7 - 13 February 2002
Issue No.572
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Al-Ahram Weekly Online 7 - 13 February 2002 Issue No.572 |
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So what is the catch?
There really is not any such thing as a free lunch -- or, it seems, a free Internet connection. Yasmine El-Rashidi investigates the details of getting online for free and explains why local ISPs have little to worry about
It was one of those days for Nevine Hussein. She tried and tried again to log on to her prepaid, year-long Internet Service Provider (ISP) on what seemed to be a quiet weekday morning. Like on many other such days, it was a fruitless venture.
On that particular day, however, Nevine came across something different enough to bring some hope. That January day happened to be the country's first "free Internet" advertising splurge, with the newspapers screaming out loud that ISPs were now offering net access without any prepaid charge or bills apart from the cost of the phone calls themselves.
"Free Internet Now," one ad read. "Dial ..." displaying the telephone number.
Free Internet has been the buzz in local IT circles for almost a year now. Queries and question-marks lay over everything and anything about it. But it was launched at the region's largest telecommunications fair, Cairo Telecomp 2002, last month. The new type of net access was hyped as being the highlight of the event, and the big bang to get Egypt's new Communications and Information Technology (CIT) year off to a good start.
It was, one must admit, the only zeal and zest in an otherwise mundane trade-fair exhibit.
"The free Internet model hasn't quite taken off in the way it was expected to," Con O'Donnell, manager and co-creator of Egypt Cyber Centre's first incubated project, filgoal.com, told Al-Ahram Weekly. "Everyone expected that the number of people using the Internet would inflate overnight, that there would be a user explosion. Instead, it was like a balloon that deflated. Someone stuck a pin in it."
The problem, he explains, was the hype.
"It's like the whole portal affair," said O'Donnell, referring to excitement over launching Egyptian web portals, few of which remained profitable. O'Donnell himself fell victim to the portal fiasco. "We spent so much money on advertising that it failed to deliver," he explains.
"The government's main aim with the introduction of free Internet," O'Donnell says, "was to divert traffic from phone lines. Internet is data. Data is heavy. It blocks the local call centres. But this way, the data carriers bear the burden and local phone lines are freed."
This is an unusual response when compared to the standard explanation behind free Internet ("to increase internet user numbers") espoused by such ISP gurus as LinkDotNet's Khaled Bichara.
Nevertheless, the number of net users, it seems, will not be shooting up any time soon. "At the end of the day, nothing will really change unless the price of computers drops significantly," said O'Donnell.
He has a point. Freeing access does not mean that computers will fall from the sky into people's homes. Although free internet may indeed mean that more people are encouraged to buy computers, the "steal deals" of LE2,500 and LE3,000 ($600) apiece are still extraordinarily high and unaffordable for the majority of the population.
"But even if prices drop," continues O'Donnell, "the Internet will never penetrate more than five percent of the population, according to World Bank figures."
But while the mad rush to get a computer and get online may not have happened overnight, there has been a slight fluctuation in business for ISPs.
Bichara, for example, stressed to the Weekly that he had confidence in the long-term effect of the free access model on the economy. "The more users, the more services, the more e-commerce, leased lines, hosting and Web development. So every ISP will benefit," Bichara told the Weekly last July.
ISPs, for their part, attempted to consolidate their financial positions by offering lifetime access deals in preparation for the big event.
The question on everyone's lips now is: what happens next?
"ISP's are partnering with sites, for example, Link and Yallabina. They offer access through a number promoted on the site," O'Donnell explains. "ISPs used to make their money on subscriptions, even with the recent drop in prices. Now they'll make most of their money through value-added services."
They also can make some piastres through the data carriers, however. The business breakdown works as follows: ISPs, companies and websites buy 'free' numbers from Telecom Egypt. They then make a deal with a data carrier, such as EgyNet. Users are charged LE1 per hour for the phone connection. The government gets LE0.30 and the carrier the rest. ISPs channelling traffic through carriers are bringing business to the carriers, and therefore are given a share of the profits -- generally LE0.35-LE0.40 per connection hour.
A profitable loophole? Or a creative way for ISPs to save their hides?
"It is basically a revenue-sharing model between the various ISPs and Telecom Egypt," according to Shahin Shahin, an Arab Advisers Group analyst. "Under the new scheme, competition among ISPs will be tougher as it will be limited to the quality of their services, their marketing strategy and their brand name recognition."
ISPs, in short, need to get their thinking caps on and their action plans into fifth gear. They do not need to be too apprehensive, however. Nothing in this world, it has once again been proven, is entirely, utterly free.
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