Revolutionary pricing model to shake up Egyptian ISPs
Egypt's 60 Internet service providers (ISPs) are closely watching the government’s initiative to offer free Internet access early next year. The government expects that lowering the cost barrier would boost Internet usage in the country, however, experts question whether the current infrastructure is sufficient to handle such a surge.
The proposed free Internet model means an end to the monthly subscription fee that ISPs currently charge their customers. Web access would instead be offered for the price of a local call. At current rates, an hour of Internet connection will cost one Egyptian pound ($0.23). According to this model, ISPs will enter revenue sharing arrangements with the national fixed-line telephone monopoly Telecom Egypt (TE). Revenues from Internet dial-up calls would be divided between the ISPS and TE, with 70 percent going to the the service providers and 30 percent to the carrier.
Apparently, TE will be giving up a great deal of its revenues. However, heightened demand for Internet services is expected to compensate for these potential losses. As many as one million Egyptians are expected to go online following the free Internet move. According to figures released by the Mena Report Research Department, Internet usage in Egypt exponentially grew from only 72,000 in 1997 to 573,000 in last year. The figures are based on the number of registered subscribers and the assumption that about four users share every account.
When free Internet becomes a reality, competition between ISPs will surely be stepped up. With no subscription fees charged, users could frequently switch providers in search of a better deal on a fast, high-quality connection. In addition, only a handful of Egypt's largest ISPs will be licensed to operate in cooperation with TE, leaving toady's smaller players with the choice of merging or evaporating from the market.
Since Internet was commercialized in Egypt in 1994, four players emerged as the largest, most established ISPs, standing the best chance of staying in the game. The four--LinkdotNet, Internet egypt, GegaNet and Nileonline--are licensed to deploy a network and provide Internet access either directly to users or by selling or leasing bandwidth to smaller ISPs. — (menareport.com)
© 2001 Mena Report (www.menareport.com)