Are Egypt’s consumers benefiting from lower internet prices?
 
 
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As Egypt’s government issues new internet price guidelines for telecommunications companies, will the changes translate into benefits for users on the ground? 

 

Although some users have noticed differences in download speeds and capacities since the new prices were released, others worry that companies are still offering the old packages and limited bundles, and that the ministry cares more about the interests of companies than consumers.

 

The Ministry of Communications and Information Technology (MCIT) issued reduced internet prices in July, amid mounting pressure from consumers and the market, in an effort to increase the number of users and internet penetration rate.

 

Internet service providers in Egypt can choose whether or not to offer the lower-priced bundles, as the new prices aren’t binding.

 

To stay competitive, most providers have had to reduce their prices and diversify the packages they offer. Still, many customers may not even be aware of the new prices, as they haven’t been widely marketed. The customer service departments of TE Data, Vodafone and Etisalat, say customers are only notified of the new prices when they pay their monthly bills.

 

The telecommunications sector in Egypt has been experiencing a period of stagnation since 2011, after being in the spotlight for years under the cabinet of former Prime Minister Ahmed Nazif, who came from a communications background.

The government hasn’t focused on the sector since the revolution, according to Khaled Hegazy, external affairs and legal director at Vodafone Egypt. This has delayed the introduction of 4G, which was planned for 2014.

“It would be difficult to find anyone who disagrees that the quality of all the services provided today in the telecoms sector is not satisfactory, be it in mobile or fixed internet, or fixed voice,” Khaled Sherif, deputy to the minister of communications previously told Mada Masr.

 

Egypt is ranked among the world’s slowest countries when it comes to internet speed, with the number of ADSL subscribers only reaching 3.27 million by March 2015, according to the ministry’s monthly bulletin. Young mobile users continue to demand lower internet prices at higher speeds to match global standards.

 

In late June, consumers launched a social media campaign, calling on citizens to briefly boycott telecoms operators by turning off their mobile phones from 5-10 pm in protest against deteriorating services and quality, high rates and the government’s control over the sector’s infrastructure.

 

Facebook page, “Internet Revolution Egypt,” has more than a million followers, and was used as a platform to mobilize the boycott, garnering significant media attention and evoking a response from ministry officials. Those responsible for the campaign reportedly met the minister of communications and information technology in April to discuss possible options. The reduced internet prices followed a few weeks later.

 

New prices, old bundles

 

With the introduction of the new prices, the ministry aims to increase the number of internet users by 500,000 by the end of 2015, and 1.5 million users by 2016, Reuters reports. By June 2015, the number of ADSL users in Egypt reached 3.51 million, an annual increase of 22 percent, according to a monthly report by the ministry.

 

The ministry is also aiming for a 50 percent internet penetration rate by the end of 2016, from the current official rate of 14 percent. Unofficially, the penetration rate is estimated to reach 34 percent, due to line sharing, in which users open up their connections for others to use.

 

Since the new prices came into effect at the start of August, the number of users has increased by 31,000, Communications Minister Ali Negm told Reuters.

 

However, Sarah Shabayek, senior telecoms analyst at investment bank CI Capital, doesn’t think the new reduced prices are the best method for accelerating market growth.

 

“The new internet prices do not address the two major contributors to increasing the number of internet subscribers in Egypt: The youth segment, which represents 50 percent of the population, requires a high speed connection with ample download volume. Also, the line sharing phenomenon is a structural hurdle that requires campaigns and targeted tactics, not a price reduction,” Shabayek explains.   

 

The main internet provider in Egypt, TE Data, is owned by the country’s only fixed-line operator Telecom Egypt, in which the government has an 80 percent stake. The internet service provider has a market share of around 65 percent, accounting for around 70 percent of the country’s internet capacity.

 

Leading the way with the reduced prices is TE Data, which announced its new bundles just days after the ministry’s decision. The new packages, however, do not replace the old ones, but serve as alternatives. TE Data still provides its old bundles for users who prefer not to have a certain quota, however, they have to pay the more expensive rates.   

 

The new internet bundles provide the same speeds at lower prices, while limiting the download capacity, whereas the old packages are costlier, but with unlimited usage.

 

The lowest package begins at LE50 for 1 Mbps, with a download capacity of 10 GB, after which the speed slows to 256 Kbps. This replaces the old unlimited speed of 512 Kbps for LE95, meaning a cost decrease of 47 percent and a speed increase of 100 percent.

 

For LE95, consumers can now get a download limit of 100 GB at a speed of 1 Mbps. Meanwhile, LE140 offers 150 GB at a 2 Mbps speed, whereas it used to offer an unlimited 1 Mpbs bundle. The highest package is priced at LE350, offering 300 GB at a speed of 8 Mbps.

 

Negm previously said that around 40 percent of fixed internet users in Egypt use the 512 unlimited package, and around 20 percent don’t even consume 10 GB per month, according to the state-owned portal EgyNews. The new prices will benefit around 560,000 users, allowing double the speed at a much lower price.

 

Shabayek says, “young people will not be satisfied with a LE50 bundle at a 1 Mbps speed that has only 10 GB of download capability.” She adds, “This price point existed before under the ‘Talqa’ scheme, offering 5 GB of downloads at a much higher speed of up to 8 Mbps. The additional benefit is marginal, if not absent altogether.”  

 

Those who share their internet connections, Shabayek says, “care about having unlimited packages, as more than one house shares the internet, so they can get the same package they are used to with a larger capacity for a lower price.”

 

While it might benefit users, Shabayek says it may harm data companies, and it doesn’t provide incentives for more people to sign up individually, one of the ministry’s aims for increasing penetration.

 

According to media reports, Egypt’s other internet service providers were slow to implement the new prices in an attempt to pressure for a reduction in rental fees.

 

Mobile and internet infrastructure is wholly owned by Telecom Egypt, and other telecoms companies pay rental fees to the state-owned operator, a sum that constitutes around 30 percent of its annual revenues, Shabayek previously told Mada Masr.

 

By the first week of September, Vodafone and Etisalat began offering the newly priced bundles.

 

LINKdotNET, an ISP that was acquired by the country’s third mobile operator Mobinil in 2010, are yet to make any announcements regarding the matter.

 

Etisalat introduced what they called unlimited packages. However, their fair usage policy makes these bundles no different from TE Data’s limited packages.

 

The fair usage policy, applied in Egypt since 2009, states that when a user consumes more than a certain limit, the speed goes down to 256 Kbps for the 1 Mbps bundle, and to 512 Kbps for the remaining speeds. The limit for usage through Etisalat is 100 GBs for the 1 MB bundle, 150 GBs for both 2 and 4 Mbps bundles, and 200 GBs for 8 Mbps. Vodafone, meanwhile, sets fair usage of 100, 150, 200, 300 GBs for the 1, 2, 4 and 8 Mpbs bundles respectively. TE Data does not apply a fair usage policy.

 

For LE95, users are offered an internet connection at a speed of 1 Mbps with a 100 GB fair usage limit. The speed of 2 Mbps gives 150 GB for LE110, after which the speed slows to 512 Kbps. For a 4 Mbps connection, users now pay LE160, allowing them a 150 GB quota of fair usage, and the highest speed is 8 Mbps for LE250, giving users 200 GB. 

 

Etisalat created new packages at much higher speeds with more restricted download quotas that don’t exceed 45 GB, called Tornado. It allows a speed of 10 Mbps for download quotas of between 5 GB to 45 GB and prices ranging from LE50 to LE149.

 

Days later, Vodafone followed suit. The company’s offers speeds of 1, 2, 4 and 8 Mbps priced at LE95, LE140, LE220 and LE350 respectively.  

 

Vodafone also applies a fair usage policy, and despite also calling their new bundles unlimited, the speed they offer have download quotas ranging between 100GB to 30GB, after which the speed slow to 512 Kbps. The exception is the 1 Mbps bundle, in which the speed slows to 256 Kbps after the 100GB is used.

 

Vodafone’s old internet prices are still in place, which they say is due to the fact that some of the old subscribers are on nine-month plans and cannot switch until their contracts are finished. Some users feel they don’t need the higher quotas and are okay with what they have, Vodafone adds.

 

TE Data still provides their old prices alongside the new ones, offering an internet speed of 1 Mbps with unlimited download capacity for LE140, while for LE220, the speed goes up to 2 Mbps, also unlimited, and for LE380 consumers can get a 4 Mbps speed. 

 

Their special package, “Talqa,” is also still available, where for LE75, internet users get a bundle of 5 GB download capacity, but with a speed that can reach up to 8 Mbps. For LE100, the capacity goes up to 15 GB, LE150 for 40 GB, LE250 for 100 GB and LE350 for 160 GB, all at the same speed.

 

Renting the infrastructure

 

Questions still stand over whether Telecom Egypt gave the mobile operators new rental fees for infrastructure. 

 

Hegazy told Mada Masr that an offer was indeed sent to Vodafone, and based upon this, their new internet prices were announced. However, Shaymaa Hasheesh, of Telecom Egypt’s media office, told Mada Masr that no offers were sent out yet, and when this happens, they will immediately announce it.  

 

According to Egypt’s telecommunication regulation law of 2003, Telecom Egypt is obliged to offer the same rental prices to all ISPs as the sole owner of the infrastructure, in which case, Etisalat should also have received an offer with the new fees. An official from Etisalat refused to comment on the matter, however, a source told the privately owned Al-Masry Al-Youm newspaper that the company has not received any offers yet. ISPs are still capable of reducing their prices, he added, even without a reduction in rental fees, since their profit margin allows for it.  

 

According to privately owned Al-Shorouk newspaper, Telecom Egypt rents out the internet infrastructure to ISPs in Egypt for around LE39 for the unlimited 1 Mbps speed, LE55 for the 2 Mbps unlimited speed, LE85 for 4 Mbps and LE135 for 8 Mbps.

 

A long delayed and sluggish upgrade of the infrastructure largely contributes to the notoriously poor and deteriorating internet services in the country.

 

Hegazy previously told Mada Masr that, even though they try to develop their networks and capacities, they still have to use the same infrastructure as other internet providers in Egypt, which needs to be developed. 

 

Telecom Egypt started replacing copper cables with upgraded fiber cables in 2014, but Hegazy says they started very late and are only replacing the end access points. “The backbone is not being upgraded,” he says.

 

Are users satisfied?

 

When asked about their experiences with the new packages, two users expressed their satisfaction so far.   

 

Mohamed Serag, 28, subscribed to TE Data’s new 2 Mpbs package. “I download around one 800 MBs movie every two days and watch YouTube for almost two hours daily. My first month is done and my quota was not consumed. It is also pretty easy to check how much of the package is left,” Serag says.   

 

Ahmed Hossam, a 21-year-old Twitter user, upgraded from the unlimited 512 Kbps package to the 2 Mpbs bundle with 150 GB download limit. “The speed difference is extremely noticeable. I browse the internet all day for my work. I also download a 1.5 GB movie every two days. It has been three weeks so far and there is still 60 GB left,” Hossam says.

 

“I will definitely subscribe next month as well.”

 

The admins of the Facebook page that advocated for the mobile boycott are unhappy with the new internet prices, calling them “a fraud.” They don’t think the new packages will be good for consumers or that the limited packages and download capacities will be enough for usage.

 

They also commented on the fact that the old internet prices are still available, saying that what they need is reduced prices for the unlimited bundles, not new limited bundles with lower prices. The new limited packages did not solve anything, they say in a statement, claiming that the ministry cares about the interests of telecom companies in Egypt, and not consumers.

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