson the existing copper network (which has an inflated effect due to the dominantuse of DSL technologies for fixed broadband services), 2) the limited competition inmany levels of the supply chain, 3) the growth cap attributed to the limited numberof PC penetration, as well as the lack of local content, and of course 4) socioeconomicconstraints such as illiteracy and affordability.eMisr National Broadband Plan Gap Analysis 33

The following sections further explore the most influential constraints and their effecton the broadband market growth.3.1. Limited Effective Competition in the Supply ChainAmong supply-side factors, competition is one that has a considerable impact onbroadband diffusion. Competition in broadband supply, in specific, has provedcrucial for reducing service prices, improving quality and increasing customerservice levels. Indeed fast broadband growth is a characteristic of markets in whichthere is competition both between platforms (different technologies) and withinplatforms (infrastructure competition). Infrastructure with limited access or that ishighly-priced, can act as a strong barrier to broadband diffusion.Accordingly, strengthening competition throughout the supply chain (InternationalConnectivity – National Backbone – Last Mile Access – Access Devices) would havean increasing effect on market growth, by expanding access, boosting affordabilityand fostering the provisioning of value added services. If that is not the case,bottlenecks arise and the benefits of competition are severely reduced. Availabilityof multiple networks and providers in each level of the supply chain is crucial toincrease broadband supply.In Egypt, competition is limited in many layers of the supply chain. Whilecompetition seems to exist in parts of the international connectivity and in theaccess devices layers, it is rather limited in the national backbone and last mileaccess layers. The national backbone is mainly dominated by the incumbentunderlying infrastructure, which currently serves as the backbone for all broadbandservices (fixed and mobile). There is a lack of different operators, who have coreinfrastructure capable of carrying high speed Internet, as the incumbent operator isthe only operator with a telecom infrastructure leasing license. And although recentsteps have been taken towards allowing mobile operators to build their own coreinfrastructure, their licenses do not allow for infrastructure leasing. Moreover thecosts and time involved in building a core network infrastructure may reduce anddelay the competitive impact. This lack of competition has a direct effect oninfrastructure leasing prices and their service provisioning levels.On the access layer, although there are more than 5 licensed ISPs providing fixedbroadband services, there are no competitors of the incumbent operator in thefixed last mile access, except for the new licensed operators in the closedcompounds. Additionally, fixed broadband is dominated by a single accesstechnology, namely DSL. For mobile broadband, the situation is different, as thereare three mobile operators holding 3G licenses.Broadband will not achieve its maximum diffusion, if there is no competition on fixedinfrastructure and if market failures throughout the supply-chain are not eliminated.There is a need to revise policies in order to eliminate core network and last milebottlenecks. Additionally, there may be a need to take a closer look at theeMisr National Broadband Plan Gap Analysis 34

incumbent operator‟s obligation, to avoid discrimination between its retail arm (if it isto be one) and competitive operators. Moreover, it is also necessary to addressobstacles related to the layout of new infrastructure, especially the high costs of civilwork and burden of acquiring needed approvals from competent authorities.3.2. Under-Served AreasSince DSL is currently the dominant technology for fixed broadband, the quality offixed copper networks represents a major constraint. Areas that are under-served,typically have copper networks with strong limitations. Examples for such limitationare problems of bad copper quality, long distances of the copper loop as well aslimiting technologies such as pair-gain and old wireless local loop technologies.While some of those under-served areas may have no viable broadband demandtoday, many have an unmet demand due to the lack of capable infrastructure.Geographic conditions equally impact the availability of broadband infrastructureas they increase their deployment costs. Extending broadband coverage to areaswith challenging geographic conditions is not always economically viable, and thisgenerally applies to both fixed and mobile broadband infrastructure. In Egypt this istrue especially in rural and distant areas, which are typically under-served andmostly marked with lower demand and affordability rates. In those regions, there isusually no network infrastructure capable of delivering adequate broadbandservices or no available network at all. While penetration targets may not be largelyaffected by constraints in low-demand areas, nevertheless there is a clear need toaddress infrastructure limitations in such areas in order to meet the social andavailability targets necessary for socio-economic purposes. It is therefore necessaryto re-visit relevant universal service policies and spectrum policies, especially asrelated to broadband fixed wireless access.3.3. Illegal Line SharingThe broadband market in Egypt also grapples with the problem of illegal line sharing,which is mainly caused by grey markets of service and resale providers. Theinfrastructure typically used for line sharing is based on hanging cables or WiFiconnections deployed in a random manner and without any standards or qualitycontrol. Among the many negative effects of illegal line sharing, one can specifythe following: masked penetration rates, congested and overbooked networks,degraded service quality, lost revenue stream limiting additional investments, as wellas health hazards due to unapproved wireless deployment. The impact of illegal linesharing extends to all broadband users, even those that do not use a sharedconnection, mainly because it degrades the user experience with a significant dropin broadband speeds. Those negative effects are substantial in areas where linesharing is more common.The current spread of illegal line sharing in Egypt has not been adequatelymeasured. Yet a report by the Arab Research Partners published in 2008 suggestseMisr National Broadband Plan Gap Analysis 35

that DSL to illegal line sharing ratio is an average of 1:3 on the national level. It isimportant to distinguish between small scale line sharing and large scale line sharingfor commercial resale.Small scale line sharing, voluntary or involuntary, occurs where a subscribermay have a wireless router with an unsecured link, or may share the key on asecured link with another adjacent household. Both voluntary andinvoluntary line sharing occurs across the world and is caused either by adesire to support and help others or a lack of care and attention. Neither ofthese motivations or causes can realistically be controlled by the state andany pressure to curtail them is expected to be unsuccessful and thus doomedto fail.Large scale line sharing for commercial resale of capacity represents themain core of this problem. It is essentially related to illegal infrastructure andthe unsuccessful attempts by the market to introduce a fair use policy. Thereis a clear necessity to tackle this problem, by looking for innovative solutions,not only through law enforcement but also through studying the underlyingpotential and commercial opportunities as well as introducing techniquesthat only segregates those abusing the system. A review of both wholesaleand retail market dynamics may be well needed.3.4. Availability and Flexible Use of SpectrumMobile broadband has proved to be a strong driver for broadband diffusion in Egyptas in many other emerging economies. However, a major constraint to mobilebroadband diffusion would be the lack of spectrum availability and the flexibility touse granted spectrum with minimal technological or use restrictions.3.5. Service Affordability & CPE PenetrationAffordability is considered as one of the main challenges to broadband massadoption. As consumers in emerging markets are highly sensitive to price, theymake careful purchasing decisions based on their available income and servicecosts. Improving affordability needs to be driven by both income growth andreduced broadband prices, triggered by competition and greater pricinginnovation as broadband markets intensify.Since the affordability constraint is clearly posing a strong barrier to broadbanddiffusion in Egypt, NTRA has performed several studies to measure the affordability ineMisr National Broadband Plan Gap Analysis 36

the Egyptian market. One of those being a study with Qualcomm 17 where thefollowing was concluded 18 :Broadband affordability in Cairo (as a sample of dense urban community) isalmost 60% in 2011 and is projected to reach 90% in 2015;Broadband affordability in Ismailia (as a sample of urban/suburbancommunity) is almost 33% in 2011 and is projected to reach 55% in 2015;Broadband affordability in rural communities is almost 18% in 2011 and isprojected to reach 35% in 2015.A further conclusion is that current basic broadband prices in the Egyptian marketare affordable for 25% of the Egyptian households, while this percentage isexpected to double within the next 5 years, to amount to almost 50% affordability.The Detecon 19 model has analyzed the distribution of income by quintiles for theEgyptian population, based on the per capita income data at the Village/Sheyakhalevel. The lowest income quintile accounts for 36.4% of population. The secondquintile accounts for 25% of the population, the third for 16.4%, the fourth for 12.3%,and the highest quintile for 10.1% 20 . The incomes in each quintile was compared tothe cost of basic DSL services and to the cost of computers offered under the MCIT‟s"PC For All" scheme.Findings, as illustrated in Figure 3.2 below, have indicated that the lowest incomequintile does not have the financial ability to pay for either service or CPE cost.Figure 3.2 - Affordability of DSL and CPE17Joint study performed by NTRA and Qualcomm to estimate the consumers‟ affordability forBroadband service in Egypt as well as analyze key improvement factors18These results were based on the following assumptions: 4% to 7% of Disposable Income is allocated tobroadband internet, device price erosion of 5%, ARPU erosion of 5%, and entry level price is USD 6-1019“Consulting Services for Broadband Strategic Development for Egypt", a specialized reportdeveloped by Detecon International GmbH according to a consulting agreement with NTRA, 201020Income quintiles are calculated by listing all the Sheyakhas‟ per capita incomes and dividing theminto five 20% groupings. The populations of the Sheyakhas in each quintile are then aggregatedtogether.eMisr National Broadband Plan Gap Analysis 37

3.6. IlliteracyIlliteracy is another characteristic of the Egyptian society that needs to be studied inconjunction with broadband adoption. In Figure 3.3 the yellow bars show the levelsof illiteracy per Governorate. The blue bars show the level of functional illiteracy(illiterate + basic literacy), as defined by the ability to read and write one‟s name.The level of illiteracy is significantly higher in Upper Egypt than in the Delta.The absolute level of basic illiteracy is around 30% nationwide. The broadermeasure of illiteracy stands well above basic illiteracy.At the 'Markaz' level, and even more so at the 'Sheyakha' level, there arepockets of illiteracy at over 70% of them.Figure 3.3 - Illiteracy Rate by GovernorateFigure 3.4 - Literacy vs. Broadband PenetrationeMisr National Broadband Plan Gap Analysis 38

As illustrated in Figure 3.4, literacy levels, across the world, are obviously related tobroadband uptake. Concentrations of low income quintiles generally coincide withthe concentration of low literacy. This relates to the finding that there appears to bea “literacy threshold” of around 80%, above which broadband penetration risesrapidly (see above). Nevertheless, one needs to be careful that literacy might notbe the key determinant of broadband uptake, since low levels of literacy aregenerally related to a low per capita income.3.7. e-LiteracyThe inability to use a computer, known as e-literacy, is a further dimension, that has adirect effect on the acquisition of PCs by end-users and hence on broadbanduptake. In an attempt to analyze this relation, the below data, as illustrated in Figure3.5, was obtained through CAPMAS (a 2009 report).Figure 3.5 - Reasons for Not Owning a ComputereMisr National Broadband Plan Gap Analysis 39

The overall pattern generally indicates a much higher level of inability to use a PC inrural areas than in urban areas and overall a much higher level of inability to use (orlack of interest in) computers than literacy per se.The implication is that incorporating computer use in general and the Internet use inparticular into the educational curriculum will help boost broadband uptake acrossthe country. The data below (Figure 3.6) show that there is a long way to go in termsof increasing Internet access in Egypt. The data, provided by CAPMAS, shows that in2009 only 53% of public schools had any Internet access at all, with only 13% havingbroadband access. The figures for private schools are even worse. (Refer also tosection 3.10 on E-Education below)3.8. Local ContentFigure 3.6 - Computer Literacy in SchoolsIn the area of local content development, Egypt faces similar challenges as manyother developing countries. Developing applications that address the social,cultural and linguistic needs of Egyptian citizens is a necessity. Key bottlenecksinclude:Arabic digital content at less than 0.3% of the overall Internet content.Lack of trust in on-line services and payment systems.Low levels of ICT penetration along with limited availability of e-banking andrelated services limit the diffusion of e-commerce and of relevant content forconsumers.Lack of general awareness in spite of the fact that some organizations in thepublic and private sector are conscious of the need for developing e-content.Lack of necessary skills in the workforce to adapt content into electronic formand media convergence.eMisr National Broadband Plan Gap Analysis 40

3.9. Legal Aspects of Media and Telecom ConvergenceMedia and telecom sectors are getting much closer in the era of convergence.With the international move toward triple play services, bundles of telecom andbroadcasting services are provided to the end-customer worldwide through thesame operators. In Egypt the legislative environment and the regulatory frameworksin place prohibit such service provisioning. Since media may well represent a killerapplicationto the diffusion and use of broadband services, there is a pressing needto harmonize the telecom and media legislative environments in order to facilitateand support broadband growth.3.10. e-EducationEgypt has almost 40,000 schools serving 15 million students with more than 767,000teachers. While over 2,400 schools have benefited from one of the previouslymentioned ICT projects and initiatives, this still represents less than 5% of all schools.As part of the EEI, about 35,000 teachers have received the International ComputerDriving License (ICDL) training. Another 150,000 are qualified to sit in for the ICDLtest. Around 100 technology clubs have been established inside the schools. Alsothere are 18 public universities, with approximately 300 faculties, 12 millionundergraduates and 20,000 staff members. And about 117,047 university studentsand 136,663 fresh graduates received ICDL.The EEI evaluation report concluded that some challenges include 21 :Lack of support from school leadership.Lack of incentives and supportive environment for use of ICTs.Lack of know-how on integrating ICT in education.Teachers do not engage students in production of knowledge.Teachers' use of ICT for communication with pupils is still in its infancy.3.11. e-HealthThe challenges to e-health 22 as identified by Yunkap 23 in developing countries andespecially in Africa are related to the local capacity to implement e-health. The lowinstitutional capacity (infrastructure and connectivity, legal and regulatoryenvironment, and administrative structures) is accompanied by a limited humancapacity (lack of e-practitioners - health workers able to use ICT in their activity, lackof tools to enable citizens to be transformed from a passive observer to active21Pre-university Track outcome evaluation: Contemplating a Theory of Change for the Effective Use ofICT in Egyptian State Schools22Microsoft EMEA Health Blogs – Overcoming the Challenges of eHealth23Professor S Yunkap Kwankam is Executive Director of the International Society for Telemedicine andeHealth (ISfTeH) and CEO of Global eHealth Consultants (GeHCs)eMisr National Broadband Plan Gap Analysis 41

participant in his own care, lack of e- health specialists in the Ministries of Health withcareer prospects to attract and retain them).In Egypt, the following challenges have been identified:Lack of investment in technology in healthcare sector.Access for all to e-health. There is a risk that certain parts of society - such asisolated communities, deprived areas, individuals with literacy and numeracychallenges, and disabled persons – could remain excluded from thepossibilities offered by e- health (including Internet-based health services). Onthe other hand, e- health can offer considerable possibilities for the provisionof health services to such individuals, groups, and communities.Commitment and leadership of health authorities, in particular related tofinancial and organization issues, are essential elements for the successfuldeployment of e-health. For e-health to improve the way healthcare isprovided, it must be combined with organizational changes and thedevelopment of new skills in users. e-Health was often traditionally perceivedby health authorities as a low spending priority. However, it is now seen as amatter of substantial importance within public health policies.Human Resources. The take-up of e-health systems and services would takeplace more rapidly if the needs and interests of the user communities (healthprofessionals, patients, and citizens) were taken on board. In general, theseshould be better integrated into the development and promotion of e-health.Legal framework ensuring confidentiality and security issues. The requirementfor confidentiality makes health information systems security 24 critical. There isa need for a data protection and privacy law in order to create a code ofconduct for special domains such as health, but this has not yet been takenforward. Building trust is a prerequisite to the development of an informationsociety, in e- health probably more than anywhere else.User friendliness of e-health systems and services. A top priority for healthproviders in using an e-health system is the speed in getting the desired, highqualityresults. This highlights the importance of ensuring broadbandconnection for online health services and infrastructure for regional healthinformation networks 25 .Interoperability of e-health systems. Interoperability should enable theseamless integration of heterogeneous systems. This will allow secure and fastaccess to comparable public health data and to patient information locatedin different places over a wide variety of wired and wireless devices.However, this depends on standardization of system components andservices such as health information systems, health messages, electronichealth record architecture, and patient identifying services.24Draft Commission Staff working document, eEurope 2002: Legal issues in eHealth. Unpublished25COM(2003) 65 final Electronic Communications: the Road to the Knowledge EconomyeMisr National Broadband Plan Gap Analysis 42

3.12. e-GovernmentExperience has shown that the introduction of e-government was either aconsequence of sound public sector reforms directed towards the improvement ofgovernance conditions or a catalyst for their introduction. Particularly during thestart-up phase, lessons learned by other countries that have been at the forefront ofe-government should help avoid the costly trial and error approach. The mainchallenges which could be faced during establishing the e-government system areas follow:A greater risk and complexity will pop up because projects tend to be toobig, which can also lead to limiting the range of suppliers who can compete.„Off the shelf‟ programs are rarely adopted and used by governmentaldepartments, agencies and public bodies. Also programs which havealready been commissioned by another part of government are not usuallyused by other departments which lead to wasteful duplication.Arabization also is a big issue in most of the off the shelf programs.There is serious over-capacity, especially in data centers.Procurement timescales are far too long and costly, squeezing out all but thebiggest, usually multinational, suppliers.Too little attention has been given at senior level to the implementation of bigICT projects and programs, either by senior officials or by ministers. Similarly,senior responsible owners (SROs) have rarely been allowed to stay in post longenough.Project ownership is also one of the main challenges that we face in Egyptspecially when working with multi stakeholders.Sometimes employees resist changes and technologies.Citizen trust is a big issue as well and it is very difficult to gain citizen trust to useonline applications.3.13. e-Civic EngagementNow that the Internet and social media have captured Egyptians‟ interest, theywant to expand their use in the broader world of civic engagement. There aresome challenges, however: Cultural and educational challenges. A full exploration of the e-civicengagement potential in Egypt requires efforts from all parts of society,government, and NGOs, in order to address a number of challenges on thetop of which are the challenges of illiteracy and e- illiteracy. A good portionof the population cannot read or write and do not know how to deal withtechnological devices. Media literacy and digital citizenship are alsoconcepts that need to be addressed in order to disseminate a safe use of theInternet and ICTs in civic and political causes. A culture of trust needs to beboosted for people to use online services. In addition, e-civic engagementamong citizens might move faster than in C2G due to the mistrust ineMisr National Broadband Plan Gap Analysis 43

government, where citizens believe the government to be on an isolatedisland away from their real needs and problems.Infrastructure and technology challenges. There is a need for an appropriatetechnology infrastructure and security of the electronic voting database."The secure use of computers and the Internet in Egypt is not as common as itshould be. This means that many people may be using counterfeit software,making them an easy target for computer hackers who might use theirpersonal information and direct their vote to a different candidate, forexample" 26 . There is a need for a system that would secure votes that havebeen cast and prevent break-ins to the database. Legal and regulatory challenges. There should be legislation to control e-voting. In addition, cyber safety measures are needed to ensure the securityand confidentiality of data exchanged freely over the social networks andexposing the non-savvy users to sabotage, hacking and various other forms ofexploitation. In this respect, amendments to the telecom act are beingdiscussed, in addition to the data privacy and security law.3.14. ICT & EnvironmentICT & Environment is still a new trend in most of developing countries, and mostdeveloping countries are still dealing with the environment as a luxury. So ICT &Environment faces many challenges that should be identified in order to bemanaged. The following points will demonstrate some of the ICT & Environmentchallenges in Egypt:Lack of robust regulatory framework for ICT and environment.Engaging the community in the ability and potentials of ICT to decrease GHGemissions and improve energy performance. Also, community behavior mustbe changed to move from a material culture (i.e., hard copies) to a nonmaterialculture (i.e., email, videoconferences, etc).Lack of qualified skills and capacities.Bridging the gap between ICT polices and other non –ICT sectors‟ policies.ICT policies should be fully integrated with non-ICT sector policies such asbuildings, energy, transport, etc.Lack of methodologies and indicators for assessing the direct and enablingimpact of ICT on the environment.26Al Ahram Weekly, On the way to smarter voting, The software companies have developed thetechnology, but is Egypt ready for electronic voting, asks Ahmed Kotb: National Broadband Plan Gap Analysis 44

3.15. ICT Diffusion to BusinessIn Egypt, there is still a wide range of barriers that hinder M/SMEs from adopting ICTsand inhibit the fast growing companies to fill a niche and gain new market shares.These barriers vary between the lack of enabling factors as ICT skills, qualifiedpersonnel, network infrastructure, high cost factors (costs of ICT equipment andnetworks, software and re-organization) and security and trust factors (reliability of e-commerce systems, uncertainty of payment methods, legal frameworks).Limited ICT literacy of employees in M/SME results in reluctance of ICT adoption,even if the M/SME owners have clear understanding of why they should adopt ICT.M/SME owners are often reluctant to bring their firm through a learning curve thatmay result difficult and costly. Adopting ICT is a difficult task for companies of allsizes because the company goes through organizational and process changes inorder to effectively integrate ICT. M/SMEs may still be hesitant to engage in e-commerce due to gaps in the legal policy for electronic payment and securityissues.3.16. e-CommerceOn the demand side, there is strong consumer skepticism towards the Internet as apurchase channel. Some of the factors include: a misunderstanding of its operatingmodel, security concerns, lack of an appropriate and reassuring legal framework,and lack of reliability of some existing e-retailers.Some of the obstacles to e-commerce include:Lack of modern logistics infrastructures. Egypt currently ranked at #92 out of150 on the World Bank's Logistic Performance Index.Limited banking and credit/debit card penetration. Banking penetration ofonly ~15% increases the complexity of payment for goods purchased online.Limited broadband penetration and low rates of computers.Consumer mistrust of online transactions and a lack of legal clarity.Low rates of computer literacy and penetration, low spending power and lowuse of credit cards.One problem with e-commerce growth is trust. Although Egyptian credit-cardholders are gradually becoming used to using their credit cards on internationalsites, they are still wary of using their credit cards on domestic sites. The target marketfor this kind of e-commerce is necessarily limited to a small segment of thepopulation that has regular computer access and credit cards.eMisr National Broadband Plan Gap Analysis 45

4Market Modeling andFeasibility Study

The gap between normal growth rates and set national targets has been analyzedin order to help policy makers identify possible remedies and means to reduce it.The targets of eMisr were divided into three categories, availability, penetration andsocial targets. Achieving availability targets depends mainly on the willingness ofthe operators to invest in and deploy broadband services. The primary challenge ofeMisr is to develop models and regulatory frameworks that will secure suchinvestment.In the process of analyzing the different possibilities to achieve the set nationaltargets, it was important to develop a technology market model capable ofestimating the needed investment using different technology combinations. Thesetechnologies are foreseen to be developing rapidly at the international level, inaddition to being capable of satisfying the estimated Egyptian customers' needs onthe long term. The model should estimate the needed investment per technologymarket, in addition to its financial viability. This quantitative analysis enables policymakers in Egypt to establish the right combination of policy tools and strategicdirectives to create a robust broadband ecosystem.In that respect, eMisr used a proxy model that estimates the subscribers' growth, therevenues, the required investment, and the viability of employing the differentcombinations of technology options for specific geographical regions in Egypt, usingdifferent strategic options. These strategic options mainly includes options such as 1)the ability of the operators and service providers to lease their needed infrastructurefrom the incumbent (Telecom Egypt), or 2) their ability to build their owninfrastructure by forming a Special Purpose Vehicle (SPV) responsible for buildingand operating the required infrastructure. Operators and service providers would beresponsible for the access network in this case. The last option is 3) their ability toenter into strategic agreements with utilities 27 ; by incorporating them in the SPVsetup arranged by operators and services providers, in exchange for their use of theutilities' fiber backbone transmission networks.This proxy model consists of three modules, covering the estimated investmentneeded to achieve the availability, penetration and social targets. The model ismainly based on the methodology of the Egyptian Broadband Market Model(EBMM) developed by the World Bank for the purpose of estimating the impact ofbroadband penetration on the GDP and employment in Egypt, through projectingthe market for broadband access in Egypt. This process works on geographicgranularity down to the 2 nd level Egyptian administrative locality (Qism and Markaz),while, at the same time, also presents aggregate outputs at the governorates andthe national levels. The EBMM was developed according to an agreementestablished among MCIT, NTRA, and the World Bank.27The utilities option in the model is based mainly on numbers from the Egyptian Electricity TransmissionCompany.eMisr National Broadband Plan Broadband Market Modeling 47

The model also uses a wide range of technology choices; namely Digital SubscriberLine (xDSL) technologies, FTTx, and Fixed Wireless Access (FWA) technologies, for e.g.fixed WiMAX or fixed LTE. It also models Mobile Broadband Technologies, byincorporating variable costing elements reflecting the ability to model 3G, or 4Gmobile technologies (HSPA, HSPA+ and LTE).For the FWA technology market, a differentiation is implemented in the networkdimensioning for higher income and lower income targeted populations. Thisdifferentiation reflects the possibility of adjusting the QoS to diverse marketsegments.The model assesses the viability of each technology market combination, withoutmaking an explicit breakdown for individual operators or service providers. Themodel produces the required investment (per technology market) to reach the settargets irrespective of the number of operators or service providers who may exist.Due to the intrinsic difficulty of forecasting a certain market behavior, the model isbased on adoption-speed scenarios. It arrives at a range of possible marketpenetration and service adoption levels and hence calculates the correspondingranges of investment required and the expected levels of the sector revenues.The service-adoption-speed scenarios are modeled by means of an S-Curve 28accounting for the gradual increase in subscribers' adoption of any service. Theadoption speed could however, vary from market to market, and from oneenvironment to the other according to the level of demand, and socio-economicfactors present in the country.The model uses four, seven, and ten years' projection timeframes; however the basisfor investment evaluation is done on a four-year timeframe (with the exception ofthe Fiber Access module, the viability of which is calculated on a ten-year projectiontimeframe).The model also examines the impact of some political decisions on the marketgrowth and the viability of different strategic options; in order to quantitativelyanalyze the sensitivity of such decisions on the overall business model of theoperators.Three main strategic options have been identified as possible means to achieve ourset national targets. The following sections will assess the financial viability andestimated investment for each.28S-curves are also known as logistic functions and are commonly used in modeling the diffusion of newservices or technologies. S-curves are a special case of the Bass Diffusion Model, developed by FrankM. Bass. This concept has also been extensively covered by Everett M. Rogers in “Diffusion ofInnovation“eMisr National Broadband Plan Broadband Market Modeling 48

4.1. Required Investment and Financial Viability AssessmentThe targeted short-term subscriber numbers for broadband services are 12.5 millionbroadband subscribers (4.5 million fixed broadband and 8 million mobilebroadband). In addition, the short-term availability targets account for a total of 15million HH, besides a total of ~2500 3 rd level Egyptian administrative localities(Sheyakha and Village), where availability is defined as the ability of citizens toacquire broadband services within an appropriate timeframe.The social targets' objective is to promote social development in areas that mightnot be commercially appealing for service providers. The social targets aim atrolling out high speed fiber access nodes in approximately half of the 3 rd levelEgyptian administrative localities. These nodes should support speeds up to 25Mbps. This is envisioned to impact social development in those regions, in addition toincrease its readiness for advanced broadband applications like e-learning, andcloud computing applications from the demand stimulation programs.Hence, based on the set targets and the above illustrated assumptions, theestimated investment ranges from EGP 14.4 billion to 23.6 billion (USD 2.40 billion to3.95 billion) over four years. This investment requires an additional EGP 2.1 billion(USD 350 million) to incorporate the demand stimulation investment needed to boostup the demand to the levels aimed at in the penetration targets. The demandinvestment figure has been calculated by MCIT, to secure a mass uptake in thefacilities and services offered by broadband. Demand stimulation includes manydirectives to be applied, like supporting local content development, trainingprograms, etc; which will be explained in detail in Chapter 5 - Strategic Options.It is important to note though that these estimated figures represent the totalinvestment needed by the sector, and will depend on the infrastructuredeployment/lease options. In addition to private sector investment, governmentstimulation may be needed to encourage investment in areas where deployingbroadband services may not be economically viable. To encourage investments insuch areas, it is assumed that government stimulation of up to 20% of the totalneeded investment would be required.The range of estimated investment accounts for the usage of different strategicoptions as possible means to achieve the national targets. Figure 4.1 depicts theinvestment required (in terms of CAPEX) for each option.eMisr National Broadband Plan Broadband Market Modeling 49

Figure 4.1 - Investment required (USD billion) for different Strategic Options 294.2. Incumbent Based ApproachRelying on the incumbent operator solely to provide infrastructure leasing services forother operators and service providers could be a promising means to fosterbroadband development in Egypt. The current network of TE extends to nearly allpopulated areas in Egypt, usually up to the 2 nd level Egyptian administrative localities(Qism and Markaz). TE‟s ability to provide wholesale services to the currentbroadband service providers in Egypt is basically demand driven.For this option to be effective, it should be coupled with specific regulatorymeasures aimed at removing all the current obstacles and possible constraintsfacing the current and potential operators and service providers as explainedpreviously in Chapter 3 - Gap Analysis.In this scenario, the backhaul and core network services costs, for the differenttechnology choices employed in the model, will fully depend on TE only. In otherwords, the operators and services providers will lease their needed infrastructureaccording to the current actual price scheme used in the market. While this optionprovides the least required CAPEX investment as compared to the others, it turns tobe the least viable option according to the financial viability analysis.The financial viability analysis used the Net Present Value (NPV) approach to assessthe viability of the different technology market combinations. Table 4.1 shows thefinancial viability of the different technology market combinations in the Incumbent29Investment accounts for penetration, availability and social targetseMisr National Broadband Plan Broadband Market Modeling 50

Based Approach, calculated for the investment needed to achieve penetrationtargets only.TechnologyNPV4 years(for CAPEX 1)NPV7 years(for CAPEX 2)NPV10 years(for CAPEX 3 30 )FWA (Lower Income)(-)(-)(+)FWA (Higher Income)(+)(++)(+++)Fiber Access (10 year)NANA(-)DSL(-)(- -)(- - -)Mobile Broadband(+)(++)(+++)Table 4.1 - NPVs of different Technology Market CombinationsIncumbent Based ApproachNPVs are calculated based on four-, seven-, and ten-year projections for alltechnology markets, with the exception of Fiber Access, which uses only a 10- yeartimeframe. Table 4.1 illustrates the non-viability of some technology markets overthe first seven years; however shows some improvement in its viability over longerperiods of time.The accumulated four-year total investment, in this case, is estimated to be EGP 14.4billion (USD 2.405 billion), accounting for the different set targets as shown in Figure4.2. It should be noted that the social targets investment was calculated based onbuilding new FTTx infrastructure. This is due to the unavailability of any fiberinfrastructure at the majority of the 3 rd level Egyptian administrative localities(Sheyakha and Village). Following this approach, the needed investment toachieve the availability targets is estimated to be ~ EGP 3.3 billion (~USD 558 million).Figure 4.2 - Investment Split Ratios – Incumbent based30CAPEX 3 > CAPEX 2 > CAPEX 1, where CAPEX 1 = investment needed to cover penetration targets,which accounts for USD 1.209 billioneMisr National Broadband Plan Broadband Market Modeling 51

4.2.1. Cost Structure Analysis for Incumbent Based ApproachThe costing structure of the operators and service providers adopting the IncumbentBased Approach is affected by:1. Price of leased line transmission capacities2. Administrative fees paid to the local authorities3. Subscribers‟ service adoption rates (Discussed in Section 4.6)This section demonstrates the effect of reducing the current transmission leasingpricing scheme of TE by a certain percentage. It also quantifies the amount ofinvestment saved in case of waiving the right-of-way administrative fees applied onservice providers for digging to lay their new infrastructure. The administrative fees,collected by the relevant authorities, constitute a large portion of the requiredinvestment for building new broadband infrastructure. Such administrative fees differfrom one region to another.1. Reducing TE Transmission Leasing Pricing SchemeTwo markets were found to be non-viable under the current TE transmission leasingpricing scheme, Fiber Access and DSL. A sensitivity analysis was done to identify theeffect of TE‟s E1 transmission leasing prices (as an example) for those two markets.Results show that a reduction in the current E1 prices by 20% leads to an increase ofthe NPV of the Fiber Access case by ~31%. Similar figures result for the xDSL marketcase, demonstrating an increase in its NPV by ~35%.2. Waiving Right-of-Way Administrative FeesThe waiving of right-of-way administrative fees reduces the total needed investmentby ~20%. The problem of high administrative fees has been previously highlighted inChapter 3 - Gap Analysis, and possible remedies for this constraint would have anoverall positive impact on the operators' business models, especially for the fibermarket case.4.3. Building New InfrastructureAnother possible strategic option to achieve the set targets is to allow operators andnetwork providers to build their own infrastructure, totally independent from theIncumbent. A possible setup could be an SPV responsible for building and operatingthe overall infrastructure, and leasing to providers.Again, this option requires regulatory interventions and willingness of operators toparticipate. Further information on this scheme and its underlying policy andregulatory implications is described in the following chapter of Strategic Options.Table 4.2 shows the financial viability of the different technology marketcombinations under this setup.eMisr National Broadband Plan Broadband Market Modeling 52

TechnologyNPV4 years(for CAPEX 1)NPV7 years(for CAPEX 2)NPV10 years(for CAPEX 3 31 )FWA (Lower Income)(-)(+)(++)FWA (Higher Income)(+)(++)(+++)Fiber Access (10 year)NANA(++)DSL(-)(-)(+)Mobile Broadband(++)(+++)(++++)Table 4.2 - NPVs of Different Technology Market CombinationsSPV ApproachNPVs are calculated based on four-, seven-, and ten-year projections, for alltechnology markets with the exception of Fiber Access, which uses only a 10-yeartimeframe. Table 4.2 illustrates the non-viability of some technology markets overthe first four years; however shows some improvement in its viability over longerperiods of time.The accumulated four-year total investment in this case is estimated to be EGP 23.6billion (USD 3.953 billion) accounting for the different set targets as shown in Figure4.3. It should be noted that although the apparent investment for the IncumbentBased Approach is much lower, it does show worse comparative results in itsfinancial viability, as compared to the SPV approach. To reach comparative NPVresults with that of the SPV approach, current leased line prices of TE need to bereduced by a percentage ranging from 50% to 80%. The needed investment toachieve the availability targets is estimated to be ~EGP 6.1 billion (~USD 1.019 billion).Figure 4.3 - Investment Split Ratios – SPV Setup31CAPEX 3 > CAPEX 2 > CAPEX 1, where CAPEX 1 = investment needed to cover penetration targets,which accounts for USD 2.296 billioneMisr National Broadband Plan Broadband Market Modeling 53

4.3.1. SPV Setup AnalysisIn this case, the costing structure of the operators and service providers adoptingthe SPV setup is affected mainly by two parameters:1. Waiving Right-of-Way Administrative FeesWaiving of the right-of-way administrative fees reduces the total needed investmentby ~44%. This is a much higher value than that of the Incumbent Based Approach.This is due to the fact that this setup is highly dependent on the infrastructure built bythe SPV, with no leasing from the incumbent operator.It is important to note that the problem of administrative fees cuts across theestimated investment required for all strategic options analyzed.2. Subscribers Service-Adoption-Speeds (Discussed in Section 4.6)4.4. Co-Sharing with a Utility ProviderThe last strategic option modeled, in order to achieve the set targets, is to allowoperators and service providers to enter into strategic agreements with utilities byincorporating them in an SPV setup. This could possibly be in exchange for theoperator‟s use of the utility‟s fiber backbone transmission networks. In such case,only the access part of the network needs accounted for.This trend is starting to be widely adopted in many countries. There are differentbusiness models adopted though; the utilities can be either partners with thetelecommunications operators or wholesalers of their infrastructure.The implications of this model are clear. The required investment cost structure forthis option does not differ much from that of the SPV case. However, it does havesome advantages over the SPV option. No additional core infrastructure investmentis needed, due to the availability of utilities' infrastructure capable of providing theneeded transmission capacities of the operators and service providers.Table 4.3 shows the financial viability of the different technology marketcombinations under this setup, resulting in a higher NPV for the FWA, Fiber andMobile markets. NPVs are calculated based on four-, seven-, and ten-yearprojections for all technology markets with the exception of Fiber Access, which usesonly a 10-year timeframe. Table 4.3 depicts a similar behavior for the viability of thisoption with that of Building New Infrastructure case.eMisr National Broadband Plan Broadband Market Modeling 54

TechnologyNPV4 years(for CAPEX 1)NPV7 years(for CAPEX 2)NPV10 years(for CAPEX 3 32 )FWA (Lower Income)(-)(+)(++)FWA (Higher Income)(+)(++)(+++)Fiber Access (10 year)NANA(++)DSL(+)(++)(++)Mobile Broadband(++)(+++)(++++)Table 4.3 - NPVs of different Technology Market CombinationsUtilities in SPV ApproachThe accumulated four-year total investment in this case is estimated to be EGP 21.9billion (USD 3.669 billion) accounting for the different set targets as shown in Figure4.4. The needed investment to achieve the availability targets is estimated to be~EGP 6.1 billion (~USD 1.012 billion).Figure 4.4 - Investment Split Ratios – Utilities in SPV Setup4.4.1. Analysis of Co-Sharing with UtilitiesThe costing structure of the operators and service providers adopting the utilities inSPV setup is affected mainly by two parameters:1. Waiving of Right-of-Way Administrative FeesRemoval of administrative fees can reduce the amount of the total estimatedneeded investment by 41%. Administrative fees still prove to be of crucialimportance for the business case viability of the different technology markets, evenif a risk reducing scheme – such as the utilities – is deployed.2. Subscribers’ Service Adoption Speeds (Discussed in Section 4.6)32 CAPEX 3 > CAPEX 2 > CAPEX 1, where CAPEX 1 = investment needed to cover penetration targets,which accounts for EGP 12.1 billion (USD 2.019 billion)eMisr National Broadband Plan Broadband Market Modeling 55

4.5. Estimated RevenuesBased on the set targets, the model calculated the required investment to achievethem. On the other hand, using the S-Curve as a basis for estimating the gradualsubscriber's service adoption towards the targets, an estimation of the number ofsubscribers per year can be calculated. The revenues are driven by the ARPU foreach technology market. Table 4.4 lists the estimated ARPU for the differenttechnology markets in Egypt. The values presented in this table have an obviousstrong impact on the financial viability of the various technology markets.TechnologyFWA (Lower Income)FWA (Higher Income)Fiber Access (10 year)DSLMobile BroadbandARPU (USD)1020751720Table 4.4 - Estimated ARPUsFigures 4.5 and 4.6 illustrate the broadband revenue projections and thecorresponding broadband subscribers from years 2012 till 2015 respectively. Fromthe figure, revenues are estimated to reach EGP 17.2 billion (USD 2.88 billion) at 2015.Figure 4.5 - Broadband Revenue ProjectionseMisr National Broadband Plan Broadband Market Modeling 56

Figure 4.6 - Broadband Subscribers AdoptionFigure 4.6 shows the broadband subscribers' adoption profile, while meeting the setnational penetration targets for Mobile and Fixed in 2015. The projected number ofFWA (Lower Income) subscribers is 65,532. The projected number of FWA (HigherIncome) subscribers is 1,026,791. The projected number of FTTH subscribers is 96,665.The projected number of xDSL subscribers is 3,312,062. And finally, the projectednumber of mobile broadband subscribers is 8,371,052. The indicated figures all sumup to the required penetration target. (Targets = 4.5 million for Fixed Broadband and8 million for Mobile Broadband).This accounts for a total projected 2 nd level Egyptian administrative localities (Qismand Markaz) of 48 for FWA (Lower Income), 300 for FWA (Higher Income), and 43 forFiber with the latter being a subset from those areas served with FWA (HigherIncome). This is mainly based on the fact that household income of 2 nd levelEgyptian administrative localities (Qism and Markaz) is used as the primary thresholdfor the selection of the FWA technology in a specific region. This same threshold inaddition to the total household income in the 2 nd level Egyptian administrativelocalities is used in the case of Fiber selection. Fiber is envisioned to be deployedonly in higher income areas with higher household income.4.6. Sensitivity AnalysisThis section addresses the effect of different market evolution scenarios (speed ofservice adoption). As previously indicated, the number of subscribers adoptingbroadband services in Egypt is to reach 12.5 million subscribers by 2015. Howeverthere is a possibility that this number be surpassed if the demand stimulation resultedin increased subscribers' growth, hence causing a faster adoption scenario. In thatcase the set targets would be reached at an earlier point in time.eMisr National Broadband Plan Broadband Market Modeling 57

Figures 4.7 and 4.8 illustrate the broadband revenue projections and thecorresponding broadband subscribers from years 2012 till 2015 respectively, in thecase of a faster subscriber service adoption speed.Figure 4.7 - Broadband Revenue Projections – Faster Subscriber's Service Adoption SpeedFigure 4.8 - Broadband Subscribers Adoption – Faster Subscriber's Service Adoption SpeedThis increase in the subscribers' service adoption speed results in an averageincremental investment (over the three scenarios) of about 35%. It is clear that theimpact of the subscribers' service adoption speeds is large. The adoption speed alsoaffects the viability of the technology market options positively. The adoption ratewill depend largely on the customers' interaction with the new services, the workdone to stimulate demand and attract consumers, as well as the overalldevelopment of the economy.eMisr National Broadband Plan Broadband Market Modeling 58

5Strategic Options

Achieving the set targets requires collaboration among all stakeholders of theEgyptian broadband industry. NTRA‟s aim, through the eMisr National BroadbandPlan, is to facilitate the creation of a robust broadband ecosystem, to allow for asustainable market growth.Experiences in high-penetration countries show that successful broadband diffusionrequires both supply and demand side programs. Indeed, the supply side ofbroadband access through the establishing of high speed broadband infrastructureis only one of the two factors of the equation. The other equally important factor isthe creation and expansion of demand through complementary applications andservices that provide added value to the market. Demand side drivers also includeavailability of applications and services that address local needs and enhancebroadband value proposition, as well as increase familiarity with Information andCommunications Technologies (ICTs) 33 .While broadband diffusion may continue to increase if the development agendafocuses on either the supply or the demand side alone. Nevertheless, it will not growas fast and as much as it could. It is hence important to realize that broadbanddiffusion will not achieve its potential unless supply and demand sides are coherentlydeveloped. In other words, even if both supply and demand are considered, butare not properly coordinated and harmonized, development efforts will most likelyresult in an insufficient supply of broadband infrastructure or a poor demand forbroadband applications.The overall structure of theeconomy, on the otherhand, has a cross-cuttingimpact on broadbanddiffusion. The morereceptive the economy isto innovation and businessdevelopment, the moreinclined broadband is todevelop and diffusenationwide. Figure 5.1illustrates the drivers ofbroadband diffusion 34 .Figure 5.1 - Drivers of Broadband Diffusion33As defined by the World Bank (2007), Information and Communications Technologies consist ofhardware, software, networks, and media for collection, storage, processing, transmission, andpresentation of information (voice, data, text, images).34"Strategic Options For Broadband Development", a specialized report developed by World Bankaccording to a consulting agreement with NTRAeMisr National Broadband Plan Strategic Options 60

5.1. New Era InfrastructureThis section will discuss the options and recommendations for supply drivers ofbroadband diffusion in Egypt. The supply side of broadband access encounters allthe elements constituting the supply chain and creating a high speed infrastructurecapable of carrying broadband services. This section also includes directives thathelp to foster competition across the whole supply chain. The gap analysisdescribed in Chapter 3 serves as our starting point. Unavailability of the service andthe lack of competition in some parts of the supply chain are some very obviousconstraints. Other constraints like line sharing problem, and right-of-way fees provedto have a huge effect on the Net Present Value (NPV) of some potential marketsanalyzed for broadband diffusion (refer to Chapter 4 for more details). Variousrecommendations, in this section, will be described in order to address challengesand constraints.As depicted in Figure 5.2, the supply chain includes elements that are used to carrybroadband services to end users, starting from the international connectivitysegment, to the national backbone (core networks), to last mile access and finallyto access devices and retail services.InternationalConnectivityNationalBackboneLast MileAccessAccessDevices andRetailServicesFigure 5.2 - The Supply Chain for Broadband InfrastructureOpening for competition and the elimination of any bottlenecks in the supply chainare the key success factors needed to boost up high speed broadbandinfrastructure. Competition in broadband supply is crucial in driving down prices,improving quality of services and increasing customer benefits. Competition has apositive effect on market growth, as it expands access, increases affordability andtriggers the provisioning of value added services. Lack of access to infrastructureand lack of affordable services both act as strong barriers to broadband diffusion.However, to maximize effectiveness, competition must be introduced throughoutthe different levels of the supply chain. If this is not the case, at any lone level of thesupply chain, bottlenecks arise and the benefits of competition, includingbroadband diffusion, are severely reduced. Hence availability of multiple networks,technologies, and service providers at each level of the supply chain is crucial.Finally, access devices can act as gate keepers for broadband penetration. Thus,the availability and affordability of access devices are other important drivers ofbroadband diffusion. Without access devices consumers cannot connect tobroadband services, and broadband diffusion throughout the economy isnegatively affected. Personal computers (PCs) represent, so far, the main accessdevices for broadband. Therefore, PC penetration has traditionally limited the rateeMisr National Broadband Plan Strategic Options 61

of increase of broadband diffusion. However, reductions in PCs prices and, moreimportantly, the surge of new devices, such as tablets and smart phones, becomingsignificantly cheaper than PCs, reduce the effect of this barrier significantly on theshort term. Yet the need for governmental initiatives to make access devicesavailable to all citizens is still evident.5.1.1. A Broadband Conducive Future Market StructureThe future of the telecom market in Egypt and its structure will shape, and will begreatly influenced as well by, decisions taken by NTRA with respect to opening upfor competition in the broadband market. Its structure will hence change in order tocope up with the dynamics of the market and to meet the new demand. As shownin Figure 5.3, the foreseen market structure is expected to have a layer of operatorsresponsible for building, maintaining, and leasing infrastructure to other licensedoperators on non-discriminatory basis. Those are referred to as Telecom BackboneInfrastructure Companies and will not be entitled to provide any retail services toend users. It's expected that there will be need for a very limited number ofoperators at the Telecom Backbone Infrastructure layer.In addition to this layer, it's expected to have an upper layer of other operators whowill provide full-fledged telecommunications services, by leasing infrastructure fromthe Telecom Backbone Infrastructure Companies. Those operators will have theright to provide bundled packages of triple play services whether fixed or mobile,and the right to enter into each other‟s markets. This will ensure a required balanceamong the different market players.Figure 5.3 - Egyptian Broadband Market Structure in the FutureeMisr National Broadband Plan Strategic Options 62

The market trend in Egypt, as in other countries worldwide, is experiencing tendencytowards mergers among operators and acquisitions of smaller ones. The licensingregime is to be modified accordingly in order to accommodate for unified licenses.The market is expected to have only a few operators licensed to acquire scarceresources, such as spectrum, right-of-way, and/or numbering. Any other licenses forservice provisioning will be class licenses.The following sections will highlight the relevant options and recommendations thatwill facilitate the move towards achieving the foreseen future market structure.Those options and recommendations target specific possible bottlenecks andobstacles in order to foster competition across the supply chain as needed.5.1.2. National Backbone InfrastructureTo meet the growing demand for new connections and higher speeds, a state-ofthe-artnational backbone is required. As eMisr sets aggressive targets,nontraditional solutions should be in place to facilitate the roll out of such a highspeed national backbone network. Accordingly, NTRA will work on the followingdirectives:1. Maximizing Open Access on Existing Core Network of Telecom EgyptSince Telecom Egypt is the sole infrastructure provider, it is obliged to providethis service on a non-discriminatory basis to other licensed operators.To ensure a non-discriminatory behavior of Telecom Egypt, NTRA willimplement appropriate regulatory measures (such as accounting separationas stated in Telecom Egypt's license) or consider other tools such as functionalor structural separation if needed.NTRA will implement the needed regulatory mechanism to revise, on a regularbasis, the cost structure of the wholesale, interconnection and otherinfrastructure leasing services; to ensure that it is a cost-based model thatenables an adequate business case for all market players.Accordingly, NTRA will revise the current subsidy in the Internet market with aview of directing it towards capital expenditure (CAPEX) instead of ongoingoperational expenses (OPEX). This is expected to facilitate the building ofnew infrastructure with higher capabilities especially in under-served regions.NTRA will create a task force with the mandate of setting a timely action planfor the shifting of the subsidy from OPEX to CAPEX.Functional / Structural Separation:- If other remedies are considered insufficient to create functioningcompetition in the market, functional separation will be considered toincrease competition in the supply chain.- In that case, the incumbent operator will be divided into two separatedivisions: one responsible for network operations and wholesale services,and the other for retail services provisioning. The network operationseMisr National Broadband Plan Strategic Options 63

division may still be government owned (totally or partially), while the retailservices provisioning division will be private-sector owned.- Separating the network operations and wholesale services function fromthe retail services function will help foster competition on a nondiscriminatorybasis. It is expected that this action will help the marketleapfrog by eliminating bottlenecks throughout the supply chain.- NTRA will create a task force with the mandate of studying the need forfunctional separation of the incumbent, taking into account internationalcase studies, needed legislative actions as well as possible impact on theEgyptian market.2. Co-sharing in Fiber Backbone DeploymentAs most of the capital investment in fiber networks is in the civil work, sharing inits deployment will help lift the burden off the operators. Creating a SpecialPurpose Vehicle (SPV), with existing operators as shareholders, is one option.The whole responsibility of this SPV is to build, maintain and upgrade a highspeed backbone that meets and fulfills the operators' requests. This action willcreate competition at the infrastructure level.NTRA will create a task force with the mandate of studying the creation of thisnew SPV.The main responsibilities of this task force include:- Study the need for creating an SPV for co-sharing in fiber deployment,- Set a suitable structure for this new SPV, its rights, obligations, and roll outplan,- Study the needed legislative amendments to the current licensing regimein order to cope with this new approach,- Consult with the operators.In case Telecom Egypt is part of this SPV, then functional or structuralseparation for Telecom Egypt is a must. In that case, this task force will joinefforts with the task force on structural separation to study the inclusion ofTelecom Egypt in that SPV.3. Granting Equal Rights to the Incumbent and the MNOsThe existing Mobile Network Operators (MNOs) currently have the right tobuild their own infrastructures, solely for the purpose of their own networks.Since each MNO has its ISP subsidiary, extending the MNOs rights to includethe leasing of their infrastructure to other operators or to each other willfurther open the competition in the backbone segment of the supply chain.However, this option may encounter redundant investment from the differentoperators in some regions. This could be saved if such operators co-share inbuilding the needed backbone.eMisr National Broadband Plan Strategic Options 64

This option is mutually exclusive with the previous option of 'Co-sharing in FiberBackbone Deployment'. It is considered as an alternative option if nocommon agreement is reached among operators to establish an SPV.Based on the results of the studies performed by the fiber co-sharing taskforce, NTRA may give MNOs the right to lease their backbone infrastructure toother operators.In that case, and in order to make the required balance between the existingoperators, especially after opening up competition for full backboneinfrastructure leasing services, it is previewed that the current incumbent,Telecom Egypt, will be given the right to provide mobile services.Therefore, the existing key market players, namely the incumbent and theMNOs, will all have the same rights of service provisioning. Each operator willhave the right to provide fixed or mobile triple play services.4. Utilities Infrastructure SharingSome infrastructure of the utilities can be suitable for the telecom operators totransmit their payload, especially for long distances (or inter-governorates).The transport and electricity utilities are such examples that offer a goodopportunity.The Egyptian Electricity Transmission company has a fiber network for its ownuse. The Egyptian railways and highways are also planning to undertakesimilar investments on a national level, by laying down fiber optics, toenhance their signaling and network management systems. There is a strongpotential to use any excess capacity for telecom purposes, thus increasingcompetition in the backbone and backhaul market segments. Alternatively,telecom operators may use the utilities' right-of-way, to dig and lay their fibercables, after agreeing with the relevant utility.NTRA will set the required regulations to facilitate and encourage theengagement of utilities with telecom operators, especially regulations relatedto utilities' right to lease infrastructure to licensed telecom operators.Further details, action items and timeline will be elaborated in “Phase Two:Broadband Action Plan” which will be explained in Chapter 7 –Implementation.5.1.3. Last Mile AccessOne of the biggest bottlenecks in Egypt is at the access level, as was explainedpreviously in sections 3.1 and 3.2. Existing problems at the access level includes thelack of access networks in some areas and its technical inadequacy in others. Thisprevents the users in those areas from connecting to broadband services, creating agreat obstacle to broadband diffusion.eMisr National Broadband Plan Strategic Options 65

1. Wireless Broadband AccessWireless Fixed Broadband Access is considered as one of the majortechnologies to bridge the broadband gap. The cost of wireless networksdeployment is lower than that of fixed networks. More importantly, wirelesstechnologies help in speeding up the roll out of last mile access networks andin overcoming the local connection bottleneck. Thus it will make it possible toincrease competition more rapidly and reach the desired critical massquickly. Using wireless technologies can change the market dynamics andmay help increasing profitability, fostering operators' appetite to additionalinvestments.Wireless technologies and wireless solutions provide efficient means to reachdifficult and low-dense areas in a cost effective way. This also helps fasterachievement of the set targets.NTRA will set the required regulations to allow for the deployment of wirelessbroadband access technologies in the Egyptian market as needed. Theseregulations include the allocation of spectrum, its granting process, and therights and obligations of the licensees.Needed regulatory directives will be discussed in sub-section 5.2.3: "RadioSpectrum Directives".2. Migration to FTTxBeing one of the top technologies to trigger high speed broadband demand,FTTx is the most attractive and future-proof choice to carry broadbandservices.A major step has been taken by NTRA in Q3 2010 to foster the deployment offiber through the licensing of two new players in newly established closedcompounds (considered as high economic areas). It is expected that top ofthe line and innovative services will be provided to high end communities.This project acts as the nucleus for future FTTx nationwide deployments. NTRAshall analyze periodically the progress of this project in order to extend itsdeployment.As ~ 70 - 80% of the cost of laying out fiber is mainly in civil works, making thecost of fiber deployment nearly comparable to new copper installations,NTRA will foster fiber deployment for new local loop installations in someareas, and ducts in other areas in order to facilitate a full transition to fiber inthe future.3. Next Generation AccessAs new trends in fixed networks are moving towards fiber, hence sharedaccess local loop unbundling - which is the unbundling technique currentlyused in Egypt - may not be viable any more.NTRA will implement the necessary regulations to allow for open access,mainly Full Local Loop Unbundling and IP Bitstream.eMisr National Broadband Plan Strategic Options 66

Full Local Loop Unbundling and IP Bitstream access will be introduced andprovided in consultation and agreement with market players and taking intoaccount all market economies.4. Utilities Networks SharingOne of the innovative solutions to overcome the obstacles in the last mileaccess is to use the underlying utilities‟ networks that reach every home, forexample, gas, water, sewage or electricity.NTRA will set the appropriate regulatory environment needed to allow forsuch solutions and to encourage licensed infrastructure operators to searchfor innovative solutions in this track.5.1.4. Radio Spectrum DirectivesRadio spectrum is considered part of the society‟s infrastructure as it is used in dailyactivities including TV, Radio, mobile, public safety, and more. The development intechnologies and applications paves the way to a different world where everythingis wireless. This evolution in communications technologies, has led to an enormousincrease in spectrum demands.Providing extra frequency spectrum for use in wireless broadband applications is animportant driver towards a more developed infrastructure. This additional frequencyspectrum will encourage licensed operators to invest more in introducing newtechnologies that support higher data rates and thus new bandwidth hungryapplications. This in turn reduces costs of currently available services and reflects onthe market in a reduction of prices.1. Allowing Flexible Usage of SpectrumFlexibility will allow any specific technology to use the spectrum that is mostsuitable to it and hence will help ensure that spectrum moves to moreproductive uses, including mobile broadband, through voluntary marketmechanisms. In some cases however, when flexibility of spectrum use has anegative effect on public interest, NTRA could get involved to provide what isbest for the public.In order to avoid forcing a particular technology path that would be later onovertaken by market trends, NTRA is adopting a technology neutralframework that eliminates barriers of entry for broadband accesstechnologies. Technology restrictions, especially over spectrum rights, mayreduce the viability of business models of prospective operators, resulting in alower number of applicants and bidders. It may also limit potentialinvestments of existing operators as they restrict their business plans to theprofitability derived by only one of the potential uses of the implementedbroadband technology.eMisr National Broadband Plan Strategic Options 67

2. Encouraging Innovative Spectrum Access ModelsNTRA will support innovative spectrum access, and encourage researchersand young entrepreneurs to develop new spectrum access techniques. Thissupport could be done through providing a specific spectrum band forunlicensed use for innovative research. Smart radios such as software definedradio and cognitive radio are able to sense the environment and operate inthe vacant frequency bands. It should be noted that such radios don‟tnecessarily preclude the licensing process as they could vary between beingtotally unlicensed or fully licensed according to the license requirements. Inall cases, the regulator will have a role; for example, cognitive radioregulations may include reducing transmitted power or using less channelbandwidth. Cognitive radio could provide users with small needs access tounused spectrum. This avails more spectrum for users requiring large amountof dedicated spectrum.On the international level, NTRA is participating effectively in the activities ofthe ITU-R to follow the regulatory measures needed to introduce cognitiveradio system technologies and software-defined radio.3. Making Use of Digital DividendIn 2006, the Regional Radio Conference (RRC) organized by the ITU,rearranged the broadcasting bands used in ITU Region 1 with the objective ofdetermining sub-bands for digital radio and TV broadcasting. Adopting theDVB-T standard, a classical analogue TV channel can multiplex up to 8 digitalTV channels based on the compression technique used and the picturequality.This effect of the virtual gain in capacity resulting from switching televisionbroadcasting from analogue to digital has generally been called the “DigitalDividend”. The Digital Dividend can potentially be utilized for broadbandmobile access in outlying areas where fixed network provisioning would beunviable. The Digital Dividend spectrum is ideal as it has very goodpropagation characteristics so the cell size would be much larger comparedto higher frequency bands.NTRA is currently considering the spectrum band 790-862 MHz as part of thedigital dividend and shall consider also the spectrum band 698 -790 MHz asfuture extension.4. Providing Additional Spectrum for Wireless BroadbandWireless solutions generally provide cost effective means to cover low populatedareas and areas which are difficult to reach using traditional wired solutions. Wirelessis also important to provide extra capacity in highly populated areas and in areaswhere mobility is an important concern for people who want broadband access onthe move. This makes providing spectrum for wireless broadband an important taskfor any broadband plan to be effective. Moreover, broadband technologies areeMisr National Broadband Plan Strategic Options 68

spectrum hungry, they need large amounts of spectrum to provide high data rates.This situation leaves NTRA with the burden of availing enough frequency spectrumfor wireless broadband.In order to estimate the future spectrum requirements for broadband in Egypt, thefollowing inputs are considered: geographical status of each city, populationdensity, average spectral efficiency for different technologies, forecasted number ofsubscribers, and behavior of users (adopting low and high data rate scenarios peruser). The current spectrum allocated for 3G mobile networks is also considered.It is estimated that by the year 2015 only additional 2x25 MHz and 2x75 MHz wouldbe needed in order to meet the users' needs for low and high data rate scenariosrespectively. The average additional spectrum needed would hence be 2x50 MHz.It is estimated also that additional 2x150 MHz and 2x500 MHz would be needed inorder to meet the users' needs for low and high data rate scenarios in the year 2021with an average of 2x325 MHz.In order to meet such spectrum demand, several evacuation scenarios werestudied. Two scenarios are set for maximum and minimum spectrum that could beevacuated to reach the average values. It is concluded that an average of 2X150MHz could be evacuated and used for wireless broadband for FDD technologies,whereas for TDD technologies, an average of 450 MHz could be evacuated.eMisr National Broadband Plan Strategic Options 69

5.2. Demand StimulationA central factor determining the success of broadband diffusion in Egypt is securingthe mass uptake of the facilities and potential offered by broadband services. Ademand stimulation program will be required, and there is a need to assess differentstimulus packages to justify their rationale and return on investments.Demand stimulation policies can be divided into three main categories:1. User Demand StimulationSupporting local and relevant content.Designing focused programs to avail broadband promotional policies tospecific vulnerable segments of the population or highly populatedunderprivileged regions to trigger mass usage 35 .Drafting plans for popular, inexpensive, converged services to widen theaddressable market 36 .Improving consumers‟ services and information dissemination about availablepackages and applications 37 .Providing basic/generic e-skills training and digital literacy/ citizenship in majortraining programs across sectors and through NGOs 38 .2. Government Demand StimulationGovernment will be the anchor tenant for broadband services in allcommunities across Egypt to stimulate broadband services in underservedcommunities.Urging ICT budget allocations at the level of ministries and main publicentities.Forging and activating partnerships between ministries, MCIT and the privatesector to initiate new e-government work programs.Mass training and capacity building of government employees to administerICT enabled services to the public.Appointing information and communications officers in all governmententities.Providing new e-government applications and implementation packages.Aggregating the demand of various government branches and agenciesand inviting competitive tenders rather than separate one for cost effectiverollout of services 39 .35 Reach and Increasing Impact, World Bank, IC4D, 2009, p 4137Info Dev UN Conference on the Least Developed Countries – 10th May 2011 ITU SIDE EVENT –DEPLOYING BROADBAND FOR SUSTAINABLE DEVELOPMENT Priorities for the LDCs and how to enable asecure and stable environment for broadband deployment in these countries39 National Broadband Plan Strategic Options 70

Subsidizing broadband equipment in mega projects, flagship projects (e.g.real estate automation and medical records automation) and users' intensivepoints such as schools and universities.3. Industry StimulationOffering incentive packages, tax reduction schemes, and/or easy paymentterms to SMEs using broadband.Providing reliable and nation-wide broadband service support to SMEsNurturing talent by providing specialized training on different applications forSMEs.Providing new m-application services.The following sections survey a number of key broadband applications that areresponding to short and long term pressing needs of the Egyptian economy.5.2.1. e-EducationThe mission of the e-education demand stimulation policies is to improve theeducation and learning process via the utilization of ICT and to reinforce the 21stcentury skills to build an ICT-based community. Broadband is an important tool thatenables education stakeholders (educators, parents and students) to meet majorchallenges in education and to accelerate education reform.Integrating ICT technologies into the Education sector would help learning systemsto spread far beyond the boundaries of the physical classroom, schools, universitiesand traditional school day. It allows teachers and parents to communicate forbetter decisions related to student‟s needs through improving the flow of informationand facilitating the collection and analysis of greater amounts of student data tomore accurately track student performance. It also increases the opportunities ofcollaboration to provide variety of educational resources, products and services,and definitely ICTs encourage innovation in the delivery mechanisms of theeducation process.Key Objectives for ICT Integration in the Education Sector Include:Improve the education and learning process via ICTQualify teachers and administrators to obtain international certificates in ICTIncrease Egypt‟s competitiveness, and increase job opportunities for itscitizensPromote the concept of e-learning technologies as a pillar in the educationalprocess.Sector Recommendations:1. Enhance ICT InfrastructureeMisr National Broadband Plan Strategic Options 71

Provide high speed affordable network access to all learning areas, with anEducation Broadband Infrastructure Fund to subsidize deployment to rural ordeprived areas. Support (including subsidies) of access devices computers, laptops, PDAs,ultra-mobile devices Establish e-rate which offers schools and libraries discountedtelecommunications services. Consider new ICT trends for education: cloud computing, virtualization,telepresence and video technology 40 .2. Increase the Digital Education ContentIncrease the supply of digital educational content available online.Establish standards to be adopted for locating, sharing & licensing digitaleducational content.Ministry of Education should periodically reexamine the digital data to ensurethat they are consistent with the needs and practices of the educationalcommunity.Consider taking legislative action to encourage copyright holders to granteducational digital rights of use.Provide funding for research and development of online learning systems.Establish a program to fund the development of innovative broadbandenabledonline learning solution.Incorporate new ICT trends in digital content: info-share, web portals, opensource resources, etc 41 .3. Educate the Teachers of 21 st CenturyTrain teachers in digital literacy and programs targeting STEMReview the existing teacher training program in order to prepare teachers forincorporation of ICT‟s.Make training materials available to teachers and educators by whatevermeans, preferably electronically.Encourage the procurement of educational technologies that must be usedby teachers, and assist in providing training in their utilization.Identify and/or develop distance education and/or part-time programs for inserviceteachers.Foster the development of a community of learners and broadercollaboration between teachers.Include trends in ICT for communications and training: social networks andmobile learning 42 .40ICT Trends in Education - Australian Council for Educational Research ACEReSearch, and UNCTAD ICTPolicy Review -The Republic of Egypt41Ibid.eMisr National Broadband Plan Strategic Options 72

4. Unlock the Value of Data and Improve TransparencyEncourage the adoption of standards for electronic educational records.Develop digital financial data transparency standards for education.Provide a simple Request for Proposal (RFP) online broadcast service wherevendors can register to receive RFP notifications for local or state educationalagencies within various product categories.5.2.2. e-HealthThe mission of the e-health demand stimulation policies is to improve the safety,quality, and efficiency of health care delivery by enabling ICT across the healthsector with special emphasis in the poor rural communities. IT Health has animportant role in advancing policy priorities that improve health and health caredelivery, among which:• Improving care quality, safety, efficiency and reducing disparities• Engaging patients and families in managing their health• Enhancing care coordination• Improving public health• Ensuring adequate privacy and security of health information.Broadband is necessary for these transformations in three ways. First, it enablesefficient exchange of patient and treatment information by allowing providers toaccess patients‟ electronic health records (EHRs) from on-site or hosted locations.Second, it removes geographical and temporal barriers to care by enabling videoconsultation and remote patient monitoring. Third, broadband provides thefoundation for the next generation of health innovation and connected-caresolutions. Health systems are not just about replacing paperwork with smartcards,ICTs enable healthcare to be personalized. This not only makes treatments moreeffective, it enables doctors to diagnose problems more quickly, and even predictthem before they occur. Health-related information is one of the most sought aftertopics on the World Wide Web, which puts a seemingly limitless quantity of healthinformation at the fingertips of everyone with an internet connection.Key Objectives for ICT Integration in the Health Sector Include:Provide quality health care services via broadband servicesPrepare physicians and nurses in all medical facilities e.g. hospitals, and ruralhealth clinics to become members of the digital workforce and theconnected health community.42ICT Trends in Education - Australian Council for Educational Research ACEReSearch, and UNCTAD ICTPolicy Review -The Republic of Egypt.eMisr National Broadband Plan Strategic Options 73

Increase the capacity of the local IT industry to promote innovative healthsolutions in partnership with world-class firms, creating economic value thatwould lead to mutually beneficial business opportunities.Sector Recommendations:1. Ensure Sufficient Connectivity for Health Care Delivery LocationsSupport broadband deployment in rural areas: Government should establisha Health Care Broadband Infrastructure Fund to subsidize networkdeployment in rural or underserved areas.Modernize healthcare infrastructure: Establish common standards andprotocols for sharing administrative, research and clinical data, and provideincentives for their use. Networking, exchange of experiences and data, andbenchmarking, is necessary in the health sector. Drivers for this include theneed for improvements in efficiency, and the increased mobility of patientsand health professionals under an emerging internal market in services.2. Modernize Regulations to Enable Health IT AdoptionRespect for human rights and protection of the citizen, including theprotection of personal nominative data, respect for intellectual propertyRegulations on the legal status of electronic documents and signatures3. Encourage Innovative Health SolutionsEmpower health care authorities with ICT solutions: Will increase productivity,efficiency, and management of resources.Empower health consumers: Provide ICT/Internet based health careinformation. A growing number of people are looking proactively forinformation on their medical conditions 43 . The Ministry of Health shouldestablish quality criteria for health related websites and accessibility of websites.Encourage and support development of innovative technologiesIncrease Research and Development fundsIdentify and regulate new e-health servicesEncourage Smartphone applications to assist healthcare industry.5.2.3. e-GovernmentBroadband services can help governments reinvent themselves, operate moreefficiently and in a faster way and produce new outcomes for their citizens throughe-government. The goals of e-government services are to 1) introduce43Detmer, D.E., P.D. Singleton, A. Macleod, S. Wait, M. Taylor, and J. Ridgwell (2003), The InformedPatient: Study Report, Cambridge University Health, Judge Institute of Management: Cambridge, UK.March 2003eMisr National Broadband Plan Strategic Options 74

competitiveness to service provision, 2) Greater convenience for the citizenry, 3)enhance productivity, accuracy, performance and reform in the administrativebody, 4) fight corruption, and 5) contribute to better social and economic prosperityin Egypt, 6) Increase transparency and accountability.Key Objectives for ICT Integration in the e-Government Program Include:The Egyptian Government has 4 main objectives, as described below:Ensure citizen and business satisfaction through offering high quality, easy touse/access, interactive services via various integrated delivery channelsEnsure active participation and innovationImprove organizational performance through the use of ICTAddress citizens‟ trust through applying transparency and accountabilitymeasures in government.Government services include two main dimensions: public services' back-endsincluding the processes, human capacity development, and legislations; and thefront-end outlets and delivery channels. ICT is the main tool that is used to developthe two dimensions of government services front and back ends. Using ICT enablesbetter efficiency and simple government services, and allows for 24 hours servicesthroughout the country via various delivery channels and models.Program Recommendations:1. Focus on Citizen-Driven Public ServicesDevelop quality services with convenient access points in consultation withcitizen and government teams.Ensure complete geographical coverage, via the government as the anchortenant policy.Reduce number of physical visits to government service providers.Provide different integrated service delivery channels.Enhance quality of services (efficiency & effectiveness).Implement responsive complaint mechanisms and citizen satisfaction surveys.2. Mandate the a Government and its Institutions with a New RoleDecentralization for administrative and financial aspects, and legislation.Shift towards regulations and transparency.Publish government information online (data disclosure), at no charge.3. Foster InnovationIntroduce the PPPP (Public, Private & People Partnership) concept indesigning and developing the new channels for service delivery (the “LivingLabs” concept).Reward innovation within government.Introduce R&D concepts/units to government.Exchange experiences & best practices (locally and internationally).eMisr National Broadband Plan Strategic Options 75

5.2.4. ICT & EnvironmentICTs contribute around 2 to 2.5% of Greenhouse Gas Emissions (GHG) every year,and these emissions are expected to nearly double, to about 4% by 2020 44 .However, the ICT sector has a high potential for reducing emissions by 5 times thesize of the sector‟s own footprint, or 15% of total BAU by 2020 45 . In economic terms,the ICT-enabled energy efficiency translates into approximately USD 946 billion(worldwide) of cost savings 46 .Reducing carbon emissions will require changes in lifestyle and behavior, butchanges in management practices can also have a positive impact. ICTs can helpwith this, either directly, by reducing the ICT sector‟s own energy requirements orindirectly, through using ICTs for carbon displacement, or in a systemic way, byproviding the technology to implement and monitor carbon reductions in othersectors of the economy.Key Objectives for the ICT & the Environment Include:Develop a framework for a National Pro-Growth Green Strategy.Synergize and coordinate green ICT activities.Raise community awareness of green ICT challenges and opportunities.Recommendations:1. Identify ICT & Climate Change Mitigation Opportunities 47Smart rids, smart meters, and energy efficient ICT applications- Integrate the ICT into energy policies.- Start an awareness raising campaign to highlight the importance of thesmart grid and smart meters as an effective technology: highlighting itsadvantages for improving the power delivery system in terms of reducingtransmission losses (delivery optimization), control demand (demandoptimization) and predictive maintenance (asset optimization).- Facilitate and organize capacity building programs for utility‟sprofessionals to address issues related to enhancing process efficiencyand workflow.- Provide information, skills and expertise to 1) utilize advanced ICT basedtechniques, and 2) introduce modern technologies and practices.44ITU (2009) ICTs and Climate Change, background paper for the ITU Symposium on ICTs and ClimateChange, Quito Ecuador, 8-10 July, 200945Gesi Initiative (2008). SMART 2020 Report: Enabling the Low Carbon Economy in the Information.46Stern, N (2008) Key Elements of a Global Deal on Climate Change, London School of Economics andPolitical Science47ICT‟S Potential for Energy Saving and GHG emission reduction in the built environment-Egypt report,op-citeMisr National Broadband Plan Strategic Options 76

- Act as a consultant for the Ministry of Electricity and Power to identify theexisting challenges specific needs of the Ministry to be in a position to helpin choosing and recommending the right smart grid technology and planthe implementation of smart grid implementation activities.- Facilitate Demand Side Management (DSM) capacity building andtraining.- Lead by example by building a smart grid network in Smart village or usinga smart micro grid in MCIT premises.Smart Transportation- Integrate ICT into transportation policies.- Raise awareness of community of the potential of intelligent transportationsystem (ITS) and other smart transportation technologies.- Support the integration between wireless and wired communicationsbasedinfrastructure and roads, vehicles and transportation infrastructure.- Lead by example, implementing an ITS in the Smart Village.Smart Buildings- Integrate ICT into building policies- Work closely with the Architecture, Engineering and Construction (AEC)community in Egypt and with the Building Energy Efficiency Code (BEEC)personnel at the local authority levels to raise their awareness and buildtheir capacity on ICT potential for energy savings in the buildingsenvironment.- Work collaboratively with the Ministry of Local Administration and Ministryof Housing to assist in 1) the development of training programs for BEECand GPRS personnel at the local municipalities level; 2) to organize publicawareness and outreach program to highlight the importance of the BEECand GPRS standards; and 3) to raise awareness and build capacity on theICT potential role for energy savings in the buildings environment in Egypt.- Promote and support the use of Building Information Modeling (BIM)applications and technologies to improve building design to use several ofthe environmental design principles and to control the energy envelopeon new buildings especially.2. Identify Opportunities to Use ICT to Monitor the Effects of Climate ChangeAccording to the recommendations of the Egyptian Second NationalCommunication report ICT sector can help in adapting to climate change effects asfollows:Establish monitoring systems on rising sea levels. The primary objectives wouldbe the 1) identification of vulnerable areas; the 2) building of databases; the3) development and implementation of measures for resource protection;and the 4) follow up and enforcement of planning regulations.eMisr National Broadband Plan Strategic Options 77

Support the Egyptian Environmental Affairs Agency (EEAA) air qualitymonitoring network with a number of monitoring stations for CO2, CH4, andVOCs.Establish a network of tide gauges monitoring over the Mediterranean, theRed Sea, and Lake Nasser.Support the Ministry of State for Environmental Affairs, and Ministry of HigherEducation in the establishment of a Regional Center for Research and Studiesof Climate Change. The Center would be responsible for data collection,monitoring and assessing climate changes and likely impacts within Egyptand in the other Nile Basin countries, developing and maintaining a databasein this regard, as well as networking with other research institutes.3. Create a Sustainable ICT Sector Establish a Green Government ICT infrastructure. Egyptian governmentorganizations, Agencies, and association are one of the largest purchasers ofICT products and services. So greening the government ICT infrastructure willcontribute highly in decreasing the GHG emission of the ICT sector.- Set environmental requirements for ICT public procurements.- Enhance process efficiency and organizational change in publicadministration through teleworking and videoconferencing to reduceGHGs 48 .- Share ICT resources and applications. MCIT should cooperate with othergovernmental agencies and populate a comprehensive crossgovernmentasset register, reusable applications, equipment, and anonline applications store to enable the reuse of business applications andcomponents across the public sector 49 .- Take a leadership role in improving the energy efficiency of public sectordata centers. Increase diffusion of green ICTs and ICT applications, by encouraging theusage of green ICTs and ICT applications among businesses and households,and promoting eco-labels and standards. Promote environmental-related ICT skills and awareness 50- Increase public knowledge about ICT and its effects on the environment.Using ICT applications also necessitates a minimum awareness about theenvironmental implications of personal behavior.48Cairo Roadmap on “ICT & Environmental Sustainability”: Kingdom ICT Strategy, March 201050OECD, Toward green ICT strategies: Assessing policies and programs on ICT & the Environment, June2009eMisr National Broadband Plan Strategic Options 78

- Support environment related ICT skills and education. This also includesusing e-learning for increasing environmental understanding andawareness.Demonstrate success and feasibility- Encourage the development of methodologies such as the ITU-T StudyGroup 5 Recommendations on “ Methodologies for assessing theenvironmental impact of ICT” 51 as well as indicators to measure andmonitor environmental impacts along the complete ICT devices andservices life cycles, including baseline measures of embedded greenhousegases and green-house gas emissions. Engage the private sector, civil society and academic community. Theprivate sector, civil society and academic community have major roles in theprotection of the environment through innovation and making use of ICTs forsound environmental management to tackle climate change.- Ensure life cycle perspectives in ICT and ICT-related solutions forsustainable management of natural resources and materials inproduction, use, and end-of-life phases.- Promote coherent environment-friendly and socially responsible R&D,design, production, use and disposal of ICTs, and extending their workinglife wherever environmentally efficient.- Encourage ICT Sector to invest in appropriate ICT based applications.- Implement effectively the net polluter pays principle.- Set legislation and policies to governance the rational management of E-waste.5.2.5. e-Civic EngagementWith the recent political and social reforms, Egyptians are showing a great interest incivic engagement and ICT tools to facilitate that engagement. The goal of the e-civic engagement demand stimulation program is to create a „digital citizen‟, readyfor the 21st century. “E-Civic engagement is the lifeblood of any democracy andthe bedrock of its legitimacy. Broadband holds the potential to strengthen thedemocracy by dramatically increasing the public‟s access to information and byproviding new tools for citizens to engage with this information, their governmentand one another” 52 .51ITU-T, Study Group 5-Q18 ”Methodologies for assessing the environmental impact of ICT”,„National Broadband Plan Seeks to Increase Civic Engagement‟, March 23, 2010, National Broadband Plan Strategic Options 79

Key Objectives for e-Civic Engagement Include: Create trust between government and citizens through an accessible andtransparent government and enhancing access to PSI (Public SectorInformation), and also promoting the social accountability. Activate the applications and tools of e-civic engagement (e-voting, e-petition, etc.). Increase the role of online media to encourage e-civic engagementbetween citizens. Adopt a vigorous capacity building and training programs for differentsegments of the population to educate them on how to use socialnetworking and various other e- government platforms in partnership with civilsociety.Strategic Recommendations:1. Strengthen e-Engagement between Citizens and Government and Vice Versa Enhance access to PSI (Public Sector Information) for an open andtransparent government. Make the primary legal documents of Egyptian government free andaccessible to the public on digital platforms. Develop platforms for online consultations: websites, discussion boards,electronic mailing lists, weblogs, real-time online chats, social media, etc 53 . Develop an e-petition platform.53Online consultation, From Wikipedia, the free encyclopedia: National Broadband Plan Strategic Options 80

2. Implement an e-voting system using ICT in different phasesE-Voting has multiple systems, including optical scan voting systems, votingsystems and DRE voting systems, such as specialized or direct electronicrecording, punch cards, national identity, and the Internet, and computernetworks, systems and telephone communications.E-Voting, on the other hand, can be done in remote locations. This system hasalready been tested in overseas absentee voting of some countries."Electronic voting has many advantages over the traditional way of voting.Some of these advantages are lesser cost, faster tabulation of results,improved accessibility, greater accuracy, and lower risk of human andmechanical errors" 54 . However, e- voting, if not properly implemented couldlead to election fraud.3. Increase Awareness of ICT Services Usage in Civic EngagementTrain on communication and social networks through new technologies,including: Facebook, Twitter, Web 2.0 ... etc.Include new topics in the education curriculum: "Digital Citizenship", in orderto reach the concept of "technology community" and the consolidation ofdemocratic principles in the students.5.2.6. ICT Diffusion to BusinessImprovement of productivity is a result of the adoption of more efficient businessprocesses enabled by broadband, such as optimization of supply chains, marketingof excess inventories. Broadband removes geographical barriers, provides access tonew technologies, and allows SME‟s companies to explore new business54E-Voting, National Broadband Plan Strategic Options 81

opportunities, access customers and obtain information about market prices.Broadband is also an important factor in changing the composition of the valuechain in many SME‟s sectors.ICT can play a very important role in empowering M/SMEs as it can help themcreate business opportunities and combat pressures from competition. AppropriateICT tools can help M/SMEs cut costs by improving their internal processes, improvingtheir products through faster communication with their customers, and betterpromoting and distributing their products through online presence. In fact, ICT hasthe potential to improve the core business of M/SMEs in every step of the businessprocess.Key Objectives:Increase adoption of broadband services by M/SMEsEmpower M/SMEs and cultivate the spirit of entrepreneurshipPromote high value application development and outsourcing servicesRecommendations:1. Improve SME Productivity through ICTsEnable email, file sharing, websites, and e-commerce to connect M/SMEs totheir customers and suppliers.Enable telecommuting. Broadband Internet connection and Virtual PrivateNetworks (VPNs) provide workers with a remote working environment. Thisflexibility in working condition encourages people to work, especially womenthat are supposed to field a number of household chores.Empower entrepreneurship in the ICT Sector by providing services such asincubating innovation & commercially promising SME‟s Startup & incentives toattract entrepreneurs aboard to establish Micro / SME businesses in Egypt2. Increase Capacity for Developing ICT ApplicationsMCIT, ITIDA and GAFI should work together to develop and promote highervalue outsourcing services such as BPO, KPO, ITO and technical support,application development, business application implementation, remoteinfrastructure management, and the 'Arabization' of software.The Government may need to enhance its efforts that aim to raise theawareness at all levels of the disadvantages and criminal nature of softwarepiracy and increase prosecutions to secure investor confidence.5.2.7. e-CommerceThe mission of the e-commerce demand stimulation policies is to enhance theInternet economy and provide opportunities for Egyptian companies to reach alarger market at a reduced cost.eMisr National Broadband Plan Strategic Options 82

Key Objectives:Enable more companies to develop online activities with a specific focus onSMEs including through a tailored approach by sector, e.g. on TourismIncrease the percentage of e-commerce transactions from 0.2-0.3% of totalretail spend to 0.5-1.1% by 2016.Recommendations:1. Increase the availability of Arabic online content, by improving IP Rightslegislation and enforcement and by incentivizing Arabic vs. English contentcreation.2. Develop a clear legal framework for online shopping, including e-paymentsolutions.3. Increase banking and debit/credit card penetration.4. Improve consumer awareness and confidence in e-commerce.5. Unlock the potential of online payment and electronic money, including mobilepayment and virtual cards.6. Improve logistics infrastructure.7. Develop of a "paper-less" culture (e.g., legal value of non-physical invoice).8. Set-up an e-commerce legal framework especially for warranty, fraud and badservice issues.9. Develop credible local offers e.g., renown offline retailers selling online, officiallabels that guarantee security of transactions, etc.5.2.8. e-ContentThe Government of Egypt has made considerable progress in several areasregarding the enhancement of Arabic digital content. Nevertheless, there is asignificant untapped potential.Key Objectives:Improve access for all to high-quality digital contentSupport the availability, use, and distribution of Arabic digital contentCreate an environment conducive to the sustainable production of Arabicdigital contentEncourage the creation of local community digital contentSupport universities, research centers, and businesses in R&D capabilities fordigital content.Recommendations:1. Identify and quantify user demand for e-content: general public, businesses,government, etc.2. Create incentives for the private sector to develop content, particularly inArabic.eMisr National Broadband Plan Strategic Options 83

3. Reduce risk for investing in content development projects through investmentcredits and tax policies4. Provide special incentives (investment credits, tax policies, subsidies) forArabization projects.5. Develop content for mobile applications. Mobile subscribers are growing at afaster rate, and mobile broadband may be the most effective broadbandaccess channel for many Egyptians.6. Create an enabling legal environment, which will help in protecting consumeridentities, data access, informed consent, and anti-fraud measures.7. Use e-government showcase the potential of e-content. Develop a top-level government portal as an entry port for governmentservices, information, documents, etc. Support the e-government program by speeding up the development of e-content. Work in partnership with the private sector to stimulate more contentdevelopment.8. Establish a single authority or consultative group for on-line content.Enable users to find information that is well-organized and readily available.Coordinate with public and private stakeholders to create a vibrant on-linecommunity.eMisr National Broadband Plan Strategic Options 84

5.3. Financing OptionsThere is a wide range of finance related measures which the Egyptian governmentcan take to encourage the development of new broadband networks and theextension of existing networks.The two main types of financial support are: Investment incentives, and Financialsubsidies.5.3.1. Investment IncentivesInvestment Incentives, for fixed capital formation, include:Investment tax credits. These are tax credits aimed at fixed capital formationin particular industries, and are generally focused on corporation tax. Theyhave the effect of substantially reducing the amount of tax payable bycompanies during and immediately after the investment phase. There areseveral forms of these tax incentives such as:- Tax holiday: For start-up businesses, which are generally loss-making in theirearly years (when fixed capital formation tends to be highest). The effectis to lengthen the period of time from the start-up phase till the businessstarts paying its taxes. No corporation tax is payable until the businessbecomes cumulative Free Cash Flow positive. This would be a veryconsiderable incentive from the point of view of the operators andapplication developers.- Reduced rate of Corporation Tax for a defined period. Given that in thestart-up phase, significant tax losses tend to be incurred by new facilitybased telecommunications operators.- Tax credits for reinvested profits. Where the nature of the assets createdby reinvestment of profits is specified, these are essentially the same asinvestment tax credits for on-going business.- Other tax reductions: these can be permanent or temporary. They canalso be specific to designated regions (generally economically deprived)or nationwide.• VAT: All other things being equal, a lower rate of VAT chargeable onthe services offered will make those services more attractive. This isespecially the case for (potential) customers with low disposableincomes.• Property tax reductions or exemptions will, at the margin, aid financialviability.- Similarly, employment tax breaks will both aid financial viability andencourage companies to hire incremental staff (as the balance betweenthe cost of capital and the cost of labor will be shifted in favor of labor.eMisr National Broadband Plan Strategic Options 85

Special investment allowances. These include faster depreciation allowancesfor specific classes of capital assets or for fixed capital formation in specificindustries.Regulatory exemptions. These are often arranged on a targeted regionalbasis, aimed in particular at economically disadvantaged areas of thecountry. Within the report, the suggestions of Class Licenses and thepermission to offer aerial distribution for broadband access networks inbottom income quintile areas of the country are examples of regulatoryexemption which would aid, at the margin, the development of incrementalfixed asset formation.5.3.2. Financial SubsidiesFinancial Subsidies can offer a wide range of potential options. A non-exhaustive listof possible approaches is given below.The extension of the existing Property Transfer Levy (which historically didcover telephone service) to benefit fixed telecommunications serviceoperators generally and broadband operators in particular.The provision of soft loans for specific purposes. The Government already hasthe „Computers For All‟ scheme. There is also a proposal that a schemeshould be put in place to help entrepreneurs finance Public Access Points inrural areas.General subsidies aimed at promoting investment in particular areas such asUpper Egypt could also be considered.Specific subsidies to address white spots or designated unprofitable areas.Possible mechanisms for such subsidies would be via an expanded UniversalService Fund or Next Generation Fund.5.3.3. Other ToolsIn addition to these financing support mechanisms, there are other tools can beused to support the broadband take-up, mainly, the extension of the UniversalService Obligation and the proposal for Egyptian government to act as the anchortenant for broadband networks.Currently there is a Universal Service Policy in Egypt: the provision of affordable basictelecommunication services to all citizens. The aim is to provide access to local,national and international services in the light of total technology neutral andcompetitive environment. It can thus be seen that at present the Universal ServicePolicy is defined in terms of basic voice services only. NTRA will work on extendingthe definition of the universal service to deal with broadband access approachesexplicitly.NTRA believes that the Government has an instrumental role to play in directlystimulating the demand for broadband services by acting as an anchor tenant foreMisr National Broadband Plan Strategic Options 86

oadband access. The Government is unique in that it has representation in everyneighborhood in the country. As a result, there will not be a sizeable village whichdoes not have a school, clinic, police station or mayoral office. The Governmentwould become the initial customer which justifies Fiber to the Community. In somelow income areas, it might be the only initial customer for directly connected fibers.But it provides the incentive to install the fiber.NTRA believes that the anchor tenancy approach described above acts as a nonsubsidysupport for broadband by the Egyptian government. In addition, thisapproach should be complemented by a renewed effort to implement e-programsas discussed in section 5.2.eMisr National Broadband Plan Strategic Options 87

6Benefits and Outlook

Information and Communication Technologies (ICTs) have tremendouslytransformed society and economies around the globe. In fact, they havesubstantially altered the way of firms‟ operation and the system of markets‟management and organization. ICTs also have a great impact on the work ofemployees in businesses of all sizes, across every industry sector, and across allbusiness functions.According to Atkinson (2007) 55 , broadband distinguishes itself from other digitaltechnologies in two key ways. Firstly, it is not just a consumer technology but a“prosumer” technology that is enabling consumers to also be producers whocontribute to economic growth and innovation. Secondly, it exhibits positiveexternalities 56 where the benefits from broadband adoption accrue not just toindividual consumers, but to other broadband users and society as a whole.Because of this, the social returns from investing more in broadband exceed theprivate returns of companies and consumers. As a result, market forces alone willnot generate the societal optimal level of broadband, at least in the foreseeablefuture.Investments in telecommunications infrastructure could not only provide a short-termboost to the economy, but also lay the groundwork for long-term improved growthand employment perspectives. Indeed research findings indicate that telecominvestment has an impact far beyond the scope of the industry itself, promotinggrowth in adjacent industries and creating new industries. Telecommunicationsinvestment explains up to one third of economic growth 57 .Spurring robust job growth, lowering the unemployment rate, and creating dynamicjob market are some of the main macro-economic concerns that Egypt are facingand trying to address with its public policies. On the other hand, as mentionedabove, the broadband Internet access can play a major public policy role inenhancing well-being among citizens.6.1. Macroeconomic Impact of BroadbandThe importance of basic telecommunications services for economic growth anddevelopment has long been recognized in the international community. Telephonepenetration (traditionally measured in terms of fixed voice line equivalents per 100population) is a standard metric for evaluating the positive correlation betweentelephone penetration and economic activity (usually measured as GDP percapita). In fact, it is well known, and generalizes to more complex measures of ICTdevelopment.55Atkinson, Robert D. 2007. The Case for a National Broadband Policy. Washington, DC: The InformationTechnology and Innovation Foundation.56Atkinson mentioned that there are four kinds of broadband externalities; network externalities,investment externalities, competitiveness externalities, and regional externalities.57(Wieck et al, 2010)eMisr National Broadband Plan Benefits and Outlook 89

Today, access to telephony services, while remaining essential, is no longer enough.Internet access - and increasingly means broadband Internet access - is nowgenerally regarded as a basic and essential infrastructure for society and theeconomy.While the economic and social significance of ICT and its benefits are widelyaccepted, quantifying those benefits in a reliable way is really challenging. It wasdifficult to observe the economic impacts of ICTs in aggregate data. Measuring ICTinputs is notoriously difficult, in part, because of the very rapid pace of innovationand continuously declining prices, described popularly as Moore's Law. This makes itdifficult to measure both the quantity and value of ICT inputs (and outputs) inappropriate quality-adjusted terms. A computer purchased in 2010 is a much morecapable device than one purchased in 2000.Additionally, ICT is used most intensively in the service sectors of the economy (andin service-sector-like business operations of non-service sector firms), for which it isdifficult to measure output appropriately. Failure to measure ICT inputs or ICTderivedoutputs correctly contributes to the measurement problems, making itdifficult to observe measurable ICT impacts.Lastly, and perhaps, most importantly, ICT is a general purpose technology that isused by businesses in many ways to produce many different types of intermediateand final goods and services. ICT changes the way firms produce goods andservices (e.g., just-in-time manufacturing, supply-chain management, and electroniccommerce), enhancing the quality of other factor inputs such as labor and non-ICTcapital. Furthermore, it takes time for such seismic changes to reveal themselves,hence the benefits gained from ICT investment are likely to be observable only afterperhaps several years. The fact that ICT may be expected to change firmproduction functions in so many ways means that measuring ICTs‟ impacts isinherently complex.Evidence of the significant contribution of ICTs to economic growth began toaccumulate in the late 1990s. First, firm-level studies with better data demonstratedthe superior returns offered by ICT investments. Next, with the passage of time andbetter data, the significant benefits of ICT were apparent even in aggregateindustry-level data and economy-wide metrics. For example, Jorgenson 58 estimatedthat ICT added 1.18% to GDP growth and accounted for 2/3 of the total factorproductivity growth from 1995 through 2000, thereby helping to explain theresurgence in economic growth in the United States in the last half of the 1990s.Although the evidence that ICTs do contribute to economic growth andproductivity enhancements is now substantial, the evidence of a positive58 See Jorgenson, D., "Information Technology and the U.S. Economy," American Economic Review, Vol.91, Number 1 (March 2001) 1-33eMisr National Broadband Plan Benefits and Outlook 90

contribution from broadband Internet access is less clear. There are many reasonslurking behind the difficulty of measuring the economic impact of broadband.First, it is important to remember that broadband is a component of ICT usage.Broadband is not useful by itself, but only when used in conjunction with other ICTs.All of the same problems that confounded early attempts to measure positiveimpacts from ICT bedeviled the efforts exerted to demonstrate the economiccontribution from a component of ICT such as advanced communication services,or even more narrowly, broadband.Broadband services are not desirable in themselves, but for what they enable.Because broadband is an input in the production and consumption of many othergoods and services, rather than a final output, we do not observe the value createdby broadband directly. This adds to the measurement difficulties.Furthermore, we are still in the early stages of realizing the benefits of broadband.Broadband services only began to be widely deployed in the most advancedmarkets after the year 2000, and significant adoption lags behind drastically indeveloping markets. It will take time for the necessary evidences and data toaccumulate in order to be enable us to document the economic impacts ofbroadband.6.1.1. Impact on National Economy and ProductivityThe interest in estimating the economic benefits from broadband has increased,and now includes studies from other markets. These studies are based on theeconometric analysis of country-level (and in some cases, more geographicallygranular) historical data (in most cases, from 1998 through 2008). These studies lookat the relationship between economic productivity (measured in terms of GDP orGDP per capita) and the level of broadband penetration (measured in lines per100), while controlling for a variety of other factors that can be expected to partiallyexplain the level of economic output.The studies differ in terms of the data sets (time frame, the countries included), theeconometric specification, and the variables included (i.e. the selection ofdependent and independent variables and how they are measured). For the mostpart the studies focused on the United States or OECD countries, so there is muchless evidence available for the other countries. These studies, covering different timeperiods and samples, all conclude that there is a positive correlation betweenbroadband penetration and GDP growth, estimating GDP-broadband elasticities ofbetween 0.018% and 0.150%, Another study conducted by Quiang et al. (2009) 59used data for 120 countries from 1980-2006 and found that a one percent increase59 See Qiang, C. and C. Rossotto (2009), "Economic Impacts of Broadband" published in "ExtendingReach and Increasing Impact," 2009 Information and Telecommunications for Development, WorldBank.eMisr National Broadband Plan Benefits and Outlook 91

in broadband penetration added 0.121% to the GDP growth of medium to highincome countries; and 0.138% to the GDP growth of developing countries. This lastresult is interesting because it differs from the findings of higher growth impacts incountries with more advanced broadband markets..An alternative approach to estimating economy-wide impacts is based on abottom-up forecast of the impact of investing in broadband infrastructure andexpanding broadband service adoption. These studies often make use of multipliersderived from input-output tables to capture the direct, indirect, and inducedstimulus effects of investment in broadband infrastructure. The direct employmenteffects are associated with the investment in the infrastructure by the networkoperators undertaking such investment. This results in the direct creation (orsustainment) of employment in the sector. This direct employment effect indirectlystimulates employment in upstream sectors that supply the telecom service providersinvesting in the broadband infrastructure. Next, the investment and increased thefinal output it produces raises national income that results in still further stimuluseffects as the additional income fuels demand in other downstream sectors,stimulating employment in those sectors as well.Finally, the productivity enhancements delivered by broadband are expected toresult in additional "externality" or spillover benefits. These result from theenhancements in labor and capital productivity, innovation, and more efficientbusiness operations made possible through the use of broadband enabledtechnology. Examples of such improvements include being able to economicallyaddress larger geographic markets (because of the way the Internet reduces theeffects of distance), engage in more flexible and responsive supply-chainmanagement, or enhance service quality (e.g., through better consumer service).These effects of the latter are typically estimated to be of similar or even largermagnitude than the direct (plus indirect and induced) effects identified above.While the direct (plus indirect and induced) effects may be realized relativelyrapidly, the externality benefits may take longer to be realized.Once again, the studies provide a range of estimates, and the applicability of theseestimates across countries is more suspect since the analysis is grounded in thespecifics of the particular economies under study. Nevertheless, the studies provideemployment multiplier estimates (per million USD of broadband investment) in therange of 35 to 50 (of which from 16 to 27 is due to externality effects); and GDPmultipliers in the range of 4.8 – 6.7 (per USD of broadband investment), of which 3.8 isdue to externality effects.To sum up, the research literature provides compelling evidence that broadbanddoes contribute significantly to economic growth and productivity improvements.Accordingly, there are two approaches for providing estimates of themacroeconomic impacts of broadband. Integrating this estimates with the EgyptianeMisr National Broadband Plan Benefits and Outlook 92

Broadband Market Model (EBMM) 60 developed by the World Bank Consultants infavor of Egypt based on a signed agreement with MCIT and NTRA.The first approach relies on the results obtained from the cross-country econometricanalysis of the relationship between GDP and broadband penetration, and uses theEBMM forecasts of broadband penetration. The second approach uses broadbandinvestment multipliers to project employment, using the EBMM forecasts ofbroadband investment. Using Method 1 to predict the increase in GDP, andMethod 2 to predict the employment growth will generate the following results.Method 1: GDP and Broadband PenetrationThe basic methodology uses the EBMM estimates of broadband penetrationincrease on an aggregate level and uses those estimates to derive augmented GDPgrowth forecasts, based on multipliers derived from the academic literaturedescribed above. The earlier analysis concluded that annual GDP increased by 0.138% per 1%increase in broadband penetration The EBMM forecasts penetration growing from 5.2% in 2011 to 15.5% by 2015 The International Monetary Fund reports GDP in the base year (2010) as USD218.465 billion and growth rates are derived from IMF estimates too The increases in the broadband penetration by year are applied to themultiplier used by the World Bank to obtain revised forecasts for GDP.Because GDP is growing the benefits of broadband are compounded. Theserevised estimates of GDP with the broadband plan are compared with thebase GDP scenario to compute the incremental contributions to GDP byyear.Using this method, the cumulative contribution from 2011-2015 to GDP is EGP 24.9billion (USD 4.17 billion). Relative to the initial year GDP (2011), broadband increasesGDP by 1.8%.Method 2: Broadband Investment and MultipliersThe second approach for estimating macroeconomic impacts in the EBMM is to usethe EBMM forecast of broadband investment, and estimates of the employmentmultipliers derived from the research literature to estimate the macroeconomicimpacts associated with the broadband plan. The earlier analysis concluded that employment multipliers were in the rangeof 35-50 (jobs per year for each USD 1 million in infrastructure investment) The scenarios adopted project total investment in the range of USD 1.9 3.5billion60 Overall Approach and Methodology of Egyptian Broadband Market Modeling is discussed inChapter 4.eMisr National Broadband Plan Benefits and Outlook 93

The multipliers may be applied to the annual investment to derive forecasts ofthe jobs.Application of this approach suggests that the broadband plan will result inbetween 6,650 to 17,500 direct jobs annually, being sustained on average.6.1.2. Types of Jobs that Have Positive Effects by BroadbandIt is acknowledged that the job growth resulting from the deployment of abroadband network can occur from three sources; (1) direct labor associated withdeploying and maintaining broadband investment; (2) direct labor associated withmanufacturing the infrastructure components and customer premise equipment;and (3) indirect labor associated with creating services and applications, includingsupporting industries that would result once the network is deployed (Pociask, 2002).1. Direct Labor Associated with Deploying and Maintaining Broadband InvestmentWhen broadband is widely deployed, job growth is expected in labor in directlyrelated fields to broadband infrastructure. This may notably include; Telecommunications operators. Especially, workers in network and facilityplanning department, maintenance operation department, and salesdepartment that directly deals with broadband customers Telecommunications facility construction companies, which often obtaincontracts from the telecommunications operators to install facilities, such asnetwork devices (e.g. routers, switches, etc), optical fiber cables, cell phonetowers and antennas for mobile broadband, and non-telecommunicationinfrastructure (e.g. utility‟s masts and ducts).2. Direct Labor Associated with Manufacturing the Infrastructure Components andCustomer Premise EquipmentHardware or equipments are not necessarily manufactured in their own countries.However, it should be noted that many equipments, especially those for end-users,are made in developing countries and they are well accepted in developedcountries too. The industries that can create jobs may include;Networking hardware vendors, which sell telecommunications equipmentsmainly to operators. They also sell software that is used for monitoring andcontrolling the hardwareConsumer hardware vendors, which sell home-based equipments, such asset-top boxes or DSL modems, and broadband-enabled mobile handsets.Fiber optical cable manufactures.3. Indirect Labor Associated with Creating Services and Applications(Including supporting industries that would result once the network is deployed)eMisr National Broadband Plan Benefits and Outlook 94

The indirect effect on job creation caused by broadband is highly extensive. Theindustries that can create jobs may include: Retailers of consumer electronics. This job is one of the sales channels forhome-based broadband equipment. They are sometimes available not onlyat telecommunications operators‟ company, but also at retail shops. Theyalso sell computers and mobile phones whose sales can be drasticallyincreased by broadband usage Contents and applications creation industries. Especially, broadbandenabledmobile phones (e.g. smart phones) can accommodatecomplicated software. Contents and applications development has beenunder continuing expansion Consulting services on IT related matters, which aims mainly to efficientbusiness management and improved operation such as supply-chain.6.1.3. Positive Effects vs. Negative Effects1. Potential Negative Impacts of BroadbandIt has been widely discussed that there are two types of negative impacts thatbroadband Internet connection may have on employment. One is the productivityeffect, and the other is the displacement effect (Wieck et al, 2010).Firstly, the adoption of broadband-based processes should lead to processimprovements and productivity gains (Wieck et al, 2010). A company improves itsprocesses to increase its employees‟ efficiency. After the change has been made,the company is able to produce more with the same personnel or produce thesame with fewer personal (Fornefeld et al, 2008).Secondly, not unrelated to the direct productivity effect mentioned above, thedisplacement effect is also negative (Wieck et al, 2010). The productivityimprovement allows companies to engage in increased specialization inknowledge-intensive activities. This structural evolution in business environmentsgenerates jobs displacement from the traditional sectors of the economy to theservices sector, where labor productivity is usually higher than in the rest of theeconomy. Thus, structural displacement of employment from a low-productivity to ahigh-productivity sector has a negative effect on employment (Wieck et al, 2010).2. Positive Effects Outweighs Negative EffectsFornefeld et al conducted analysis (2008) on the positive effects too. A companytakes advantage of its improved production processes to improve its position in themarket. After a certain time, the benefits of the process improvement become areality: sales increase and more input is needed to face the demand. The previouseMisr National Broadband Plan Benefits and Outlook 95

level of employment may be reached or even overtaken 61 . Additionally, innovationand new economic activities (e.g. new services and applications in technologicallymore advanced sectors) can have a positive impact.What is intriguing for policy makers is that this positive result is largely due toinnovation. The development of broadband has to be closely associated withinnovation policies, providing the best conditions for the creation of new servicesand improving competitiveness of companies. To put it the other way around,understanding and fostering innovation in the services sector is necessary toguarantee that broadband‟s impact on employment are positive.6.1.4. Supporting Issues Related to Job CreationIt is noteworthy that there exist several “supporting” issues that can reinforce thepositive impact of broadband on employment.Telecommuting:Broadband enables telecommuting, the process of working remotely (for eg athome). The broadband Internet connection and Virtual Private Networks (VPNs)provide workers with a very similar working environment. This flexibility of workingconditions encourages people to work, especially women that are supposed tocarry out a number of household chores.Facilitation of Job Search:Broadband Internet connection allows job seekers to conduct job research athome, with ease. They can access the website of many organizations, and send ajob application online. They can also get interviewed with Internet videoconference in a non-costly manner.Reduced Job Relocation Abroad:Because of broadband, linkages between international labor markets are forged.This means that people can get employed without leaving their home countries. Thisis particularly true of efficient young people in developing countries, where braindrain have been a huge problem in the labor policies.Case studies on the impact of broadband on job creation are presented in Annex(2).61 Fornefeld et al also pointed out that the long-term employment level after a process improvementcould not be determined in advance.eMisr National Broadband Plan Benefits and Outlook 96


Implementation of eMisr is a long-term commitment to transform the strategicoptions and recommendations to action items, monitor execution and progress,measure impact, adjust policies and initiate programs. eMisr is a live document witha feedback process to update this plan throughout its implementation.The strategic options of the first phase of eMisr “A Framework for BroadbandDevelopment” will be translated into action items in “Phase Two : Broadband ActionPlan”. NTRA will create a 'National Broadband Committee' as a higher focus groupresponsible for putting eMisr into action. 'National Broadband Maps' is anotherproject that will help in the implementation process. It is based on GeographicalInformation Systems (GIS) to project all the broadband-related data on digital maps.These maps will identify key supply indicators and demand patterns. 'eMisr Portal' willbe the online window of this strategic plan and the interface with the market andcommunity.7.1. Broadband Action PlanNTRA will announce the Broadband Action Plan in Q2 2012. The Broadband ActionPlan will be the execution arm of eMisr. It will transform all the strategic options andrecommendations into action items, timelines and responsibilities for each task force.NTRA will create different task forces, each with specific objectives, required outputsand deadlines. These task forces will engage with different stakeholders in themarket, and will study mainly the issues discussed in chapter 5: „National Broadband Committee‟: as mentioned above this task force willconclude action items extracted from eMisr strategic plan into theBroadband action plan. It will also monitor and review periodically theimplementation of the plan as well as the updating of eMisr. 'Subsidy Review Task Force - SRTF': this task force will be responsible forreviewing the current subsidy in the Internet market and work on maximizingits benefit, as explained earlier in section 5.2.1. This should cope with therequirements of the new phase of directing the subsidy rather towards capitalexpenditure (CAPEX) instead of ongoing operational expenses (OPEX). 'Line Sharing Task Force - LSTF': this task force will study the extent of illegal linesharing in Egypt, its impact and reasons, and proposed solutions. 'Functional Separation Task Force - FSTF': As explained earlier in section 5.2.1,this task force will be responsible for studying the need for functionalseparation of the Incumbent operator, TE. It will study similar cases worldwideand compare them to the domestic situation, then report back with theimpact of functional separation on the Egyptian telecom market and actionsto be executed by NTRA. 'FiberCO Task Force – FCTF': this task force will be responsible for studying therecommendation of creating a Special Purpose Vehicle (SPV) responsible forco-sharing in fiber deployment. It will study the international best practices,consult with the national operators and conclude with specific actions to beexecuted by NTRA.eMisr National Broadband Plan Implementation 98

„Universal Service Task Force - USTF‟: this task force will set and review theuniversal service plan to minimize the digital gap between the rural andurban areas.The Broadband Action Plan will work also on investigating the Egyptian market incooperation with the stakeholders. This work will be based mainly on the Deteconmodel. The methodology of this model is based on dividing Egypt into five quintilesaccording to the income per capita, representing their ability to spend on telecomservices.The model then analyzes the best technology options for each region. In order toselect the best technologies per region, the quintiles are then divided, based on thepopulation density per region, thus creating 9 distinct clusters, as shown in Figure 7.1below.Figure 7.1 - Cluster ChartThe National Broadband Committee will work with the relevant stakeholders toenrich this model in order to identify the viability per region, and hence neededgovernment intervention. The National Broadband Committee may initiate pilotprojects in coordination with the operators in some selected regions. The results ofthese pilot projects will feedback into the model in order to fine tune the overalloutput, mainly the overall investment and impact.eMisr National Broadband Plan Implementation 99

7.2. National Broadband CommitteeNTRA will create a National Broadband Committee, with the followingresponsibilities:Transform the strategic options and recommendations into action items to beexecuted.Coordinate the efforts of the different task forces.Initiate pilot projects and programs within the scope of eMisr.Interact with the Egyptian broadband society in order to get feedback andenhance ongoing projects.Monitor the performance of the action plan.Follow up with MCIT on the coordination with other government sectors,relevant ministries and public authorities to move forward with the broadbandplan.Report to NTRA the progress of the action plan, policy proposals and theupdating of eMisr.7.3. National Broadband MapsNTRA will create „National broadband Maps‟ which is a project based onGeographical Information Systems to project the indicators on digital maps. Thesemaps will help in identifying the blank spots, the supply indicators and the demandpattern. The digital maps will be composed of different layers, to indicate both thesupply side and the demand side. The digital maps will also contain different levelsof access permissions according to the type of users (MCIT & NTRA / Operators /Public).The supply maps will indicate the current status of the existing broadbandinfrastructure and available services, mainly:The coverage of the broadband fixed and mobile networks.The distribution of the different services and speed rates by region.The blank spots where there is no coverage or low quality provided services.The supply side maps will have the following benefits:Acknowledge the current status of the existing infrastructure and services forpolicy makers, the operators and the service providers.Identify, for policy makers, the regions that need governmental intervention.Pinpoint, for investors, the areas with shortage in networks.Help customers determine the available services in the region as well as theservice providers.The demand side maps aims to measure the affordability per area as well as theneeded investment, mainly:eMisr National Broadband Plan Implementation 100

Distribution of users across the country.Distribution of the bit rates and traffic.Affordability per area.Points of interest, mainly the entities that are largely depend on ICT andbroadband services, for example, business companies, banks, schools anduniversities, and governmental entities.Expected investment per area.The demand side maps will have the following benefits for policy makers, serviceproviders, and content providers:Acknowledge the current situation of existing services and demand.Categorize the demand for each area in order to provide tailored services foreach area according to its situation.Identify areas with weak demand in order to create specific programs andprojects for these areas.NTRA will develop the National Broadband Maps in cooperation with the operators,service providers and other relevant entities, and will develop a process to updatethese maps periodically.7.4. eMisr PortalBroadband portal will be a web-based interface for the eMisr Broadband Plan andwill be used to interact with all stakeholders and the Egyptian citizens. The portal will:Display all the required information on available broadband services in Egypt.Provide users with needed information, such as basic legal information, rightsand obligations, availability of providers and services in a specific region, etc.Gather feedback through surveys.Create an online broadband forum for users to exchange experiences, reportservice unavailability, or share new ideas and proposals.Help service providers to announce new services and products.Help investors and operators to identify underserved regions and the regionswith growing demand by making use of specific layers of the NationalBroadband Maps.eMisr portal has multiple benefits; chief among them are the following:Create awareness on broadband among the Egyptian citizens.Strengthen competition between the service providers.Help service providers as well as application and content providers to addresscustomers‟ needs.Provide a window to showcase the Egyptian broadband market experienceinternationally.eMisr National Broadband Plan Implementation 101


Annexe 1National Broadband ApplicationsInitiatives in Egypt

Overview of National Broadband ApplicationsInitiatives and Pilot Projects in EgyptThe demand side of broadband is led by the mass of users. Accordingly, plannedapplications should be geared to real public needs through a bottom-up approach.This approach has gained momentum in stimulating ICT development in ruralregions, generally not as a replacement for top-down policies, but as a powerfuladdition in rural areas where there is insufficient demand for the private sector toinvest. Top- Bottom approaches in stimulating broadband applications should reston thorough pre- project assessments to ensure the broadband plannedapplications respond to actual demand and to monitor new demands. In all suchareas, we realize that broadband development is increasingly led by users.“demand- side measures should take advantage of this trend and allow citizensparticipation and crowd- sourcing in as much as possible” 62 .The following section reviews a number of key broadband application initiatives andpilot projects that have been responding to short and long term pressing needs ofthe Egyptian economy. E- education and e- health are two areas that have beenrecognized as priority domains for action. E- commerce is a field that has not beenfully explored and is promising. e- civic engagement, though not a new area ofaction by any means, has become a point of high demand. E- government hasand will continue to be an area with a potential intense demand overshadowed byobstacles of capacity building, trust, and reliability… ICT and the environment is anew field closely related to sustainable development that need figure on ourmedium and long term plans. Broadband development for SMEs is crucial area ofwork as it touches closely employment generation and new forms of labor.I. e-EducationEducation is the backbone of development. The goal is to empower young citizensto live and learn in a continuously changing 21st Century environment and toenable them to effectively interact in a global marketplace. ICT is acomplementary tool for higher standards of education at all levels and forupgrading the skills and productivity of the citizenry.Technology can enable students to become:Capable information technology usersInformation seekers, analyzers, and evaluatorsProblem solvers and decision makersCreative and effective users of productivity tools62“Socio- Economic Assessment of Broadband Development in Egypt, op. cit., p 123eMisr National Broadband Plan Annexes 104

Communicators, collaborators, publishers, and producersInformed, responsible, and contributing citizensE-education, also known also as tele-education or distance learning, as defined byITU is about delivering the service of training or teaching using the Internet orintranets 63 .The GoE has given educational reform high priority on its agenda. Education is acorner stone for driving the economy and in the creation of wealth for the nation.Any progress in this sector positively affects all other sectors in the economy. Similarlyto other developing nations, Egypt is facing the challenge of delivering qualityeducation to its citizens.MCIT and its institutions had to exert all necessary efforts to implement and developthe domestic principles of human development to ensure the deepening andintegration of ICT with the educational process and training and capacity-buildingand technological literacy by using ICT at all levels, including curriculumdevelopment, training of cadres of teachers, and the development ofmanagement systems, educational institutions, as well as support for the concept oflearning and continuous training, enabling the human cadres at different levels toacquire the technological skills necessary to create a knowledge community.Egypt‟s ICT in Education aims to promote the use of ICT in the education to developa new generation of technological savvy citizens capable of mastering ICTs in theirdaily lives.The Egyptian Education Initiative: was launched at the World Economic Forumin 2006, the initiative is designed to improve the content and delivery of theeducation offered in Egyptian schools and universities so as to better preparestudents to enter the digital workforce. The EEI provides infrastructure(hardware and connectivity), develops e-learning methodologies andcontent, trains teachers and students, and revises curricula to match studentskills to markets. The initiative is designed around four tracks: pre-universityeducation, higher education, lifelong learning and e-industry development. Itdevelops appropriate low-cost technology models and accessible e-curriculafor different subjects while offering e-training to teachers to boost theireducational and leadership competencies. In addition the project seeks toreform teaching by establishing an education quality assurance andaccreditation agency whose criteria match those of UNESCO.The EEI has joined forces with nearly 185,000 stakeholders across Egypt‟s educationcommunity; 70,000 PCs have been deployed; more than 185,000 people havereceived training; and the EEI has an impact on more than 2,000 schools, 17universities and 1,000 IT Clubs.63ITU Broadband Commission report- Broadband: A platform for ProgresseMisr National Broadband Plan Annexes 105

Smart Schools Network: In 2002, MCIT signed a protocol with the MoE toimplement the Smart Schools Network to improve administration inpreparatory schools across Egypt (grades 7 to 9), leveraging technology toraise educational standards and promote computer literacy. The project wasformally launched in 2006 as a public-private partnership between the WorldEconomic Forum‟s IT member community, the Government of Egypt, andvarious multinationals and other organizations. Schools provide a physicalspace for students, teachers and administration, and IT companies providemodern classroom technology, learning portals, networked computerlaboratories, electronic libraries, and connectivity to the Internet, andsoftware for computer education, computer-aided education, teachertraining and learning centers. Two new phases were launched to implementthe SSN model in 173 experimental schools nationwide, and 50% of theinitiative‟s teachers and students qualified for international certificates. Theproject also mobilized schools to serve as community learning centers anddeveloped an online portal to monitor the schools‟ utilization of resources. Vocational Schools Development Project: the Vocational SchoolsDevelopment Project enhances and strengthens vocational education andtraining using ICTs. The target beneficiaries are teachers and students atindustrial schools, as well as the wider communities surrounding these schools.In this project, 10 vocational schools will be provided with ICT infrastructure, e-curricula and human resources capacity building, and an e-learning centerwill be established to serve all vocational school students and teachers, aswell as trainees from the surrounding communities. This pilot project isintended to become a model of vocational education and training that canbe replicated domestically and internationally. The selected industrial schoolswill serve as Vocational Community Learning Centers, providing ICT-basedcourses as well as vocational courses to the community at large. Schools Development Initiative: The project aims to establish a learningenvironment that enables the spread of modern teaching methods such asactive learning, collaborative learning and mutual learning, and enhancesthe skills of creativity, constructive criticism and teamwork. It involvesproviding school students of all ages; with the skills they need in ICT and otherareas to enter the workplace, as well as the ability to conduct research.Through this initiative, 312 schools covering different educational stages havebeen upgraded: 124 in Cairo, 80 in Giza, 68 in Luxor and 40 in Fayoum.Expansion of this project will help create new generations of human resourceswith the knowledge and skills required to succeed in today‟s job market. Tofurther promote modern methods of learning, MCIT, Luxor Governorate andthe Heliopolis Association‟s Schools Development Project are workingtogether to establish and accredit e-learning centers in middle and highschools in Luxor. Siwa Oasis: The Integrated Program to Develop Siwa Oasis Using ICT is acommunity development program, adopted by ICT Trust Fund. The program isbased on the provision of ICT-enabled services in various sectors to establish aeMisr National Broadband Plan Annexes 106

sustainable integrated ICT for development (ICT4D) model for ruralcommunities. On the Education track, the project could establishcomprehensive ICT and networking infrastructure for six schools; deployedschool management and learning management systems, accompanied by acomprehensive capacity-building program enabling teachers andadministrators to integrate ICT programs into the education process; andalleviated illiteracy among women through cooperation with the SiwaCommunity Access Center for Women. Three schools covering grades 1 to 9have been equipped with computer labs and Internet access; three moresmart schools are currently under establishment; 41 teachers have improvedtheir teaching knowledge and skills; 1,128 students have new IT skills; schooldropout rates have declined, especially for girls; and adults are benefitingfrom the use of the computer labs as community learning centers after schoolhours. The Integrated Program to Develop Siwa Oasis Using ICT came first inthe Arab Gulf Program for Development‟s AGFUND International Prize 2010.Illiteracy Eradication - Siwa Oasis: The Siwa program directly impacts andempowers the community in Siwa Oasis in areas of literacy, education, healthand small and medium enterprise through integrated and focusedinterventions applying ICT in various sectors. ICT for Illiteracy Eradication(ICT4IE) Efforts on this track are focused on reducing illiteracy among women.To overcome local traditions that restrict women‟s movements outside thehome, an innovative solution was created in the form of the “tabluter”. Thetabluter is a customized ergonomic embedded single CPU that runs for fourindependent users. It is used as a mobile education lab in individual homes,promoting literacy through interactive software. Egypt ICT Trust Fund hassucceeded in decreasing illiteracy in Siwa to a marginal rate of only 2% of thecommunity.Illiteracy Eradication Initiative: In Egypt, more than 30% of the population isilliterate, with higher rates for women, and this is a persistent, debilitatinghindrance to the ability of these citizens to participate effectively in society.MCIT has taken a number of steps to use ICT to address this very seriousproblem The ICT for Illiteracy Eradication program produces electroniccontent for teaching Arabic and elementary mathematics through a mix oftaught and self-study courses based on the General Authority for Literacy andAdult Education (GALAE) curriculum. The electronic content was deliveredthrough IT Clubs, the Internet and CDs. Moreover, MCIT has establishedTraining of Trainers programs in 15 governorates to serve the growing demandfor basic literacy trainingComputers to Excel Initiative: launched in 2006, was established to promotethe spread of ICT tools among school-age children and to encourage andreward academic excellence. In December 2010, the Prime Ministerrewarded 20,000 of the country‟s top primary school students with laptopcomputers and one year‟s free Internet subscription. Laptops were alsopresented to 2,000 distinguished teachers. This year, the awards included 3GeMisr National Broadband Plan Annexes 107

USB modems that provide high-speed wireless Internet connections, even inremote areas.In addition The IT Clubs have had some success in training people. They havebeen most successful where there are strong local and community levelorganizations that have been able to make best use of this resource for thebenefit of local populations. The IT Club has been in operation since 2001, thetotal number of IT clubs reached 2162 club and almost 1920 of them withInternet access. These clubs house 25,919 computers and peripherals, haveserved more than 1 million users, and have generated more than 8,000 jobopportunities. Although MCIT is the main contributor to the project, theprivate sector, public sector, individuals and local communities play animportant role in the project, which is vital to guarantee sustainability.Monitoring and Evaluation: The EEI has set up a number of monitoring units toevaluate its progress. MCIT has developed an information system to collect,validate, store and retrieve data and report on progress indicators related tothe Ministry of Education‟s Technology Development Centers, charged withmonitoring progress and collecting data on the status of ICT use in EEI schools.To-date, more than EGP 478.4 million (USD 80 million) has been invested inprofessional development and training of students, developing curricula,certification, content digitization, infrastructure deployment, hardware andsoftware as part of EEI program activities.On June 2009 an outcome evaluation was conducted for the pre-university track ofthe EEI, 53 EEI schools in 15 governorates was selected for this evaluation 64 . Around72% of surveyed schools have a website and only 50% of schools have developedtheir websites during the project. As for e-mail accounts, results showed that 69% ofschool staff has e-mail accounts. Teachers are keen to have an e-mail account(61%) more than administrators. Teachers use their e-mail accounts to communicatewith friends and relatives (42%) more than communicating with colleagues andstudents (19%). Around 92% of teachers stated that they use ICT in teaching andlearning activities. However, around 70% of teachers use technology to present theirlessons while 49% of them assign subject-specific projects and assignments forstudents to work on that require their use of technology and 35% of them getstudents to present using technology.II.e-HealthE-health as defined by the ITU 65may also be known by such terms as tele-health,telemedicine, m-health, or personal health systems. This field of development alsocorresponds to the reorganizational or administrative convergence of healthcareand social care through the use of assistive technologies and those that, for64Pre-university Track outcome evaluation: Contemplating a Theory of Change for the Effective Use ofICT in Egyptian State Schools65BB Commissioner reporteMisr National Broadband Plan Annexes 108

instance, support elderly people at home. It is likely to become a major componentof services delivered via broadband.Due to the continuing deployment of wireless broadband and smart phone devices,which would enable mobile services companies to capture a large share of themarket. Gartner predicted that ICT-based healthcare spending would still grow by2.2% worldwide in 2009 despite the economic downturn. According to the WorldBank report in 2006 the projected regional increases in total healthcare spending,2020 – 2050 66 is as follows: Europe and Central Asia 14% East Asia and Pacific 37% South Asia 45% Latin America and Caribbean 47% Sub-Saharan Africa 52% Middle East and North Africa 62%The broadband technology provides access to online information and services thatare essential for governments, businesses, and the public to operate effectively inthe information age.As a part of Egypt‟s sustainable and comprehensive development, nationwidehealthcare reform is a high priority focus area for the government of Egypt. Thevision for the healthcare reform program is to improve all citizens‟ access toupgraded, affordable and high quality healthcare services. Accordingly, TheGovernment of Egypt and its Ministry of Health have established several e-Healthprograms to bring better diagnostic and health services to a wider segment of theEgyptian society. MCIT has facilitated the integration of ICT in health services andthe provision of medical education to remote or underserved areas of Egypt. The e-health initiative is inspired by pursuing equal opportunities for health servicesanywhere in Egypt, and expanding medical insurance to all citizens.The principle objectives of the e-health initiative are as follows:Extend better medical diagnostic services to rural areasProvide a training facility for the medical communityAcquire international consultations for special casesReduce the cost of health care through better patient managementOptimize utilization of expertise and resourcesProvide an advanced medical services in emergenciesCreate an electronic databases for medical recordsIn April 2008, MCIT laid out the IT Health Master Plan for the Ministry of Health andPopulation to be implemented jointly with IBM. The project aims at analyzing thecurrent situation of MoHP and identifying its key objectives and future vision,66Based on World Bank, 2006eMisr National Broadband Plan Annexes 109

analyzing the current situation of Egypt‟s health sector vis-à-vis the internationaltrends in the health sector outlining possible gaps and formulating tactical strategiesfor achieving so.Parallel to the formulation of the master IT plan for the health sector, a number of ITin Health projects 67 have been implemented by the Ministry of Health, ministry ofCommunications and the ministry of administrative development to accelerate theuse of IT in the health sector.Emergency Medical Service Call Center Ambulance Project:MCIT and the Ministry of Health and Population (MoHP) are cooperating to establishan emergency call center for Greater Cairo. The project aims to develop theEmergency Medical Service (EMS) system in the Greater Cairo area and improve thespeed and efficiency of its services by providing the Egyptian Ambulance ServicesAuthority with a computerized ambulance dispatch system.National Network for Citizen HealthThe project provides the most recent automated systems to develop centralmanagement of treatment by the government, and direct patients to differenttherapeutic units, such as hospitals and specialized centers in the country.The project aims to develop quality control and performance evaluation systems toguarantee the delivery of subsidy to those for whom it is intended, and guaranteesystem efficiency. It also aims to develop the information systems and databases ofthe central department for citizen health treatment by the government, andconnect all peripheral departments and hospitals through a Virtual Private Network.Information System Units in Governmental HospitalsThe project aims to facilitate the work of MoHP by establishing an informationsystems unit in 700 hospitals nationwide equipped with hi-speed Internet PCs, a WebCam and a scanner. In 2008, information systems units were established in tenhospitals as a pilot phase, to be replicated in 262 hospitals, 252 of which are publicand central hospitals while 37 are insurance hospitals. The units are used to facilitatethe national network for citizen health treatment, patients‟ registration, financial andadministration operations and training Medical staff.Pilot Project for Hospital AutomationIn April 2008, MCIT initiated a pilot project for automating hospitals‟ work in anattempt to facilitate services to the public and support decision making. Theproject‟s main deliverable includes a comprehensive database comprisingelectronic medical files for each and every patent. The pilot phase includes the67MCIT Golden Book, MCIT in 10 yearseMisr National Broadband Plan Annexes 110

automation of three public hospitals, two in Cairo and one in Suez.National Cancer Registry ProgramThe program utilizes state-of-the-art data mining technologies to extract a variety ofhealth indicators for investigating reasons behind the spread of cancer. As an initialphase, the city of Aswan was selected to be enlisted in the program. A fullyequipped data collection center was prepared to be ready to receive all patients‟data to be registered using the latest data mining and recording applications. Ahigh-end data transfer application was also developed to transfer patient‟s data tothe National Cancer Archive.National PACS ProjectThe project aims to develop a centralized database (PACS and RIS system) in themain center (Center of Excellence CoE) in Fum El-Khalij that integrates clinicalimages, scanned documents, and other non-textual data into patient‟s electronicmedical records. A local database was also created in the eight hospitals hospitalcovered by the project. Each of the hospitals‟ databases will be automaticallysynchronized with the central database in Fum El Khalij.Integrated Health Record SystemThe Integrated Health Record System project aims to build a national database ofhealth records and a Virtual Private Network linking primary health care units all overEgypt. The data is recorded by specialists and service providers. The database ismanaged by an information system that administers data retrieval, health indicatorsand medical consultations.Pan-African e-Network 68Within the framework of efforts to establish a pan-African e-network, MCIT andTelecommunications Consultants India Ltd (TCIL), through the African Union, signedan agreement on 7 December 2007 providing Egypt with a tele-education terminaland a telemedicine terminal.The tele-education terminal, housed in the Faculty of Commerce, AlexandriaUniversity, started operation in January 2010. About 30 students have since enrolledin an MBA program offered by Indira Gandhi National Open University. Thetelemedicine terminal, located at the Regional Center for Women‟s Health andDevelopment, came online in November 2009. By the end of 2010, it had held about380 medical education sessions attended by over 7,000 participants. The AfricanUnion has selected Alexandria University as the regional university for North Africa,and the new education hospital affiliated to Alexandria University‟s Faculty ofMedicine as a super specialty hospital for the North Africa region.68www.panafricanenetwork.comeMisr National Broadband Plan Annexes 111

III.e-Government“e-Government” as defined by the World Bank 69refers to the use by governmentagencies of information technologies that have the ability to transform relations withcitizens, businesses, and other arms of government. While the (UNDPEPA) defines e-government as “Utilizing the Internet and the World Wide Web for deliveringgovernment information and services to citizens” 70 . And with the help of thesetechnologies we can serve a variety of different ends: such as a better delivery ofgovernment services to citizens, an improved interactions with business and industry,a citizen empowerment through access to information, or more efficientgovernment management.While e-government is considered to go through different evolutionary stages.Gartner for instance classifies these stages as (1) Informational, (2) Interactional, (3)Transactional and (4) Integrated. Similarly, Layne and Lee identify 4 evolutionaryphases of e-Government: (1) Cataloguing, (2) transaction, (3) vertical integration,and (4) Horizontal Integration. And the ITU describes the E-Government environmentfour basic dimensions as following:InfrastructurePolicyGovernanceOutreachThe main drive of the e-government initiative is to modernize the citizen's experienceof public services and to improve the functionality of the Egyptian government 71 .The Ministry of Communications and Information Technology (MCIT) was instrumentalin introducing e-government in Egypt and extending ICT into public services, in closecollaboration with the Ministry of State for Administrative Development. As a generalmandate, MCIT supports other ministries in facilitating e-Government programs andservices as part of the Egyptian Information Society Initiative (EISI). One of the coreobjectives of the initiative is to modernize the way citizens interact with theirgovernment by introducing ICTs to the internal operations of governmentdepartments and to their interface with the public.In order to achieve the environment required for good governance and enhancingthe country‟s competitiveness, 4 programs were developed. Each one of theseprograms runs a number of projects that are directly aligned with EgyptianGovernment overall goal. The four programs are:Government Services DevelopmentState Resource Planning and Development69World Bank website Model of Citizen Adoption of E-Government71Egypt‟s Information Society, Oct 2005eMisr National Broadband Plan Annexes 112

Establishing and Integrating National DatabasesInstitutional DevelopmentMCIT partnered with other ministries and government agencies to support theirefforts to improve services, boost efficiency and reduce costs by integrating ICT intotheir operations. The ministry has developed a number of projects to buildinfrastructure, upgrade the skills and training of government employees, digitizedata, improve interagency communication and data transfer, increase governmentefficiency and effectiveness, and enhance communication and service deliverybetween the government and citizens.In 2001, GOE launched web-enabled services on an e-government portal.The new citizen-oriented gateway, which designed to allow citizens to paytelephone bills, request copies of birth certificates and replacement nationalID cards, and obtain information about EgyptAir flight schedules, electricitybills, and university and secondary school test results. The web portal hasproven to be a major success and is gaining popularity.MCIT on behalf of the government is working closely with ministries, authorities,organizations and centers to offer their services on the portal; areas beingdeveloped include education, science and technology, information, humanresources management, emigration, manpower and trade.In 2004, GOE passed responsibility for the successful e-government programto the Ministry of State for Administrative Development, though it continues towork closely with the ministry to support ongoing growth and development ofe-government services.The portal is supported with an advanced search engine which allows forhighly accurate bilingual search.It also provides online access to more than 700 informational services and100+ transactional services.In 2004, GOE launched a project to automate authentication offices affiliatedwith the Ministry of Justice. The project automated more than 50 offices andconnected them to a central data center. The project‟s second phase,implemented in 2008, included the automation of a further 50 authenticationoffices. The project has also established a decision support system and datamining center and provided training to 850 employees from the Real EstateRegistry and authentication offices. The average number of transactions permonth increased from 1,800 at the time of the project‟s launch to 25,000 in2008, with average transaction times down from 40 to 10 minutes. This projectwas closely integrated with the Agricultural Land Registry project and theProhibited from Transaction Project to speed up verification that the variousparties in any real estate transaction are not listed in the Prohibited fromTransaction database. MCIT is working with the Ministry of Justice to create acentralized database of persons prohibited from engaging in real estatetransactions. The project‟s information center and database is networkedeMisr National Broadband Plan Annexes 113

with the Illicit Gains Office, the Attorney General‟s office and the Real EstatePublicity Department as well as authentication offices and the Land Registry.Egypt‟s plan to update and modernize the government sector seeks to useICT to gradually automate all of the government‟s back office procedures.- The Enterprise Resource Planning (ERP) project is a national initiative thatwill redesign the way the government conducts its business. The project‟sgoal is to enhance workflow across departments, enable easy sharing andretrieval of data, and allow monitoring and follow-up of user activity.- The system, first deployed in 2003, includes payroll, accounting, budget,personnel, inventory and procurement systems, as well as documentmanagement and electronic archiving.Development of a database of industrial establishments and products for theCentral Agency for Public Mobilization and Statistics (CAPMAS).Automation of notarization offices and other offices in the Ministry of Justice.Development of technology infrastructure projects for the Luxor City Council,to improve city services including the establishment of a portal to offer touristsup-to-date information on the city, and development of the IT infrastructureat the city‟s Tourist Information Center, a women center, a Public Library andthe Heritage Center, in addition to the automation of Luxor‟s land registrationand authentication offices.Development of a portal and information systems network, including onlineticketing and flight information, for EgyptAir.Enhancement of the information network and service procedures, updatingof databases and training of employees of the Egyptian Customs Authority.The project includes creation of an information portal to promote growth intrade.Development of a database of standards specifications and an informationportal for the Egyptian Public Authority for Standardization and QualityControl.In 2005, establishing one of the GOE most prominent e-government initiativesis the land registration program. The project was based on cooperationbetween MCIT, the Ministry of Water Resources and Irrigation, and the Ministryof Justice – and it has linked the Egyptian Survey Authority‟s database ofdetailed maps and the Ministry of Justice‟s title registration system,automated the Land Registration System and the Egyptian Survey Authority,and developed a web portal and a “one-stop shop” system. It has alsocreated a cadastral map that shows the ownership of land parcels andprovides: unique identification numbers for these parcels; certificates of titlenumbers; positions of existing structures; section and/or lot numbers and theirrespective areas; adjacent street names; selected boundary dimensions; andreferences to prior maps. Other benefits include the upgrading of real estateoffices and administration procedures across the country and the creation ofeMisr National Broadband Plan Annexes 114

a database containing over 5 million real estate documents relating to 19governorates and 93% of a total of 138,000 maps relating to 10 governorates.In 2006, development and modernization of the Ministry of Social Solidarity, toprovide funding and support for the upgrade of 1,000 offices and 27 socialsolidarity units and installed network infrastructure connecting 1,300computers to each other and the Internet.Automation of 1,600 Ministry of Finance-affiliated units nationwide to facilitatethe calculation of cash flows and budgets.Creation of databases for various ministries and related organizations,including Dar Al Ifta Al Misriya, a religious authority responsible for issuingIslamic rulings, involving the compilation of an ofnline database of around120,000 religious edicts.Establishment of the Sheikh Zayed Geographic Information Systems Unit tohelp modernize the Sheikh Zayed City Council and improve its services. Theproject includes an information center at council offices with a fully equippedgeographic information system (GIS) and software applications that willfacilitate service delivery to the city‟s investors, decision-makers and otherstakeholders.In 2008, development of the infrastructure of the National Organization forPotable Water and Sanitary Drainage through a project designed to link allthe organization‟s departments through an integrated institutional informationsystem and a geographic information systems (GIS) unit.Installation of advanced communication networks, enhancing infrastructure,improving passenger service, and raising levels of reliability and safety onEgypt‟s railway systems.In 2009, Egyptian Government continued enhancing the e-government portalfrom different angles to assure its usability and accessibility in a citizen-centricapproach. The portal addresses three segments of beneficiaries (citizens,businessmen and foreigners).Developing the Citizens Relationship Management (CRM) system thatcovered more than 28 government organizations. The CRM system isfunctionally maintaining and managing citizens‟ complaints, suggestions andinquiries, dealing with more than one million users annually.Developing a Family Smart Card system for the delivery of social services tounderprivileged families, enabling better targeting of subsidies through linkingand integrating the National Identity Database with relevant databases indifferent governorates to build complete family profiles.Establishing a Local Government Development program to assist localgovernorates in availing convenient, accurate, fast and efficient governmentservices. 48 municipalities in 16 different governorates were automatedAvailing online about more than 85% of the overall customs' servicestransacted throughout Egypt. The developed services include manifestsubmission, manifest modification request submission, customs declarationeMisr National Broadband Plan Annexes 115

egistration, submission and follow up, storage request submission, warehousestocks follow up, temporary admission services and imports status enquiry. Simplifying investment procedures as well as accelerating differentinvestment services processes through the Investment Services Developmentproject. This contributes to better business environment in Egypt asacknowledged by „Doing Business Report‟ that was released by Word BankGroup in 2009. Another of MCIT‟s e-government projects, the Egyptian Geography Network(EGN), received the Special Achievement in Geographic Information SystemsAward at the 2006 ESRI International User Conference in the United States.EGN is a national network of GIS users and providers that provides aframework for publishing, sharing and using geographic information on theInternet. It is available to private, public and commercial users, including datapublishers and service providers, reducing the time involved in planning,producing and digitizing maps. The network‟s website contains maps andmetadata for 22 government organizations. Another project was launched with Egyptian chambers of commerce andtheir local branches throughout the country to introduce decision supportsystems and provide training for employees. The ministry has equipped eightinformation centers with computers and local area networks and has set up awide area network to link the information centers with the projectmanagement unit at the Trade Information Center. The project has alsocreated a centralized database, data warehousing and a web portal. Inaddition, in 2008, MCIT signed an agreement with the Alexandria Chamber ofCommerce to provide comprehensive up-to-date geographical data of thechamber‟s activities, including a geographic database, a geographicinformation unit and a web portal. Moreover, another project with Egypt‟s National Council for Childhood andMotherhood in to use ICT to improve the efficiency, effectiveness and impactof the council. The project encompasses modernization of the council‟sinformation infrastructure, development and implementation of anautomated network to serve children in need, the launch of acommunications access point connected to 20 other Egyptian authoritiesthat offer services for children, equipping mobile information centers,providing girls‟ schools with PCs, supporting illiteracy programs, developing aweb portal for youth and establishing a Child Emergency Hotline. The projectis linked to the Egyptian Education Initiative.IV.e-Civic Engagement"Civic engagement has been defined as Individual and collective actions designedto identify and address issues of public concern” 72 . ICT tools have proven efficiency72Civic engagement, From Wikipedia, National Broadband Plan Annexes 116

as an indispensable tool in expanding citizen to citizen interactions (C2C), as well ascitizen to government (C2G) exchange and dialogue.Designing a clear strategy for e-civic engagement becomes a necessity particularlyin emerging countries and countries in political transition, such as Egypt that arecurrently witnessing an outburst of civic interest in the public sphere. However,similarly to other more mature e-applications, such as e-health, e-education, wemust expect a period of piloting and testing that would reveal the real needs of theEgyptian society.E-civic engagement is an interactive relationship in two ways: between governmentand citizens; and among citizens. In past years, Egypt has taken several steps tostrengthen citizens‟ participation in both directions.A. Availing government services to citizens and allowing for citizens’ feedback:"In early 2010, the United Nations Public Administration Network (UNPAN) e-Government Development report classified Egypt among the top ranked countriesregarding "online services" 73 . With the help of a modern technology infrastructure,the Egyptian Government has effectively introduced a number of e-governmentservices to citizens including:A Digital platform for Civic engagement: In August 2011, the Egyptiangovernment created a digital platform to open community dialogue aboutsome of draft laws, such as the Law of treachery and the law of SyndicatesFreedom.Egyptian Government Portal The web site is theresult of a cooperation between The Ministry of Communications andInformation Technology and the Ministry of state for administrativedevelopment, and all the other Ministries and government bodies toestablished a complete framework for automating the services that thegovernment provides and that sum up to over 700 services through the E-Government project. The site is considered the first step towards establishingan Egyptian E-Government that levels with the international governmentalsystems worldwide and that is supported by the latest technologies.Consumer Protection Agency Website Relationship Management (CRM)E-SignatureTransparency and Integrity Committee (TIC)B. Amplifying citizens’ voices through online media:This was demonstrated clearly in the role of online media before, during, and afterthe Egyptian revolution, which changed many of the concepts and also the outlook73Administrative Reform, 2010-2012 Work Plan, Ministry of State for Administrative Development, Version3.0, October 2010eMisr National Broadband Plan Annexes 117

for the future. The success of online media in the Egyptian case is due to theincreasing number of Internet users in Egypt, especially among the youth who ledthe revolution, and also due to a large extent to the increasing number of capacitybuilding programs and trainings offered by the government through its differentinstitutes (e.g. International Telecommunication Institute, the NationalTelecommunication Institute, The ICT Trust Fund…) that have reached out to millionsof trainees who were acquainted with basics of ICT education through the ICDLprograms, as well as with the participative potential of web 2.0 tools. Capacitybuilding and training were availed in cooperation and close partnership with MNCssuch as Microsoft, IBM, Cisco, Huawei … etc.Online media enables cyber activism, which was a major trigger for street activism. Itencourages civic engagement, through facilitating the mobilization andorganization of protests and other forms of political expression. It also promotes anew form of citizen journalism, which provides a platform for ordinary citizens toexpress themselves and document their own versions of reality, such as blogs andpages on Facebook (Page of Khaled Saeed).V. ICT & the EnvironmentThe most recent results presented by climate scientists are alarming. Theaccumulation of greenhouse gases (GHG) in the atmosphere is growing faster thanoriginally predicted. Scientists, economists and policy makers are calling foremissions targets of at least 20% below 1990 levels in 2020. It is our responsibility toestimate the GHG emissions from the information and communications technology(ICT) industries and to develop opportunities for ICT to contribute to a more efficientand sustainable economy.It is estimated that ICTs contribute around 2% to 2.5% of GHG emissions every year.And The ICT sector‟s emissions are expected to increase to nearly double – to about4% – by 2020 74 . But on the other hand the ICT sector has a high potential thatopportunities can lead to emission reductions five times the size of the sector‟s ownfootprint, up to 7.8 GtCO2e, or 15% of total BAU emissions by 2020 75 . In economicterms, the ICT-enabled energy efficiency translates into approximately 600 billionEuros (USD 946.5 billion) of cost savings 76 .As a non-Annex 1 Country, Kyoto protocol 77 , Egypt is not required to meet anyspecific emission reduction or limitation targets in terms of commitments under the74ITU (2009) ICTs and Climate Change, background paper for the ITU Symposium on ICTs and ClimateChange, Quito, Ecuador, 8-10 July75Gesi initiative(2008), SMART 2020 report” Enabling the low carbon economy in the information”76Stern, N (2008), Key Elements of a Global Dealon Climate Change, London School of Economics andPolitical Science: National Broadband Plan Annexes 118

United Nation Framework Convention on Climate Change (UNFCC), or the Kyotoprotocol. Howe ever policies, initiatives, projects and programs that targetingmeasures for mitigating and adapting to climate change are in progress in Egypt.ICTs are deemed crucial tools for dealing with the environment, and climatechange. Whether through the establishment of data bases and data processing,smart grids, disaster prediction and management, handling the ICT sector‟s carbonfootprint, ICTs have proven to be an integral part of all efforts in the area of climatechange mitigation and adaptation in sectors as critical as: transport, energy, water,etc.Therefore, The Egyptian ICT sector recognizes its responsibility in adapting andmitigating to climate change threats and effects, as well as in decreasing thenegative environmental impact of ICTs. In this regard the Egyptian ICT sectoridentified and considered the issue of “ICT & sustainable Environment” in three mainareas: ICT Applications for adapting to climate change effects, ICT applications formitigating to Climate change effects, and Towards a sustainable ICT sector. In eacharea a lot of activities, in form of: initiatives, programs and projects, have beendeveloped. These activities can be summarized as follow:1. A Sustainable ICT sectorA. Developing a framework for a National Pro-Growth Green ICT strategyIn June 2010, MCIT signed a Request for Technical Advice with the World Bank onGreen ICT. Accordingly the World Bank assists the Ministry of Communications andInformation Technology in playing a more active advocacy role in the green of ICTin the context of the overall development agenda of Egypt. And this will be donethrough the following: Development of the framework of a National Green ICTstrategy, design of an E-waste pilot project, and design of an awareness, informationdissemination and knowledge development campaign on E-waste management.B. Synergize and coordinate the Green ICT activities on the national levelIn February 2010 the Egyptian Ministry of Communications and InformationTechnology (MCIT) adopted the Egyptian Green ICT strategy in close cooperationwith the Ministry of State for Environmental Affairs (MSEA) 78 . And in this context, TheGreen ICT Stakeholders‟ Committee was established. The committee includesmembers from public sector, private sector, NGOs, regional and internationalagencies to ensure synergies and coordination between all efforts. The Green ICTProgram rests on three main pillars:a. Raising the community awareness on green ICT challenges, potential andopportunities.78 National Broadband Plan Annexes 119

. Dealing with ICTs from a cradle to cradle perspective, with a special focus ondeveloping a Sustainable Management of E-waste Program.c. ICTs solutions for a sustainable future program by exploring the mitigating impactof ICTs in other sectors, as well as looking into adaptation mechanisms using ICTs.C. Sustainable management of ICT resources and procurements (form cradle toGrave)In light of decreasing the environmentally negative impact of the ICT sector, a lot ofactivities have been done in this regard and other activities are in process:In process Activities:Setting up Green conditions and specifications in the public procurement ofICT goods, in line with global trends.Conducting a national E-waste assessment study .(the study expected tofocus on the following (assessment of potentials for establishing an E-wasterecycling industry in Egypt, Identifying economic incentives , assessing thecurrent amount of E-waste)Designing of an E-waste Pilot project.Designing of an Awareness, information dissemination and knowledgedevelopment campaign on E-waste management in cooperation with WB.Compiling Proposal for introducing & implementing take back system or“polluter pays principle” either in legislations and customer billsCompiling Proposal for setting and updating the appropriate legislations andregulations to support the rational management of E-waste in Egypt.Polices and regulations:On 13 th August 2000, Within framework of the state concern to protect thehealth of the Egyptian citizen, the National Telecommunication RegulatoryAuthority (NTRA) in collaboration with the National Telecommunications andInformation (NTI), Ministry of Health and the Ministry of state for EnvironmentalAffairs prepared and issued the Egyptian Environmental Modified Protocol forMacro cell .The Macro cell protocol was modified in accordance with therevision of the safety standards applied as well as with the results of theaforementioned researches especially those related to the electromagneticinfluence of the macro cell stations, which are safe to human beings as longas they comply with conditions detailed in the Second article 79 . Supporting the sustainable management of e-Waste: On December 2010,MCIT in cooperation with the WB developed a Terms of Reference for adiagnostic analysis of e-waste management in Egypt. e-waste recycling practices: In 2010, the government of Egypt supportedCompu-me company, one of the big retailer of ICT goods in Egypt, in79 National Broadband Plan Annexes 120

establishing the first Egyptian E-Waste Recycling Company (EERC). The corebusiness of the company is Refurbishing old ICT products, and Total Recycling/ E-Waste. Another company that active in Egypt in this industry is Spear-inkCompany. The company Core business: Refurbished; reused ; andremanufactured ink and toner cartridgesD. Encouraging and, where possible, stipulating the wide sharing of best practicesand exchange of informationIn November 2011, MCIT in cooperation with MSEA, hosted and co-organizedthe fifth ITU Symposium on” ICT, the Environment& Climate Change” incoordination with ITU. The event welcomed approximately 40 experts and400 attendees who tackled green ICT from its direct, indirect and systemicsides, as well as issues related to mitigation, adaptation and e-wastemanagement. The conference produced The Cairo Road Map 80 . Thedocument is a guidance for developing countries on “ICTs and Environmentalsustainability”.On April 2011, Egypt represented by MCIT joined the ITU-T Study Group 5 on“Environment & Climate Change” as an associate rapporteur for Q23 on“Using ICTs to enable countries to adapt to climate change” and joined ITU-TJoint Coordination Activity on ICT and Climate Change (JCA ICT&CC).In November 2009, Egypt represented by MCIT joined ITU-T Dynamic collationon ICT & Climate Change (DCICCC).From January 2010 - January 2011, MCIT reviewed and included Egypt‟s viewson all Green ICT related document issued in the 26 th , 27 th , and 28 th OECD-WIPEmeetings.E. Green Citizenship; Towards a Behavioral ChangeMCIT has conducted more than 10 workshops and events with differentstakeholders, as well as sessions on awareness raising issues… stakeholdersincluded Microsoft, Vodafone, Mobinil, CEDARE… and othersIn February 2010, MCIT and MSEA developed Guide booklet on “Green IT indaily life” 81 .On August 2010, MCIT in cooperation with MSEA & Vodafone-Egypt organizedthe first Youth camp on “Green ICT”.2. ICT applications in mitigating Climate Change effectsA. Smart transportationIn June 2010, an MOU on “building an intelligent transportation system “has beensigned between MCIT, Ministry of transport, and IBM-Egypt. The vision of the MOU is:80 National Broadband Plan Annexes 121

uild an intelligent and smart transportation system (ITS) which combinesinformation, processes, infrastructure and technology. The main work pillars of the ITSare: Building Intelligent road management and control system Offering asset management solutions to optimize the operationalperformance of assets and ensure high reliability and availability. Establishing safety, security, Anti-collision system and surveillance. Developing operations control solutionB. Smart & green BuildingsInstitutional and regulation activities:In January 2009, a major step was taken by the Egyptian government throughestablishing the Egyptian Green Building Council (EGBC). Membership in the EGBCconsists of both national and international personalities including governmentministers from Cabinet level agencies, officers from respected NGOs, prominentbusinessmen, seasoned labor leaders, and major contractors. One of the objectivesfor establishing this council is to provide a mechanism to encourage buildinginvestors to adopt Building Energy Efficient Certificates (BEECs)as well as othersections of existing codes that satisfy both energy efficiency and environmentalconservation.As an immediate action to activate the role of this council was the approval ofdeveloping a national Green Building Rating System called the Green PyramidRating System (GPRS) 82 , the council has commissioned to define the framework of arating system and a national committee has been formed to review and ultimatelyapprove the Green Pyramid Rating System. Recognizing the unique ecological,industrial and social challenges of the region, the rating system will help to definewhat constitutes an “Egyptian Green Building”.ICT community leading by example:Solar photovoltaic LEDS: Ministry of Electricity, new and renewable EnergyAuthority, Smart village company, and MCIT are cooperating now, toimplement a pilot project of “solar photovoltaic powered LEDS fixtures forstreet lighting system in smart village in Egypt”. The project is one of theactivity that aiming to satisfy the Egyptian national strategy in renewableenergy .(the national strategy targets to satisfy 20% of the generatedelectricity by renewable energy by 2020)Carbon footprint assessment: In the frame work of assessing the carbonfootprint of the ICT community in Egypt. In June 2010, smart villages companyin cooperation with the Central laboratory for Environmental monitoringdeveloped a report that assess the quality of the Air in the smart village-Giza82 National Broadband Plan Annexes 122

anch. the study come up with that “ All combinations of gas in the air is lessthan the maximum limits of air pollutants that mentioned at the environmentallaw NO 4 in the year of 1994.Smart irrigation system: Since the establishment of the Smart village, a smartirrigation system was deployed. The system provides the following: Waterefficientlandscaping, Non-Potable water for irrigation, Central IrrigationControl System, and maintaining natural aquifer conditions.LEED certified buildings: As a step to retrofit all the building in smart village tobe smarter and energy efficient, there three building in smart village succeedin this issue and became LEED certified. There buildings are:- HSBC REGIONAL PROCESSING CENTER- EFG-HERMES HEAD OFFICE BUILDING- SVC OFFICE BUILDINGIn December 2010 MCIT cooperated with the ITU in developing a report on“ICT‟s Potential for Energy Saving and GHG Emissions reduction in the BuiltEnvironment-Egypt”. The report scope was to: Identify the potential role of ICTin Energy Efficiency (EE) & GHG emission reduction in the built environment inthe context of Egypt, Study applicable and viable EE measures for theEgyptian built environment through performing a Walk-Through Audit (WTA)analysis of two buildings, and Assess the role of ICT for Smart Building, SmartGrid and related ICT based Smart Technologies and Applications andapplicable Demand-Side Management (DSM) Programs as they relate toEgypt 83 .3. ICT applications in adapting to Climate Change effectsA. Monitoring and Emergency responseIn Egypt, The Central Agency for Population, Mobilization and Statistics (CAPMAS)represents the official authority for national data collection and analysis for thecountry. Its website offers information and data concerning various environment anddevelopment indicators. In addition several other organizations are carrying outsystematic observations for specific climate targets. The systems and programsavailable for systematic observation are the following 84 :Meteorological and Atmospheric Observation: a network of 112 stations isestablished over the main cities in Egypt. The network includes surface andatmospheric stations, air pollution, global radiation and agro-meteorologicalstations.83ITU& MCIT, ICT‟S Potential for Energy Saving and GHG emission reduction in the built environment-Egypt report, December 201084Egypt second national communication report under the United Nation Framework Convention onClimate Change, 2010eMisr National Broadband Plan Annexes 123

Air Pollution Monitoring: A network of 47 stations is established over Cairo,Alexandria, main cities in the Delta and Upper Egypt.Agriculture: There are 26 agro-meteorological stations in addition to twoenvironmental stations distributed in the agriculture regions in Egypt. All thesestations are equipped with measurement equipment for the regular minimumand maximum temperatures, relative humidity, total radiation, wind speedand direction, soil temperature and leaf wetness.Water Resources: Tide gauge stations are installed at several spots of the NileDelta and Mediterranean coast, with two stations installed on the Red Seacoast, and eleven automatic tide gauge stations installed along the SuezCanal.Satellite Systematic Earth Observations: In 2007, Egypt‟s first satellite, EgyptSat-1, was launched. EgyptSat-1 carries two remote sensing devices, an infrareddevice and a multi-spectrum one. EgyptSat-1 is the country‟s first satellite forscientific research and systemic Earth observation.VI.ICT Diffusion in BusinessSMEs usage of ICT ranges from basic technology such as fixed telephone lines tomore advanced technology such as email, e-commerce, and informationprocessing systems Using advanced ICT to improve business processes falls into thecategory of e-business. However, not all SMEs need to use ICT to the same degree ofcomplexity.The first ICT tool that most SMEs adopt is having basic communications with a fixedline or mobile phone, whichever is more economical or most convenient for theirbusiness. This allows the SME to communicate with its suppliers and customerswithout having to pay a personal visit. After acquiring basic communicationcapabilities, the next ICT upgrade is usually a PC with basic software.Even without Internet connectivity, SMEs can use PCs for basic word processing,accounting, and other business practices. With the Internet, SMEs are able to usemore advanced communications capabilities such as email, file sharing, creatingwebsites, and e-commerce. This may be sufficient for most SMEs, especially those inservice industries such as tourism. SMEs in manufacturing may adopt more complexIT tools such as ERP software or inventory management software. SMEs may adoptthe tools progressively or jump immediately to advanced ICT capabilities.eMisr National Broadband Plan Annexes 124

SME’s Progression of ICT AdoptionSmall, Medium and Micro Enterprises (SMMEs)Larger businesses are more likely to have the capacity to use ICTs for comparativeadvantage. SMMEs, on the other hand, are less likely to have this capacity. Yet thesesmaller enterprises are the engines of employment and are on the front lines in thefight against poverty. Strategies that strengthen the capacity of SMMEs are alsostrategies that support poverty reduction.Formal and informal micro, small, and medium sized enterprises in all sectors ofEgypt‟s economy have been the major private sector employers since the 1980s.There are differences among these enterprises according to their size, location,ownership, status of formality and economic activity, but together, as major jobproviders, they produce a significant share of total value added, and provide alarge segment of the poor and middle-income populations with affordable goodsand services.The role of ICTs in advancing the growth of national economy through enhancedefficiency and productivity, and expanded market reach is both undisputed andirreversible. It is within the vein that adequate and strategic attention has to beplaced, so that these new opportunities provided by ICTs are not purely limited andaccessible only by the larger corporations within the national economy. Asnumerous reports have indicated, M/SMEs constitute 60% of the work force in Egypt,and produce over 80% of the national GDP. Therefore directly serve as thebackbone and driver of national economy.A. Business Process Outsourcing (BPO) and IT Outsourcing (ITO)Creation of a supportive business environmentPromotion of investment in ICT-enabled servicesEmployment creation in outsourcing servicesMultilingual voice and non voice BPO (customer support, accountmanagement, telemarketing, finance and accounting, HR processing, backofficeoperations, rules-based decision making)eMisr National Broadband Plan Annexes 125

World-class ITO and technical support (technical support, applicationdevelopment and maintenance, business application implementation,remote infrastructure management, and 'Arabization' of software)However, given that the cost of mobile telephony is relatively low in Egypt, acomparative analysis should be undertaken to determine the economic feasibility ofthis opportunity. Closely linked with VoIP is access to Wi-Fi as a way of propagatingnetwork access. Mesh networks at the local and community level can be a relativelyeasy way to propagate network access in underserved communities.B. ICT for Small & Medium Enterprises, ICT Trust Fund projectsCreating a business enabling environment to the development of M/SMEs throughthe potential of ICTs to Build capacity for Egyptian M/SMEs to leverage ICTs ingenerating employment and creating efficient, better connected and morecompetitive enterprises through utilizing ICT tools and applications via partnershipwith civil society associations.2006 SMEs in utilizing ICT in their businesses - ICTs for M/SMEs Development in EgyptProjectStudy the effects of building capacity for Egyptian M/SMEs to leverage ICTs ongenerating employment and creating efficient, better connected and morecompetitive enterprises, and identifying new socio-economic opportunities that canbe leveraged through ICT.Target Group: 3500 Young people from M/SMEsGeographical scale: 13 geographical locations in EgyptPartners: The project has operated through a grant from IDRC and technicalassistance from UNDP and Microsoft Corporations (MS).2008ICT for M/SMEs-Microsoft project, is a natural extension to the program‟s work in thefield. It is where the program strived to conquer the obstacles, meet the M/SMEs‟needs, refine the interventions and scale up the tried-out model to reach out largernumbers of beneficiaries.Target Group: 2000 M/SME‟s Entrepreneurs, with a special focus on womenGeographical scale: Alexandria, Damietta, North Sinai (Arish city), Dakahliya,SharkiayaPartners: The project has operated through a grant from Microsoft Corporation.eMisr National Broadband Plan Annexes 126

2009The ICT4SMEs program phase three, reflects a strategic leap towards a new vision ofdeveloping the M/SMEs sector in Egypt. The scope of work focused on ICT as adevelopment enabler that has a key role in poverty alleviation, through enhancingeducation quality, lifelong learning, capacity building, and economicempowerment.Target Group: 1500 Small and medium enterprise ownersGeographical Scale: Alexandria - Aswan - Assuit - Cairo - Dakahlaya - Domiata -NorthPartners: The project has operated through a grant from Islamic Development Bank(IDB), and technical assistance from UNDP2010The ICT For M/SMEs program’s phase 4, namely the “ ICT For Youth Employment”project addresses the labor market requirements and introduce a capacity buildingprogram that adapt the fresh graduates as well as M/SMEs to them using ICT.Target Group: 1500 M/SME‟s Entrepreneurs, with a special focus on womenGeographical scale: Alexandria, Damietta, North Sinai (Arish city), Dakahliya,SharkiayaPartners: The project has operated through a grant from Microsoft Corporation.VII.e-CommerceDefinition: Electronic commerce, commonly known as e-commerce, ecommerce ore-comm, refers to the buying and selling of products or services over electronicsystems such as the Internet and other computer networks. However, the term mayrefer to more than just buying and selling products online. It also includes the entireonline process of developing, marketing, selling, delivering, servicing and paying forproducts and services.B2B: Electronic commerce that takes place between businesses is referred toas business-to-business or B2B.B2C: Electronic commerce that takes place between businesses and consumers, onthe other hand, is referred to as business-to-consumer or B2C.eMisr National Broadband Plan Annexes 127

Electronic commerce is generally considered to be the sales aspect of e-business. Italso consists of the exchange of data to facilitate the financing and paymentaspects of business transactions 85 .E-commerce can be divided into: E-tailing or "virtual storefronts" on Web sites with online catalogs, sometimesgathered into a "virtual mall" The gathering and use of demographic data through Web contacts Electronic Data Interchange (EDI), the business-to-business exchange of data E-mail and fax and their use as media for reaching prospects and establishedcustomers (for example, with newsletters) Business-to-business buying and selling The security of business transactions 86Internet penetration has grown rapidly since 2000, mainly because of a number ofgovernment and private-sector incentives. Nevertheless, electronic commerce is inits infancy in Egypt 87 .BCG's e-Intensity Index, which compares the reach and depth of the Internet across41 countries, ranks Egypt at a low position overall (above India and Indonesia,slightly below Morocco and South Africa) and highlights 3 main areas fordevelopment:Fixed Broadband access, still below benchmarks in spite of significantprogress over the last 5 years in part due to significant illegal sharing effectB2C e-commerce, under-developed in Egypt with 0.2% of retail spending ascompared to other emerging markets such as Turkey or developed marketssuch as the UK (8%)Businesses' Internet engagement, in particular getting companies to activelyengage in commercial activities online would in particular benefit exports oftraditional and purely online companies over the InternetFacts: Less than 5% of Internet users have ever shopped online Internet consumption on Egyptian websites is still very limited as of today –almost non-existent outside of the purchase of travel services Even when compared to other emerging markets with similar levels ofdevelopment: for example, e-commerce represents 0.3% of total retail spendin India and 0.5% in Morocco 8885Wikipedia definition of e-Commerce, at: definition, Search CIO, at: Overview of e-commerce FROM THE ECONOMIST INTELLIGENCE UNIT, at: National Broadband Plan Annexes 128

Egypt has both business-to-business (B2B) and business-to-consumer (B2C) e-commerce. It‟s estimated that only about 250 of an estimated 5,000 websitesbased in Egypt at the end of 2003 were dedicated to e-commerce. Of these,fewer than 20 had established strong name recognition in the consumermarket. Computer penetration is much higher within the business community than thegeneral population, suggesting greater potential for B2B than B2C sites. LargeEgyptian companies have started using in-house websites to manageinventory. Sectors now covered by Egyptian B2C sites include stock market trading, realproperty, food delivery, lifestyle products, Egyptian handicrafts, furniture andhuman-resources industries. A few news portals attract a steady readership,but efforts to turn these into wide-ranging e-commerce sites have beennotably unsuccessful 89 .Local banks have introduced credit and debit cards designed for onlineshopping. Few Egyptians have credit cards, but these new cards aredesigned for online shopping only. They particularly target teenagers andyoung adults who cannot obtain credit cards themselves.The Central Bank of Egypt has licensed 11 banks (both local and foreign, butall in the private sector) to conduct electronic-banking. Among these areCitibank Egypt and HSBC Egypt. But the scope of transactions that can beconducted online is still relatively limited. Citibank allows customers to paytheir mobile-phone bills online if they are customers of Vodafone Egypt.The electronic-signature law, should eventually help expand online bankingservices, although few banks were offering full-fledged online banking as atJuly 2007. The law gives legal force to electronic signatures and calls for thecreation of a new authority, the Information Technology IndustryDevelopment Authority, to promote and regulate e-commerce. Article 3 ofthe law suggests that small and medium-sized enterprises will be encouragedto use e-commerce marketing methods. It was issued in April 2004 and wentinto effect on May 26th 2005, with Ministerial Decree 109/2005. The law and itsexecutive regulations provide legal standing for electronic signatures with theaim of stimulating e-commerce growth by providing an amenable regulatoryenvironment and bolstering IPR protection. The law calls for the formation of aregulator, the Information Technology Industry Development Authority (ITIDA),under the aegis of the Ministry of Communications and InformationTechnology. The authority is to encourage the use of “electronic dealingmechanisms” by small and medium-sized enterprises and to promote exportsin telecommunications and information technology.88Internet Economy in Egypt, Presentation by The Boston Consulting Group, January 201189Egypt: Overview of e-commerce from the Economist Intelligence Unit, Op.cit.eMisr National Broadband Plan Annexes 129

Intellectual property, Measures to protect intellectual-property rights (IPR) arebased on Law 82/2002. Although the law explicitly mentions software andelectronic data as items subject to copyright protection, softwareassociations based in the United States continue to deem Egypt‟s IPRsafeguards as inadequate.The ITIDA began operations in 2005, and it has begun preparing to issue codekeys for electronic-signature transactions. The keys will be issued to CertificateService Providers, which the government will license. Four companiesreceived a license from the ITIDA in July 2006: Security and Network Services,Egypt Trust, Advanced Computer Technology, and Misr for Central Clearing,Depository and Registry.Basis of taxation, E-commerce transactions taking place entirely in Egypt aretaxable. Article 5 of Law 15/2004, the e-signature law, entitles the InformationTechnology Industry Development Authority to collect a 1% duty on revenuesfrom communications and information-technology businesses to support thedevelopment of the industry 90 .Egyptian International Trade Point: This portal was created by the Egyptiangovernment and is considered as a centre of implementing electroniccommerce, in which Egyptian International Trade Point EITP encourages forusing Electronic Market (B2B) to assist Egyptian businessmen to share the inglobal trade exchange with electronic portals includes (Egyptian companydirectory –Egyptian product directory – Egyptian sell offer – Egyptian orforeign buy offer – tenders and bids – trade facilitation) 91 ., also known as digital content is defined to be digital informationdelivered over network-based electronic devices, i.e. symbols that can be utilizedand interpreted by human actors during communication processes, which allowthem to share visions and influence each other‟s knowledge, attitudes or behavior.E-content allows for user involvement and may change dynamically according tothe user‟s behavior. IT is a subcategory both of digital and electronic content,marked by the involvement of a network, which leads to a constant renewal ofcontent. This constant renewal of content in tie with its dynamic change allows for aqualitative difference, thus making it E-Content 92 . Digital content is rapidly evolvingand becoming a substantial part of the economies since they alter frommanufacture of physical items to valuable intangibles.90Egypt: Overview of e-commerce from the Economist Intelligence Unit, Op.cit.91 Development of Digital Arabic Content: Incubation Requirements and Training Needs. 2010,p.3eMisr National Broadband Plan Annexes 130

In one of its publications, OECD presents an analysis that reflects the positivefeedback cycle between infrastructure, content and skills. It suggests that theavailability of broadband networks contributes to digital content development,while broadband digital content applications and services are predicted toencourage the understanding and effective use of information and communicationtechnologies (ICTs), to power broadband development 93 .Enhancing the availability of relevant content in Arabic on the Internet and otherforms of ICTs (such as mobile devices) is of central importance to promote greaterup-take of ICTs in Egypt. At the same time, the development of such content alsorepresents a growth opportunity, as much of it could potentially be generatedlocally for the Egyptian market and beyond. The expansion of the “e-contentindustry” would therefore not only help to reduce the digital divide between Englishand Arab speakers but also provide employment and export opportunities.The principal objectives and operational goals of e-content:Principal Objectives:Improve access for all to high-quality digital content on the global networks.Support the increased availability, use and distribution of Arabic digitalcontentCreate an environment conducive to the sustainable production of Arabicon-line digital contentEncourage the creation of local community digital contentSupport universities, research centers and companies in developing researchand development capabilities in support of digital contentOperational Goals:Assure the role of Egypt as a hub for culture and civilizationPreserve the Arabic heritage, enrich the Arabic content in all forms andintroduce the Egyptian civilization to the national and international societiesthrough the InternetIncrease the local, regional and international demand on Arabic content byopening nontraditional marketsDisseminate Arabic knowledge and public services as well as decreasing thecost of knowledge acquisitionMagnify the benefit generated from the partnership of communication andmedia to provide various forms of content with minimum costEgypt‟s most outstanding initiatives and projects in the field of E-content are:93ESCWA Development of Digital Arabic Content: Incubation Requirements and Training Needs. 2010,p.6eMisr National Broadband Plan Annexes 131

The Arabic E-Content for Books and Software Initiative (2005): Promoting DigitizedLiteratureThe Arabic E-Content for Books and Software Initiative is a partnership between theMCIT, the Egyptian Publishers Union and the E-Learning and Business ApplicationsUnion. Under this initiative, the focus of the Government‟s efforts has been onencouraging publishing houses to digitize their content. As a result, at least 70publishers now participate in an initiative aimed at making digitized contentavailable for on-line delivery.Natural, Human, Cultural Heritage ContentThe Center for Documentation of Cultural and Natural Heritage (CULTNAT) with thefinancial support of MCIT has developed 14 projects since 2001. These projects havebeen executed in partnership with different Egyptian ministries and governmentalentities, in addition to partnerships with various Arab ministries, enterprises andorganizations from the Arab countries.The projects main objective is to promote Egypt‟s cultural heritage on specific webportals using state-of-the-art technology, high-resolution and three-dimensionalimages, third generation search engines and interactive maps, available in severallanguages.News ContentNewspapers play a key role in the development of Arabic language content on theInternet, accounting for an estimated 40% of its content 94 .In the framework of the e-content initiative, a Memorandum of Understanding wassigned by MCIT and Al-Ahram Foundation aiming at developing Al-Ahram portal asthe advertisement is one of the main revenue sources for traditional newspapersand in the last 5 years, the on-line media led to a remarkable decrease in thenumber of printed newspapers‟ readers, by this cooperation 3 projects were startedwith classified ads, mobile access and Internet radio.Also, MCIT has partnered with the News Sector of the Egyptian Radio and TelevisionUnion (ERTU) to build a news portal “” to deliver up-to date local,regional and international news in Arabic. The average number of portal visitors perday has increased from 6,000 visitors in December 2008 to 50,000 visitors in February2011.Mobile Content DevelopmentIn June 2010, ITIDA in partnership with Vodafone Egypt launched a “Mobile AppsAcademy” in the search for developers and entrepreneurs to develop innovativemobile applications for the growing smartphone market in the MENA region 95 .94UNCTAD, Information Economy Report 2011eMisr National Broadband Plan Annexes 132

E-content Related to EducationVarious public institutes and private companies as well as 17 universities in Egypt areengaged in the development of e-content. A unified university library catalogue(containing at present over 4 million bibliographic records, including all theses), usingcustomized software, is being created and compiled into a digital library. Efforts arealso underway within the EEI, assisted by others including the private sector, tocreate an e-learning platform to support the delivery of learning experiences,especially for the youth. NTI has planned to publish ICT technical material on-linefree of charge and to make this available to Arab youth in Egypt and other Arabcountries. The Egyptian E-Learning University (EELU) is developing content for adultlearners.Partnerships with international companies or organizations have resulted in 350 E-learning centers (with CISCO); 70 e-courses; and 100 testing centers in universitieswith UNESCO assuring quality control 96 .Content Related to TourismMCIT in cooperation with Luxor government, created a new formal website for The site was consolidated with a library of Luxor city photos,history of Luxor city, culture, investments, development and its local festivals, maps,safari trips on the Nile, etc.A sound and light portal was created to allow visitors tochoose shows and book tickets, buy souvenirs and pay through the Internet. Itcontains photo galleries for the various archaeological and a database for heritagefilms.E-Government ContentThe development of e-government content is evolving rapidly as part of an effort bythe Ministry of State for Administrative Development to enhance public servicedelivery. One initiative aims to extend e-government across the country via morethan 500 Government service centers 97 . These centers aim to help citizens submitinformation on-line or obtain forms that subsequently can be completed at homeand mailed to the relevant authority.Other initiatives have made official documents, such as the official Gazette andcourt rulings, available on-line and have computerized the judicial process. TheMinistry of State for Administrative Development is furthermore developing a portal95UNCTAD, Information Economy Report 201196Ibid97IbideMisr National Broadband Plan Annexes 133

for e-procurement, which will eventually enable 98 supplier registration, publication ofgovernment tenders, on-line tendering and centralized procurement of commongoods.Content of Relevance to the General PublicEfforts to encourage content development through the IT Clubs and otherwise atthe local and community level are ongoing in partnerships with NGOs. For example,IT Clubs have been contributing local content on their websites for the past fewyears. Their “community development portals” have been developed in severalcommunities. Portals for agricultural information and for SMEs have also beencreated.Creation of Arabic Language Web DomainsWith the agreement of the ICANN authorizing the creation of non Roman characterWeb names, Egypt became the first country in the world to launch an Arabicdomain name 99 . This should open new ways to expand e-services, boost the numberof on-line users and enable Internet services to penetrate new market segments byeliminating language barriers. By allowing the localization of domain names usingArabic scripts, it is predicted that the reach of the Internet will increase. Arabiclanguage speakers will have greater access to content in local languages and oflocal relevance.98UNCTAD, Information Economy Report 201199IbideMisr National Broadband Plan Annexes 134

Annexe 2Broadband and Job Creation

Case Studies on Broadband and Job CreationInvestments in telecommunications infrastructure not only provide a short-term boostto the economy, but also lay the groundwork for long-term improved growth andemployment perspectives. Indeed research findings indicate that telecominvestment has an impact far beyond the scope of the industry itself, promotinggrowth in adjacent industries as well as creating brand new industries.Telecommunications investment accounts for up to one third of economic growth(Wieck et al, 2010).Spurring robust job growth, lowering the unemployment rate, and creating adynamic job market are few of the main macro-economic concerns that Egypt iscurrently facing and trying to address through its public policies. On the other hand,as mentioned above, the broadband Internet access can play a major role inenhancing well-being among citizens. Taking these into consideration, job creationis indeed a topic to which broadband makes a contribution.Initial research for the purpose of this plan could not find many studies on therelationship between penetration and promotion of broadband services and jobcreation opportunities. This is probably because broadband is a relatively new issue,approximately ten years old, even in well-developed countries. This Annex citesthree levels of previous case studies; nationwide research, provincial-level research,and city-level research.1. Nationwide Research - Case of USPociask examined, in his 2002 research on the US market, the important stimulativeeffects that IT investment had had on the economy, and highlighted the need for ITinvestment as an economic stimulus for the future. More specifically, it examinedthe economic impact of building a robust nationwide broadband network andestimated the number of new and permanent jobs that could result directly fromthat action, as well as the indirect job gains once that network was in use. Notably,he concluded that:An estimated total of 1.2 million new permanent job opportunities will becreated in the US, including,o 166,000 job opportunities in the telecommunications sector,o 71,700 manufacturing jobs generated by the direct purchase ofnetwork plant equipment as well as customer premise equipment, and974,000 indirect job opportunities created if a next generation networkwas deployed.eMisr National Broadband Plan Annexes 136

Box 1: Broadband Investments To Spur Job Creation and EconomicOpportunity in Rural AmericaToday, even in one of the most developed countries like the US, thebroadband deployment is highly important from the viewpoint of jobcreation particularly in rural areas. On April 20, 2011, the United StatesDepartment of Agriculture (USDA) announced around USD 40 million in loansfor broadband improvement projects in Georgia, Illinois, Iowa, Kansas, NorthDakota, Montana, and Oklahoma. Agriculture Secretary Tom Vilsackmentioned, “Investment in broadband technology will create jobs across thecountry and expand opportunities for millions of Americans. Broadbandprovides the opportunity for rural Americans to receive improvededucational services, health care, and public safety. These USDAbroadband loans provide rural communities the level of financial assistancerequired to make them full partners in the digital age and keep themcompetitive on a local, national and global level.”The telephone companies and cooperatives that have been selected toreceive the financing would construct more than 1,000 miles of Fiber-To-The-Premises (FTTP) systems. USDA Rural Development funded more than 16,000miles of FTTP projects during fiscal year 2010 to upgrade, expand or replacenetworks and perform system maintenance.Through its Rural Development mission area, USDA administers and manageshousing, business and community infrastructure and facility programsthrough a national network of state and local offices. These programs aredesigned to improve the economic stability of rural communities, businesses,residents, farmers and ranchers and improve the quality of life in ruralAmerica. Rural Development has an existing portfolio of nearly USD 149billion in loans and loan guarantees.Source: News Release No. 0173.11 by USDA on April 20, 2011, titled“Agriculture Secretary Vilsack Announces Broadband Investments To SpurJob Creation and Economic Opportunity in Rural America”2. Provincial-level Research - Case of California, USVan Gaasbeck et al conducted a study in 2007 on Economic effects of increasedbroadband in California 100 , US, and forecasted three scenarios; a moderate level, astrong level, and a dramatic level of broadband growth scenarios, in terms of tenyears cumulative job creation and payment increase compared to the baselineforecast of economic growth. More specifically,100The population in California is approximately 37 million (2009 Estimate), from National Broadband Plan Annexes 137

Even in a moderate level of broadband growth scenario, 57,000 jobs and USD7 billion of payroll can be generated. In a strong level of broadband growth scenario, 1.8 million jobs and USD 132billion of payroll can be generated. In a dramatic level of broadband growth scenario, 2.2 million jobs and USD267 billion of payroll can be generated.This illustrates the strong correlation between broadband growth in California andthe number of new job opportunities created. The study also concludes that even asmall increase in broadband use could generate a substantial cumulative gain overthe next 10 years compared to what could be expected under business as usualconditions.3. City-level Research - Case of Cape Town CityA city-level research was conducted in Cape Town, South Africa (Standish et al,2007). In the macro-economic benefits section of the detailed analytical study, themacro-economic estimates relate directly to the actual cost of developing theinfrastructure, as well as the operating cost and productivity gains that businesswould experience. Thus all the backward economic linkages for construction andmaintenance and the forward economic linkages where construction workers andothers spend their salaries, were theoretically included in the research. Their findingon employment effects is that, after the broadband rollout project, the total directand indirect jobs were expected to amount to 2,412 in 2007-2008 and 4,837 in 2008-2009. It was also expected that 14,828 direct and indirect jobs would be created in2010 and nearly 252,000 by 2027 in the City of Cape Town, whose population isapproximately 3.5 million 101 .1012007 data. Obtained from: National Broadband Plan Annexes 138

Annexe 3Acronyms

ADSLARPUBWACAPEXCAPMASCPEDSLAMEBMMFTTxFWAGDPGoEICTISPLLUM/SMEMCITMNONPVNTRAOPEXPAPPCPoPPPPPSTNQoSSMESPVTEVASVATWMANAsynchronous Digital Subscriber LineAverage Revenue Per userBroadband Wireless AccessCapital ExpenditureCentral Agency for Public Mobilization and StatisticsCustomer Premises EquipmentDigital Subscriber Line Access MultiplexerEgyptian Broadband Market ModelFiber to the x; x: Node (N), Cabinet (C), Building (B) and Home (H)Fixed Wireless AccessGross Domestic ProductGovernment of EgyptInformation and Communication TechnologyInternet Service providerLocal Loop UnbundlingMicro, Small and Medium EnterprisesMinistry of Communications and Information TechnologiesMobile Network OperatorNet Present ValueNational Telecom Regulatory AuthorityOperational ExpenditurePublic Access PointPersonal ComputerPoint of PresencePublic Private PartnershipPublic Switch Telephony NetworkQuality of ServiceSmall and Medium EnterprisesSpecial Purpose VehicleTelecom EgyptValue Added ServicesValue Added TaxesWireless Metropolitan Area NetworkeMisr National Broadband Plan Annexes 140

More magazines by this user
Similar magazines