In 2014, a 22-year-old call center agent launched an Internet Revolution. Fed up with Egypt's slow, unreliable internet service, he called upon fellow web surfers to join him in protest by paying their internet bills in coins, slowing down the cashiers at the country's internet service providers the same way the networks were slowing down their customers' data transfers. The movement garnered the attention of the media and succeeded in annoying ISPs, but two years later, Egypt still has some of the slowest, most expensive internet service in the world. The nation now has 48.3 million active internet users, according to the global research group We are Social's "Digital in 2016" report. But Egypt ranked dead last in online connection speed among a survey of 31 countries.

Experts have been eagerly awaiting new technologies to push Egyptian companies to offer better, cheaper internet--specifically, for the advent of 4G, or fourth generation, mobile service. Officials have been promising 4G, which is already available in much of the world, for the last three years. In May, the National Telecom Regulatory Authority finally announced that it would offer 4G licenses to Egypt's four mobile telecom operators, paving the way for them to offer web service that's reportedly three times faster than the current 3G network, which has become less and less reliable. With more and more Egyptians accessing the web via their mobile phones, "The 3G network is now overloaded. This is why it's slow and crashes frequently," says Hamdy el Laithy, the head of LENATEL for Telecom Services. As of March, there were some 96 million mobile subscriptions; 23 million of them using the 3G network to access the internet, according to government figures. "The additional capacity of 4G technology will allow higher speeds and more users," says Laithy. 

Egypt's three mobile operators, Orange (formerly Mobinil), Vodafone Egypt and Etisalat Misr, as well as Telecom Egypt, the state-owned fixed line monopoly, have first dibs on the 4G licenses, according to a statement by Orange. Minister of Communications and Information Technology Yasser ElKady told Reuters last month that if local telecoms don't opt to buy the licenses by the first week in August, they will be auctioned to foreign telecom firms.

But even as the licenses remain in flux, electronics manufacturers are  signing deals to make 4G smartphones, SIM cards and infrastructure components, which are cheaper to produce than 3G hardware. This could translate into more affordable smartphones for millions of Egyptian consumers. Only 3 percent of mobile phones in Egypt are currently estimated to be 4G compatible, meaning the market potential for 4G devices is huge.

Sooner or later, analysts agree that the market will demand 4G regardless of which firms end up providing it. Egypt is one of just three countries in Africa--along with Chad, Libya and Sudan--that don't have 4G technology yet. "We are late, because up until a few years ago decision makers believed that 3G would be fast enough," says Laithy, who adds that the upgrade was further postponed amid the confusion in the telecom sector over awarding a so-called fourth mobile license to TE.

4G, the next step up from 3G's promise of "mobile broadband," has the potential to enable things like e-government services, interactive learning and other things that depend on high-quality video streaming. "4G services will have positive societal and economic ramifications," ElKady recently told audiences at the Techne Summit in Alexandria in May, noting that faster internet speeds will help boost foreign investment and create a better business environment. "Internet is a major factor that companies look at before they come into a country. Without internet access, businesses can't reach their customers or suppliers," says Ismail Eid, the head of AG Projects, a local telecom solutions firm. Egypt ranked 101st out of 140 countries in terms of internet bandwidth in the World Economic Forum's 2015/16 Global Competitiveness Report. "Such a low ranking is very worrying," says Eid. 

How soon Egypt can start enjoying the benefits of 4G depends on how fast the existing network is upgraded. In 2015, Telecom Egypt, which owns and runs Egypt's internet infrastructure, announced it had begun work to replace the country's outdated and overloaded copper cable network with modern fiber optic cables, which are generally required to handle 4G speeds. TE was supposed to have connected 4 million customers to fiber optics by the end of the year, but by all accounts, very little of that work has been completed. Mohamed Abou Koraish, the secretary general of the Telecom Engineers Association, complains that only a few neighborhoods have been outfitted with the new cables. "TE is laying the optic fiber network haphazardly," he says. Concerns have been raised that Egypt's outdated network infrastructure could delay the rollout of 4G services. In the meantime, Orange relies on microwaves, which enable faster service than what's possible via the old copper lines. Still, "It is true that we need a fiber backbone," says Yves Gauthier, the CEO of Orange Egypt. Until the country is outfitted with a state-of-the-art network infrastructure, the quality of the 4G signal will not be optimum, he acknowledges.

In an interview, Gauthier told Business Monthly that 4G is the "normal and necessary evolution" of his company's services. "4G allows us to offer the customers high-speed internet in mobile; more than 100Mb/s compared to 30Mb/s," says Gauthier, who noted that the company has yet to determine the cost of necessary upgrades to the company's mobile towers. Meanwhile, the other local firms have yet to voice enthusiasm for the government's terms. Vodafone Egypt's CEO, Ahmed Essam, declined to comment on whether the company would sign on to the 4G deal by the August deadline, but he acknowledged that paying half the costs in hard currency was "a concern" at a time when local businesses are struggling to get their hands on dollars. "All our revenue is in Egyptian pounds," he says. Etisalat did not respond to requests for comment, but CEO Hazem Metwally told Al Masry Al Youm in late June that the price was "too high." Neither did Telecom Egypt respond to interview requests, but in a June interview with Al Mal, CEO Tamer Gadallah said the firm was exploring the possibility of taking out a bank loan in foreign currency to cover the cost of the 4G license. 

Whenever 4G does come online in Egypt, the new hardware sales that come with it promise to be lucrative, as consumers rush to upgrade their phones to achieve faster online connections. This wide open consumer market and relatively low local production costs are motivating firms to get in on the ground floor of the 4G hardware market. "The scope for business for us is endless," says Mohamed Ismail, head of technology development at Techno Mobile for Middle East and North Africa. He says his firm is currently in negotiations with the ICT ministry to build a local 4G mobile phone factory in East Port Said. "The minister seems enthusiastic," says Ismail.

Sico Technology has signed an agreement with China's Megan Group to build a 4G smartphone and tablet factory in the Borg el Arab industrial zone, with production set to start in January 2018. "Exports will be 65 percent of production," says Mohamed Salem, Sico's chairman. In May, Egyptian officials met with representatives from Chinese telecoms OPPO and Huawei to discuss building factories in Egypt to manufacture 4G network equipment and smartphones.

In India, as part of Prime Minister Narendra Modi's "Make in India" campaign, which aims to boost the manufacturing sector in an effort to create jobs and improve the economy, the state has provided tax breaks and other incentives to telecom manufacturers that open factories there. As a result, a number of major players, including Samsung and Oppo, have announced plans to move their assembly lines to the subcontinent. "Local manufacturers need something like that," says Salem. "We missed that opportunity when 3G phones were first introduced," he adds. "Market growth could have been huge if we got on the bandwagon early." But at the moment, all the mobile phones sold in Egypt are imported. Not only does this mean that phones are more expensive for consumers; in a country where mobile penetration is more than 100 percent, the lack of a local telecom manufacturing industry represents a vast missed opportunity.

"This technology will allow breakthrough services," says Koraish of the Telecom Engineers Association. In particular, the faster speeds of 4G should enable Egyptians to stream TV shows and movies online without enduring the extended buffering with which local internet users must now regularly contend. "This will give the entertainment business a strong boost," says Koraish. "It will benefit the producers and makers as well as those who make the devices." The faster internet could also facilitate applications that enable remote control of precise activities like surgery. "At the core of innovation in the future is the ability to see and influence what is happening in real time. And 4G has the potential to allow that," says Koraish. "The government could also offer all its services via the internet with 4G, which will have the capacity to handle tens of millions of users at the same time."

There are concerns, however, that the high cost of data plans could limit the growth of 4G. Analysts point out that emerging-market consumers already tend to save their internet activity for when they're at home or in a café that has free Wi-Fi, due to the expense of mobile internet packages. Analysts predict that 4G plans will be even pricier, at least initially, as telecom operators look to cover their costs. Gauthier, the Orange CEO, argues that 4G will not be any more expensive than 3G, in terms of per unit costs, but faster connections use more data, which naturally costs more. But he takes the long view: With more and more Egyptians going online, faster, more reliable internet is an easy sell. "Why do consumers choose one technology over another? Because it brings them more speed, a better experience."

© Business Monthly 2016