Forum: How to create an organized ICT Market in Egypt?
Speakers:
Hisham Abdul Rahman from the National Telecom Regulatory Authority
CEO Alex Shalabi of Mobinil
Chairman Ali Fahmy from Delta Group
Forum moderator Ossama Kamal began with the words, "This is the first meeting of its kind; it should have been done a long time ago: A gathering of people from different sides of the IT industry to meet and discuss."
In Egypt, he said, "The telecom market needs a lot of effort to develop further. What we're trying to achieve a consensus on how to improve our market and make it better than other markets in the region and become as advanced and developed as the EU markets.
"Did we reach maturity like the surrounding markets or do we still have a long way to go?"
Ali Fahmy: "Firstly, we should appreciate the effort the Cairo ICT conference is making. Cairo ICT, we can claim, is the only chance for a gathering of this kind to take place. For this, I would like to thank the organizers and their leader Ossama Kamal. Cairo ICT has been there since the early days of the telecom and IT industries, it has been there for 12 years, which is the age of the telecom and IT industries in Egypt.
"We can claim that players in this industry at the beginning did not have any access to technical support or technical data; now, any small dealer has full access to information. The question that we should ask now is 'are we behind European countries when it comes to distribution in the Telecom industry?'"
After 12 years of operating, we became developed, and we're now covering the market efficiently. The distributor's role to deliver the product to the consumer extremely important. Alex shalaby can ensure this, operators cannot reach the customer without distributors. Distributors are developing their techniques from having a small corner shop to big chains of stores with professional management. Bill gates once said: "For every dollar I make in Microsoft, my partners in success make 15". Distributors gain profits because they are partners in success with operators. No one can work in isolation. There are a lot of cooperation between service providers and distribution networks. Carphone warehouse in the UK was trying to prove to their partner operator that have muscles and that they have the power. This operator discovered that they will start impose their conditions on them so the operator decided to cancel the contract. Carphone's stock fell rapidly on the same day. Who has the power in this game? No one does, We're not in a fight to show power, they both need each other equally. We should learn from the EU past experiences.
Kamal: Mobinil has been in the market for 12 years and 10 years under the name Mobinil. There's a lot of pressure in this forum on Mr. Shalaby because he represents the whole mobile sectorin general and Mobinil in particular.
Shalaby: I would like at the beginning to thanks Ossama and Dr. Ali. There's no doubt that we need each other and the example Dr. Ali gave about Carphone warehouse was really good. And we have Europe as our benchmark because its geographical closeness, development and its similarity to the mobile system in Egypt. We try to learn from their past experiences. The main point is that we complete each other, we, the operators, and the distributors. Distributors are important, we can't have our stores with our employees everywhere. "We're two sides of the same coins just like heads and tails" .
Kamal: There were no regulatory body or telecom ministry12 years ago. It was under the transportation ministry along with the metro,buses and trains. Most people think that the ministry of telecom and NTRA were very useful to the sector.
What is the role of NTRA with the distribution, where does it start and end?
Hisham Abdul Rahman: We represent the part that protects the consumer's rights as well as the operators and distributors rights. We make sure the there is an industrial quality standards to make sure the customer gets the best services.
Kamal: Hisham, we all as consumers think that we are forced to pay for GPS services in mobiles, since most phones have it now, while it's not activated and there are a lot of restrictions on it, do we need GPS or not??
Ali fahmy: If we remember when satellites were new, tons of authorities were aginst it: Secret services, the presidency, etc. But no one could've stopped it. Mobile phones were the same too, it was though of as a threat to security. I can't understand why it is banned if you have Google earth on the internet. Just like satellite and mobiles have overcame all the obstacles, GPS is coming whether you like it or not. No one would stop this. This day is coming.
Kamal: Everything is there. What is already considered a concern and a threat (GPS), is already there. It just frustrated the sellers because there's demand but they can't respond to it because of the restrictions.
Kamal to Alex: when Mobinil and Vodafone launched, margin profit was big and it gave dealers the opportunity to sell and market and it gave them more room and flexibility. Now while prices and therefore profit margins are decreasing, changes happens. Does this represent a threat to the relation between distributors and operators??
Alex: The decrease in profit margin is inversely proportional with increase in volume. I don't think this is gonna be a problem . The Egyptian market is still relatively emerging in Egypt. 42% of the population have mobiles which is still low compared to developed markets, we still have a long way to reach the 60 or 70%. The distribution network is expanding. We're providing new services constantly. To sum it up, the decrease of profit margin doesn't mean that we'll struggle to serve the customers and expand our distributors' network.
Ali Fahmy: To be honest, a lot of margins that was there at the business is still the same. The rent has got higher for stores; a lot of distributors have full automation which costs money. This means that the profit margin issue is not causing problems . When a 50 or 60% is reached, finding a value customer will be tough. This is the role of distributors, who doesn't develop themselves now will suffer when the market is saturated.
Alex: The level of usage is 130 minutes a month average per cusotmer. 130 compared to other countries like India is very low which the average there is something between 450 and 600. We can reduce prices further under the condition that mobile usage gets higher like in India. In Egypt, we still need non voice services such as, MMS and GPRS, to increase along with voice services.
Kamal: We shouldn't be too hard on NTRA. This kind of regulatory body doesn't exist elsewhere in the Arab world. We suffer when we try to operate there. They are cleaning the environment for us and doing us a huge favor.
Q & A
Question: The consumers doesn't trust the dealers because the can't return the mobile within 14 days from the day of purchase. What does NTRA have to say on this??
Hisham: if this happens the customer should raise a complain to us and we'll do what is necessary.
Question: I'm a dealer and once we go through this process. I will lose the customer and his trust.
Hisham: I understand and fully aware of the process, it doesn't take this long.
Ali: The customer should be informed the producer is responsible not the small dealers and that should be listed in the warranty.Ali: the most profitable company in the world is Wal-Mart and it's profit margin is just 1%. The telecom industry should focus on volume not margin now. We should encourage more consumption And if this was unprofitable for dealers their numbers wouldn't have 10 times increased in the past few years.
Question: All the talk is about protecting the consumer, we need to protect the trader too. We have a lot of problems. The most important is that I buy a stock from the agent and there is no copmensation if prices fell the next day. We never talk about trader's right. I'm glad we're represented today in the panel.
Ali: Telecom products are part of the fashion, and the idea behind the mobile industry is the product cycle and their price fell all the time. What I want to say is that what you suffer from, everyone does, the manufacturer the agent and you. Everyone in this industry suffer from time limitation. We should operate like the stock exchange. You can never predict prices and we should get accustomed to that.
Kamal: People accuse mobiles to have a negative impact on society, what do you have to say on that?
Alex: Everything has positive and negatives sides. If people complain about the negative sides, they should also thing of all the good stuff mobile technology has brought. It saves a lot of effort, it has a lot of emotional importance, it increases efficiency, etc. All developed countries has high mobile usage; mobile usage is proportional to the level of development in the society. That proves that it has its many positive sides that outnumber the negative sides. There's no doubt that mobile telecom has contributed to the technical and economical growth in Egypt.
Kamal: Is there a chamber for workers and players in the industry that could act as a lobby with a goal to develop the sector further?
Ali: some industries are new like telecom and some are old like milk and leather, the old one have chambers and the time will come and telecom will mature and have its own. There will be more and more regulation soon. Until now there's no chamber, not even like how programmers have their chamber.
Kamal: Programmers' chamber is industrial. We're talking about a one for the traders. Would you like (asking the audience) to have a special chamber for trader?? People applause to show approval.
Kamal: NTRA sets a commission monthly to listen to traders' problem
Kamal: Can a customer return the mobile within 14 day even if is nothing wrong with it?
Ali: Money back guarantee is the standard in the US. Are we gonna reach this level? The day will come when we need to satisfy the customers more and this will happen. There will be 1% of the customers that will abuse this privilege but 99% won't.
Question: There should be in ICT cairo a session to teach consumers about their rights and raise their awareness.
Kamal: I totally agree and we will consider it next year.
Kamal: I am sorry for the bad weather. We're glad and proud you came in such weather. This meeting would be a tradition we will do every year. Don't forget to visit the exhibition after lunch.
I thank Alex Shalabi because he didn't hesitate to be here as a representative of Mobinil and operators in general.
I thank Hisham Abdul Rahman and the NTRA becayse, they also, didn't hesitate to come to this open debated and take the risk.
We thank Ali Fahmi who's considered the godfather of ICT.
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