The new structure of lowering Internet prices

We confirm certain baselines:

1. We continuously thrive towards making the Internet more available and increasing the subscribers’ base, which is what happened in the Free Internet Initiative in 2002 and the Broadband Initiative in 2004. With today’s restructuring, the purpose is not constraining, but increasing the availability of the Internet.
2. We are putting the basis for a new industry in the field of providing value added and transmission services as a building block for the information society, in addition to having economic basis and business models that should be considered.
3. The price of LE 95 a month for the lowest ADSL speed (256 kb/sec) is considered as expensive for many low-income family strata, whom we encourage on the other hand to use the Internet, especially since the price of computers has become as low as LE 1300, which is often paid in installments, while laptops are for less than LE 3000. Therefore, it was necessary to reduce Internet prices to enable these families to use the Internet; a right that they should not be deprived of. As well, this was a chance to deal with the negative phenomena that have arisen such as sharing lines between the different houses, which has in turn led to low quality service and extensive user complaints, especially since the ADSL service is connected with the fixed lines and is dedicated to the rented apartment and to the needs of only one family in the whole world. In Egypt, while the officially registered homes to the ADSL services are 300 000, the actual number is the double through illegal sharing of ADSL lines, which also negatively affects our international developmental indicators.
4. All current subscriptions, such as the basic subscription LE 95 per month for the speed of 256 kb/sec, will remain as is and will not be cancelled. However, we are warning that illegal sharing of ADSL lines must be stopped for the benefit of everyone, and so that in the future we will be able to provide value added services for subscribers through promotional offers. When sharing the lines it will be difficult to offer these new services, which relate to the actual use of the Internet and the electronic payment system. Sharing the ADSL lines makes it difficult in issuing the bill for the single family.
5. The new structure for subscription offers a reduction in prices for families wishing to subscribe for the ADSL service for a maximum of LE 45 a month, and companies may wish to compete to even lower this price. A basic subscription fee was determined only to ensure a certain level of price for new subscribers, where most of them come from low-middle income families. This fee is equivalent to 8 USD, which is considered one of the lowest rates worldwide. We preferred that there would be no download limit; however, with the shared lines it is impossible to distribute the subscription fee. It was also discovered that the average use of the Internet for a family in the case of browsing the web, checking the email, interactive services and files does not exceed 2 Gigabytes per month for unlimited hours. If a family would like to use more of the Internet for downloading movies etc. it would have to pay LE 10 for every extra Gigabyte.
6. This system will be implemented for one year starting September 2007, and we will give a few months as a transitional period for the stability of accounting systems. We will follow up the development of the market closely for a few months, hoping that the market would regulate itself, and the illegal use of the shared lines between homes would come to an end, so that the consumer would enjoy a reasonable service in terms of price and quality. The National Telecom Regulatory Authority will follow up with accounting systems in private companies; hence, there is no need to worry about this issue.
7. The new structure also includes prices of other speeds, where some companies have announced the price LE 90 for the speed of 500 kb/sec, and LE 125 per month for 1 Gigabyte, and all of these represent directions to reduce prices with varying download limits. NTRA does not object that companies would compete through making different offers with different speeds, however, without NTRA’s or Telecom Egypt’s support. As for companies and institutions, there is for example a subscription for a speed of 2Gb with no download limit for a preliminary price of LE 760 per month since it is suitable for companies and institutions. We expect in the future to find promotional offers between mobile and ADSL and between fixed line and ADSL due to the new prices. Some companies have suggested an alternative offer, which is 60 hours a month for LE 45 for those who might be interested.
8. With leaving the prices to the different speeds we welcome promotional offers between mobile and ADSL and between fixed line and ADSL, which will lead to even more reduction in prices, and a wider subscriber base.
9. NTRA together with the companies seeks to put an independent system for internet cafes, which ensures that there are no constraints on downloading, and gives them new advantages, and we assure that any current contracts are continuing and will be respected.
10. In order to arrive at this reduction in prices, Telecom Egypt had to reduce prices of some of its services for Internet Service Providers. Moreover, support from the Universal Service Fund at the NTRA was given to Telecom Egypt to compensate these reductions directed to the users. There was no compensation from the Universal Service Fund paid directly to the ISPs but these were only facilitations made by Telecom Egypt.

It is worth mentioning that the support previously given to the LE 95 per month scheme for a speed of 256 kb/sec is ongoing for the current subscribers. Moreover, the support will be directed to the new subscribers to the LE 45 class per month with a download limit of 2Gb, while competition in prices will be left open to the higher speeds depending on the companies’ desire. This way, current and new users will benefit from the competition and it is possible for companies to issue different subscriptions for new subscribers with different speeds, without NTRA’s and Telecom Egypt’s support, as all support is directed toward the most needy class (LE 45) under the conditions mentioned above.