Egypt's ISPs fight fierce competition
The recent merger of Link Egypt and InTouch, two of Egypt's major Internet service providers (ISPs), has shaken the Egyptian ISP market, according to Al Ahram Weekly. The merger, which resulted in the creation of LinkdotNet, has motivated several ISPs to follow suit. Other ISPs are still pondering the results of the merger, worried it might put them out of business.
"Small ISPs, especially, are finding it increasingly difficult to operate and compete in the midst of large companies operating in the market," said Hisham Abdel-Fattah, marketing manager at Internet Egypt, the country's first privately owned ISP.
He added that he doubts other ISPs will be established in the near future due to the fierce competition and the high cost of the advanced technology an ISP requires. "To establish an ISP the minimum bandwidth needed is 6 mega-bytes which is very expensive to acquire," Abdel-Fattah said.
A wide bandwidth connection is essential to providing fast service. He added that "a company must provide Internet services at a low price, making it difficult to cover its start-up costs, not to mention realizing profits."
Abdel-Fattah expects that the future of ISPs depends on the development of e-commerce in Egypt. He predicts that the provision of Internet access will become less expensive and "the [ISP] companies will eventually depend on commissions from on-line commercial transactions."
The Egyptian Internet market, which was initiated a few years ago by the Cabinet Information and Decision Support Center (IDSC), is estimated to comprise an estimated 67 ISPs, serving 50,000 Internet subscribers. The number of subscribers is increasing at an annual rate of 30 percent.
This annual growth rate is expected to rise further with the increased prevalence of the Internet in various aspects of daily life, according to Shahira Othman, business development assistant manager at Soficom, a privately owned Egyptian ISP.
"A few years ago, the Internet was a rare commodity. Now it is everywhere. It will probably become as popular as mobile phones within the next five years. Currently it is available at schools, universities and in many workplaces; everywhere, and it is proving to be indispensable," Othman said.
Explaining the challenges faced by ISPs, Othman emphasized speed and reliability. "ISPs compete to provide the best service at the highest speed. This is the only way to keep customers and develop and maintain a good reputation in the ISP market," Othman said.
For its part, the government is working to boost the Internet market by reducing prices for connection to the Internet to encourage the establishment of more ISPs. The aim is to meet the target of one million subscribers within the next few years.
Representatives of ISPs, however, are thinking about growth beyond the government's goal. “Egypt should be looking for more than that [one million subscribers]," according to Ahmed El-Sobki, marketing manager at Egypt for Information Technology, an Egyptian joint venture ISP.
Putting the percentage of subscribers in Egypt in an international context, El-Sobki said a few years ago that "the Israeli Knesset was in turmoil because the number of subscribers in Israel seemed low compared to other countries. Its ratio of Internet subscribers to the population is 1:10. In Scandinavia, the ratio is 1:4. However, in Egypt, we are aiming to reach a mere 1:60, [the ratio implied by the one million target] which is very small."
El-Sobki expects that the number of Internet subscribers in Egypt will double in the next few years. He added, however, that it is difficult to assess the actual number of Internet users. "One Internet dial-up connection might have many users. For example, if one family member obtains a dial-up connection, all family members can use it. Thus, it is estimated that the average ratio of Internet users to a single account is 8:1."
He added that the ISP market could accommodate more companies if some provide service outside of Cairo and Alexandria. The majority of ISPs are located in the country's two largest cities with almost no ISPs in other districts. — (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)