Media convergence issues in

EGYPT and the region and

prospects for the future
Introduction
 Egypt possesses a number of comparative advantages which positively
positions it as a promising market for ICT and Media convergence:
 infrastructure
 talented ICT professionals
 efficient service providers
 empowering regulatory framework.

 Content is a key word in the convergence game.

 Egypt has always been, and continues to be, the leading source of culture
and entertainment in the Arab world.

 Egypt could become an exporter of content to the Arab world;

consequently economies of scale could be achieved.
Characteristics of 21st Century
Economies
 Driven by the services sectors
 Founded on information/communication
networks – next generation Internet
 Dependent on effective reforms in the
telecom sector – information infrastructure
 Strengthening links among local, national,
regional, internatonal networks and markets
Stages of Telecom/Information Sector
Reform
 Telecom Liberalization (Participation, Univ. Access)
 Expanding Network Capacity (Broadband)
 Preparing the Network Foundation for New Services
 Developing New Services - “killer applications!”
 Applying Services Productively in Different Sectors
 Telecom Reform & Regulation – Key Driver for
Implementing Policy Reforms for the e-economy
Criteria for Economic Growth
Technologies Markets

Applications Services

Regulations

Policies
Policy & Regulation: Catalyst for, or Constraint upon Growth?
A Review of Technological Change
 Transmission, Switching and Memory: laser and
spectrum, microprocessor, digital storage
 Impacts on network architectures: less switching,
more transport, caching nearer the user
 Impacts on Functionality: portability, functional
integration, communicability
 Erosion of natural monopoly
 End user empowerment
 Erosion of Intellectual Property Protection
Change in Technology brings change in
Economics
 Falling cost levels
 Changes in Relative Costs: Switching, Transmission,
Storage
 Spectrum Abundance replaces Spectrum Scarcity
 Signal transport is free at the margin
 Content becomes relatively scarce; network capacity
becomes relatively abundant
 Intellectual Property protection eroded
 Mass markets become fragmented
 Competition replaces monopoly
Change in Economics brings change in
Markets
 Sole providers yield to competition
 Mass markets yield to segmentation
 Features and functions more important than
price
 Cost of churn increases focus on retention
 Customer service becomes competitive
differentiator
The Dimension of Convergence

Technology
Markets

Law Applications
Convergence at a Glance
 So what is convergence?
 In a nutshell, it is the ability to provide a range of services
(voice, data, and broadcasting) over a single network (‘triple
play’).
 Examples:
 Voice over IP, which makes very low and flat rate calling
plans possible.
 Television over IP, which provides much more flexible
access
 Radio over IP, which enable users to listen in real time or on
demand
 Convergence is being applied to many fields; commerce,
education, health, publishing, and manufacturing, etc.
Convergence at a Glance (cont.)
 It has changed many aspects of our everyday life: the way we
communicate, the way we access content and entertainment,
the way we make our purchases, even our own mobility.
 A phone is no longer used for merely exchanging
conversations, but also for watching movies, listening to
MP3s or even watching and listening to the finals of the
World Cup, live.
 The NTRA has been active in convergence:
 Cooperation between MCIT and RTU (Radio and Television
Union)
 VoIP
 BGAN
 Finance/ Regional Disaster Management
Banking Development
Media & Cultural Sectors
Travel & Tourism Manufacturing

Health/Medical Government Services Education/Training

Applications
Content Interactivity
Broadcast (Instant & Delayed)
Electronic Services
Media Voice
(Pay TV, VAS, Internet)
Film Data
Multimedia, etc.
Libraries Sound
(Public, User group, Private)
Software Graphics
etc Video
Telecommunication
Facilities Network
(Information Superhighway)

Computing / Information Telecommunication

Technology Equipment Manufacturing

INFORMATION INFRASTRUCTURE
Steps Toward ICT Convergence
 Digitalization of the network
 Mobility
 Next Generation Internet (Broadband)
 Media integration (Internet Protocol)
 E-commerce (QoS)
 Restructuring of industries
 Reshaping Policy and Regulation
The ‘Converged’ Telecom Scene
 Since its introduction, convergence has had a profound impact on the
telecommuncation field and media sector, dramatically changing its
infrastructure, services and overall environment.
 Infrastructure:
- digitalized
 Competition:
 diversity of service providers and offers
 low and affordable prices
 wide range of complementary services
 Innovation:
 new services
 new business models
 new devices
 content creation industry to support demand
 local loop unbundling
The ‘Converged’ Telecom Scene
(cont.)
 Examples:
 Gradual shift to VoIP and VOB (Voice over Broadband);
now almost 15% of voice traffic is through VoIP.
 CATV (cable TV) systems are now offering video on
demand, broadband access and voice telephony.
Consequently, CATV operators are now competing with
telecom operators.
 The current trend in several parts of the world is for service
providers to offer triple play service bundles in inclusive
packages (ex. monthly)
 There is a steady growth in 3G networks and wireless
broadband services
Regulatory convergence ?
 Signatories of the GATS Agreement and the
Reference Paper have agreed to a more-or-less
common policy of liberalization of traditional
wireline and wireless telecom.
 The GATS agreement has no recognition of
convergence.
 Most countries have separate regulators for
telecommunications, broadcasting and cable TV,
financial services, software and applications
The Impact of Convergence on
Regulation
 Convergence is reshaping regulation and policy and raising
several implications:
 Convergence is leading to a rise in the number of wireless
services, which in turn raises the need for spectrum
management reform.
 Convergence entails revisiting current licensing regimes and
favors regimes that are technologically neutral.
 Convergence might lead to the broadening of certain market
definitions, with the result that several narrowly defined
markets are replaced by a single more broadly defined
market.
 Convergence may pose a threat on the industry if it induces
mergers of large scale operators and drives out small local
operators.
The Impact of Convergence on
Regulation (cont.)
 Access to communication channels and access to content
 New issues of competition and monopoly
 Privacy, security, IPR
 A transition from monopoly/oligopoly direction to
maximizing participation via open access
 Target is not technological neutrality, but maximum
development of all technology & services advantages
 Maximum opportunities for competing firms to achieve
public interest goals
 Maximum stimulation to market development through both
private and public participation
“Convergence” is really about
“Competition”
 Voice over IP: bypassing the PSTN undermines
tariffs, international settlements structures; cross-
subsidies.
 Mobile networks are competing with fixed networks
especially in developing countries.
 Cable-HFC and Satellite are displacing Broadcast
networks.
 Competing technologies (Fixed lines, Wireless,
Cable, Broadcast) offer overlaping, competing
services.
Unresolved Network Market Issues
 Public Resource Infrastructures for Telecom
Networks - Rights of Way, Spectrum, Numbers,
Names
 Interconnection
 Termination Number Monopolies
 Access Limitations in the Face of Positive
Externalities
 Leverage Opportunities for Monopoly Nodes in the
Network
 Achieving Faster Infrastructure Network
Development
Significance of Network Unbundling
for Convergence
 Industry Sectors - Equipment, Operator
Networks, Services
 Fixed and Mobile
 Basic Network Layers
 *Content
*Communication Services
*Network Protocols, OSS & Management
*Equipment & Facility Capability
How Must Regulation Change?
Investment, Investment, Investment
 Regulation is too focused on short term abuse of dominance.
More of a problem in developed markets, but stifles
investment in developing markets.
 In the long term, dominance will only be eliminated by the
emergence of competing networks.
 Competition requires investment.
 Investment responds to Price, Cost and Profit expectations.
 Price, Cost and Profit signals come from regulatory policy.
 Incorrect signals encourage both overinvestment (i.e. long
distance) and underinvestment (i.e. local networks).
 Overinvestment causes lost capital (ask Global Crossing,
Level 3); underinvestment causes lost opportunities (ask the
95% of the world who have no telephone.)
The Convergence Roadmap
For any country to successfully integrate convergence into its communication
and media sector, it must develop the following convergence pillars:

 Technical:
1) Digitalized Infrastructure ( Broadband , Wireless and
mobile technologies , High-speed backbone networks )
2) Digitalized Media Content ( DRM , DAM )

 Regulatory:
- Conducive Market Conditions (supply, demand, competition)
- Technological Neutrality
- Intellectual Property Rights and GATS agreement
 Business: ( Encourage investment , More service providers , Diverse
services; options , and Digital content creators )
Convergence Challenges
 Political and Legal
 Law restrictions
 National security considerations
 Politically acceptable

 Business
 Must find feasible business models:
 Revenue: from customers and advertisers
 Evidence of demand is still very unclear
 Which firms have the expertise to make profits in these areas? (telecom co.
vs. content providers)

 Social
 Socially acceptable content
 Literacy (traditional and ICT literacy)
Convergence Challenges (cont.)
 Economy
 Income levels:
low GDP per capita
misdistributions of wealth within countries
 Spending capacity:
Are people willing to spend on entertainment? And if so, how much?

 Infrastructure
 which networks are best and cheapest?
 availability of electricity
 availability of computers
 availability of telecommunications networks
 availability of investment
Issues for Debate
 Convergence is raising a wide array of regulatory and
legislative issues that should be addressed by both policy
makers and regulators
 The need to :
- encourage investment
- lower market entry barriers
 Policy should:
- ensure competitive markets
- encourage the provision of better and cheaper services
- be responsive to market changes; updated upon need
 Need to avoid regulatory arbitrage and gamesmanship
 Reducing the digital divide: Universal Service
Issues for Debate (cont.)
 Is the trend of institutional convergence (the
example of Ofcom) really the best way to
address Convergence?
 Are current telecom or ICT regulators
competent to regulate “content”?
 Can content regulation be avoided?
 What is the most effective role for national
telecom regulators?
Thank You