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P RE SE NTED BY:
PROFESSOR DR. KHALED MOUSTAFA KASSEM
P R O F E S S O R O F E C O N O M I C S AT A R A B A C A D E M Y F O R S C I E N C E T E C H N O L O G Y A N D M A R I T I M E T R A N S P O R T- E G Y P T
DINA MOHAMED BAKR
TE A C HE R A SSI S TA NT AT A RA B A C A D EM Y F O R S C I ENC E TEC HNOL OGY A ND M A RI TI M E TRA NSP ORT – E GYP T
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The Liberalization of Egypt's Telecommunication Sector
A Measurement of the Liberalization Index (1990-2008)
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Importance of the Research2
”Information and communication technologies [ICTs] are, without doubt, enormously powerful tools for development. They create jobs ,transform education, health care, commerce, politics and more. They can help in the delivery of humanitarian assistance and even contribute to peace and security. One of the most pressing challenges in the new century is to harness this extraordinary force, spread it throughout the world, and make its benefits accessible and meaningful for all humanity, in particular the poor”
Kofi Annan Speech at the launch of the UN ICT Task Force
November 2001 Rabat 20-22/12/2011
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The Research Objectives The Research Methodology
First : To assess the development in the telecommunication sector ‘s liberalization process over the period 1990-2008 .
The Research Objectives and Methodology
A "liberalization index", covering the period of 1990-2008, is constructed
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The Research Hypothesis4
There has been a tremendous progress in the liberalization Egypt's ICT sector during the period 1990-
2008.
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The liberalization of Egypt's Telecommunication Sector :
A Measurement of the Liberalization Index(1990-
2008)
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The Measurement of Egypt’s Telecommunication Liberalization Index
Degree of Effective Internal
Competition
Degree of Effective External
Competition
Degree of pro-competitive Regulation
Egypt’s Telecommunication Sector Liberalization Index
Identifying ICT’s Subsector’s Market Structure
Focusing on the Openness of ICT Subsectors to FDI
Focusing on the Presence of a Separate Regulatory body and Extent of its power in Handling Interconnection Issues
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The Measurement of Egypt’s Telecommunication Liberalization Index
Accordingly, The Liberalization index combines the following criteria:
1- The weighted average degree of competition in the fixed- line, mobile and internet markets. Competition indices range as follows: 0 for monopoly; 1 for partly competitive conditions; and 2 for full competition.
2- The weighted average degree of openness to foreign direct investment in fixed-line, mobile and internet markets (1 if investment is allowed in each case, o otherwise).
3-Presence of an independent regulatory body (1 if yes and 0 if no), and the extent of its powers in handling interconnection issues (1 if interconnection pricing is entrusted to the regulatory body, 0 otherwise).
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The Measurement of Egypt’s Telecommunication Liberalization Index
For a given year, the indicator of market liberalization is constructed by adding the country scores on each of those criteria. It ranges from 0 (least liberalization) to 5 (full liberalization). This indicator is likely to take one of the following scores (s):
A. Restricted market liberalization: 0< s ≤ 1.25
B. Limited degree of market liberalization: 1.25< s ≤ 2.5.C. Moderate market liberalization: 2.5< s≤ 3.75.D. Full market liberalization: 3.75< s ≤ 5.
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The Measurement of Egypt’s Telecommunication Liberalization Index
Then the telecommunication market Liberalization indicator will have the following ranking:
1=for restricted market Liberalization indicator.2=for limited degree of market Liberalization indicator.3=for moderate Liberalization indicator.4=for Full market Liberalization indicator
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Looking at the evolution of the telecommunication sector’s liberalization index in Egypt overtime as shown in the following figure , one can notice that Egypt has paved up the pace of telecommunication sector reform processes since 1990.Through the period from 1990-2008; Egypt has achieved conditions of restricted (1990-1997), limited (1998-2001) then moderate market openness (2002-2008) . But despite this progress, telecommunication market in Egypt s remain, on average, less competitive with a potential for more liberalization.
Progress of Telecommunication Liberalization Process in Egypt during the Period 1990-2008
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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080
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Liberalization Index Rank
Restricted Liberalization Limited Liberalization
Moderate Liberalization
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Liberalization of ICT Sector and its Possible impact on Industrial Sector
Telecommunications play a key role among backbone services because they affect efficiency and growth across a wide range of user industries. The quality and price of telecommunication services directly affects business costs, besides, affects the capacity of firms to network and compete in foreign and domestic markets. Good quality and low cost of leased lines and backbone networks also facilitates internet penetration and the spread of IT applications in businesses that spur productive efficiency.
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Conclusion and Recommendations
Egypt’s telecommunication sector is performing consistently well with all sub-sectors being opened to competition.
In sum, Evidence examined in that paper highlighted the major efforts undertook in the telecommunication sector’s liberalization process with more efforts needed towards inducing further deregulation.
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Conclusion and Recommendations
Thus, despite the progress experienced in the sector’s liberalization process, telecommunication market in Egypt remain, on average, less competitive with a potential for more liberalization.
So it is highly recommended that: domestic reforms involving the market liberalization where the introduction of competition should be adopted, such as increased private participation and effective ICT regulation, in addition to international commitments to anchor domestic reforms.
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