In June 2000, the MCIT, in cooperation with operators, vendors, and major telecommunications together drafted a "Telecommunications Master Plan" to expand Egypt's Telecommunications Infrastructure (ETI) over the next three years and serving as a blueprint for network evolution. The goal of the Telecommunications Master Plan is to modernize the core backbone of the sector through both expanding the capacity of the network, and upgrading the current circuit switching technology to more efficient packet switching technology. The backbone will be based on an ATM/IP network to support integrated services (data, audio and video). The extra capacity will solve the bottlenecks and will enable Telecom Egypt to satisfy the high growth in demand by licensed operators in the long term, providing them with enough capacity to offer a wide range of integrated access services.
The plan is considered a mega project in terms of the amount of investment needed in the short and the medium terms. The primary estimates projected by the MCIT for the project approaches $1 billion. The Telecommunications Master Plan views Egypt's telecommunications market as a three-layered hierarchy consisting of:
1. Core services (outside plants, exchanges and international services, among others),
2. Co-location access services (mainly related to the provision of basic communications connections between a central exchange and an end-user (fixed-line and public telephony, mobile communications, Internet, data backbone, etc.) and
3. Value-added services (examples of value-added services are prepaid telephone cards, Internet access services and content provision.).
Telecom Egypt has already implemented the first phase of an ambitious project designed to increase the capacity of its core transmission network in Greater Cairo area using Dense Wavelength Division Multiplexing (DWDM) technology. This upgrade will expand the capacity of the core transmission network by 32 times the current capacity of the system without the need for installing new fiber rings in highly populated Cairo. Telecom Egypt has also installed a new ATM architecture for the core backbone, giving it greater flexibility and increased speed in the provision of integrated services like voice, video and Internet services.
Telecom Egypt (TE) is expected to invest up to LE21 billion ($6 billion) in improvements to rollout the fixed-line network, aiming at increasing tele-density (the number of telephone lines per 100 habitants) to 17 percent by June 2005. Improvement measures will include upgrading the network and system backbone, software and the billing system TE already signed several agreements with Ericsson, Alcatel and Siemens to develop its network.
In February 2002, TE signed an agreement with Ericsson aiming at the transfer of technology know-how and modernization of the network, through the implementation of the phase two for the development of the telecommunications infrastructure of TE and the installation of high-speed networks for the transmission of voice, image and data, and fiber optic networks. This phase will be completed by 2007. The agreement involves an investment totaling 200 million Euros.
In June 2002, TE signed also a cooperation agreement with Alcatel aiming at the modernization and upgrading of TE's network for the deployment of 1.5 million new fixed lines serving 10 governorates in the Delta and Alexandria ( Lower Egypt). Special attention will be given to the underserved areas, ending all waiting lists in the mentioned governorates, and will satisfy the increasing demand for fixed lines over the coming five years. The projects' total investment amounts for EURO 300million over a 5-year period.
Telecommunications Indicators
In July 2001, fixed lines reached 8 million, bringing the number of Access Lines in Service (ALIS) to 6.3 million lines, from 4.6 million in October 1999. This raises the utilization rate to 78.8 percent as compared to an average level of 85 percent globally with a tele-density of approximately 10 percent.
The installation of state-of-the-art digital switches, replacing old exchanges, has relieved the pressure on the overloaded fixed-line telephone switching network and has led to a higher quality of service. In 2000, the number of digital lines increased to 96 percent of the total telephone lines in the network, up from 86 percent in 1999. Currently, the percentage of digital lines in the system is approaching 100 percent.
In metropolitan Cairo, TE has plans to expand the telephone services by adding 15 new telephone exchanges to reach 69 from the current 54 before the end of 2001, to reach up to 75 exchanges in latter stages. TE is not only focusing on Greater Cairo but also has various installation plans in different districts and cities such as Alexandria, Tanta and Mansoura to be completed by the end of 2001, as well as the industrial cities.
TE also plans to expand its telephone services to reach 1,027 medium size villages all over Egypt through fiber optic cables. The number of villages that have telephone exchanges increased from 835 villages in 1999 to 965 in July 2001. From Jan 2000-June 2001, new 174 telephone exchange have been added to villages in Egypt. The TRA, acting on behalf of the Government, will share the costs with TE to link small villages to mother villages where distance exceeds 5Km, via special cables.
Tariff Restructuring
On March 17, 2002, TE announced the new tariff rebalance structure for fixed telephones in residences and commercial offices as of July telephone bill. It is worth noting that telephone tariffs in Egypt have not been changed since 1988.
The aim of fixed lines tariffs reformulation is to ensure more equity and fairness between and within governorates as well as introducing a more simplified tariff structure for long-distance billing.
The new tariff structure is the follows: For local calls the call set-up charge is 3 Piasters, and the cost per minute is 2 Piasters, for long-distance calls: the call set-up charge is 5 Piasters. The cost per minute for calls made over distances less than 60Km will be charged as follows: 10 piasters from 8am-8pm; and 8 piasters from 9pm-7am. The cost per minute for calls made over distances more than 60 Km will be charged as follows: 20 piasters from 8am-8pm; and 16 piasters from 9pm-7am.
The new tariff and billing system is based on monthly computation, but payment is made every three months during a period of 40 days. The monthly subscription fee is now LE5 for residential phones and LE10 for commercial phones.
The tariff for long-distance calls was distance-dependent (based on the multi-meter system and the period of the call ranged from 45 seconds to 3 minutes within the villages and cities of the same governorate). Moreover, the long-distance billing system that formerly comprised 11 categories now comprises only 2 categories: under 60 Km and over 60 Km of distance.
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