When it comes to the mobile phone industry, it remains unclear who will laugh last, argues Dena Rashed
-- businesses or customers
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ETISALAT DISPLAYING THE 3G TO THE CROWD AT THE ICT (clockwise from top) watching satellite channels on mobiles; video calling; the wireless camera
Whether they are used for purposes of business or pleasure, or, in many cases, as a way to kill the time, mobiles are one of Egypt's most lucrative businesses. Since their inception in 1998, Mobinil and Vodafone -- the two mobile companies in Egypt -- have managed to attract over 18 million subscribers, raising questions about market capacity and mobile phone dependency in Egyptian society.
Perusing any one person's mobile will reveal the extent of the average Egyptian's attachment to this gadget: contacts, calendars, reminders, snapshots and notes are all there. Using them for phone conversations is even more telling, with Egyptians spending millions on mobile phone bills every month and prepaid card sales growing and growing. Business is booming. And so Etisalat, the third operator who won the LE17 billion bid to enter the market this March, expects to secure over 10 million subscribers over the next three years -- or so its CEO, Saleh El-Abdul, announced at the Cairo Information and Communication Technologies (ICT) exhibition last week.
The campaign will focus on the Advanced Third Generation Technology 3.5G, which allows the simultaneous transfer of voice and digital data -- including video conferencing, TV broadcasts, full-track music and corporate services. Its instant messaging service allows instant chat; and high-speed internet is available. Such features -- it is believed -- are bound to attract customers to the network.
At the ICT, representatives of the three operators attended a round-table to discuss market potential and the future business in Egypt; they disagreed as to whether the market is mature enough for the 3G or 3.5G. According to the moderator, Osama Kamal the managing director of TradeFairs International, who has been organising the exhibition since 1996, the market has grown and its needs expanded: "When Egypt Telecom, the first operator, started in Egypt in 1996, many people thought mobiles would be a luxury; they didn't even expect that the first phase of 80,000 subscribers would be covered, but look where we are ten years later... The same went for the introduction of SMS into the market; some argued no one would take the time to write messages in Arabic -- they were proven wrong."
The latest technology, Kamal added, is no luxury: "When a new technology is created the need for it emerges. Mobiles are certainly the principal means of communication for millions of Egyptians." But Etisalat will not be the only network with the new technology; Vodafone has puchased a 3G license for LE3.4 billion, promising its 8.7 million customers the latest in the mobile world. Omar El-Sheikh, Vodafone's corporate affairs director, says the round-table discussions indicated that the business market is need of the technology, though demand might not start out being very high: "We believe we made the right choice; G3 will eventually be as vital as portable PCs."
For his part the president of the Egyptian National Telecommunications Regulatory Authority (ENTRA), Amr Badawy, stressed the significance of mobile phones for the Arab world at large: "Businesses have generally benefited from the introduction of mobile phones. With a 10 per cent increase in the use of mobiles, there is an expected one per cent positive impact on business."
But the debate that has been raging for weeks now concerns, rather, Mobinil, serving 10 million subscribers; the company decided not to purchase 3G technology. According to Alex Shalaby, president and CEO, compared to its returns, the cost of the license did not prove to be sufficiently rewarding: "2G provides almost the same services except for video calls. Paying LE3.5 billion plus other costs of up to LE4.5 billion is simply too expensive." The company, he argued, would rather improve existing services with the same sum; and customers, said, can have TV broadcast and access to the internet with existing "Edge" technology, adding, "With almost 45 per cent illiteracy, it is not expected that 3G would have much effect." Badawy argues that the Edge technology, a prerequisite for 3G, requires payment for the license -- something Mobinil is contesting through arbitration.
Most of the debate right now concerns 3G, its benefits and as- yet-undisclosed cost. Whether it will be affordable for those who might be interested in it will only be revealed once it is introduced next month, but as Mustafa El-Gabaly, a senior associate at Pal-Tech who also participated in the discussion, "3G is not geared towards the low-income consumer." Still, in the bid to mobilise as many subscribers as possible before Etisalat enters the market, offers by Mobinil and Vodafone have attracted 600,000 subscribers in the last month alone: "When there are only two companies in the market, we can expect them to pool forces and form a front against the consumer; that will no longer be possible, which is why we expect the upcoming competition to benefit the consumer."
Shalaby agreed: the competition will increase flexibility and lower prices -- the hope of consumers like Ahmed Abdullah, 33, whose monthly bill of almost LE1,000 is considered a high one, especially in the light of 80 per cent of his calls being unnecessary: "Although the government regulates the cost of services with the mobile phone companies, I hope the Etisalat will compete, lower its fee and improve services." Abdullah switched from one company to the other more than once in nine years. A more pessimistic mobile user, financial analyst Dina Lotfy, argued that with a market like Egypt's that is full of subscribers, "we cannot expect the companies to reduce call costs."
For his part engineering student, Ahmed Mabrouk, one of the visitors to ICT, who was there to have a look at the new technology, expressed his dismay with a society based entirely on consumption: "We don't have companies that manufacture mobile phones or any of their accessories -- we are only using the devices for our entertainment. We produce nothing, we just consume."