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History Of Mobile Phones In Egypt Marketing Essay

Paper Type: Free Essay Subject: Marketing
Wordcount: 5438 words Published: 1st Jan 2015

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Technology and innovation become more important determinants of corporate competitiveness, and the telecommunications sector is no exception. Many developed and developing countries have approached telecommunications reform by opening the market for mobile telephones to private participation and competition. One result of this strategy is the astounding worldwide growth in mobile communications, with developed countries like Britain accounting for the fastest growth. It is believed that mobile phones are complementary to fixed-line telephony in developed countries, but they appear to be substitutes for main lines in developing regions where access is low or non-existent. While in Egypt, despite the recent significant developments, Smart phone adoption has still moved very slowly. This study has focused on a comparison between the mobile phone usage amongst students in developing countries like Britain and developing countries like Egypt and the reasons behind the differences. A detailed well-structured online survey designed to accommodate more details about mobile phone usages and habits was developed. Also unstructured interviews were conducted to gather more information with different aspects than the survey. The research was conducted with 150 participants responding to the survey; however, only 86% of Egyptian students own a smart phone while all students in the UK own a smart phone. Based on the analysis of survey Price of the mobile phone and the Internet bundle have an impact on Egyptian students not owning a smart phone.

Chapter 1: Introduction

 Introduction to Chapter 1

This chapter introduces the research context, provide an account of the background information on the country being researched and the rationale for the research, and outlines the research questions, aim, and objectives.

Background and Context

The digital divide between developed and developing countries is supposed to reflect the differential benefits of information in rich as opposed to poor countries. It is accepted that the digital gap is larger for the Internet than mobile phones. This is partly because the Internet is more demanding in terms of skills, affordability, infrastructure and partly because it is the relatively poor countries that are most lacking in these features. In some ways in which the digital divide is comparable to alternative technological gaps between wealthy and poor countries. The equivalent time information technology is totally different from alternative foreign products from developed countries as a result of what is described as “general purpose” (meaning, among alternative things, that it involves changes that transform house hold life as well as the ways in which companies conduct business). The digital divide is owing to the “digital willingness indicators” that covers a broad spectrum of variables, like skills, the regulative and legal environment. The concept is that the digital divide in phones contributes to the general readiness index, thereby endorsing growth and poverty reduction (since the two are better-known to be closely related).

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The Internet and the mobile phone have disrupted many of our conventional understandings of our relationships, and ourselves raising anxieties and hopes about their effects on our lives. People have always responded to new media with confusion, its time for rapid innovation and diffusion, it is natural to be concerned about their effects in our lives. That is why this topic was chosen as to identify the differences between the mobile technology usages in a developed county like Britain and a developing country like Egypt and to identify and explain why people in developing countries tend to leapfrog.

Research Question, Aim and Objectives

1.4.1. Research Question:

What are the reasons that developing countries seem to leapfrog in terms of mobile network technology and the difference between the usages of both countries?

1.4.2. Aim:

Is finding solutions and explaining the reasons why people in developing countries lack usage of mobile commerce.

1.4.3. Objectives:

To conduct a literature review.

To set the Methodology.

To analyze the results of the primary research.

To summarize all research findings and results.

Overview of Dissertation

1.5.1.   Chapter 1 Introduction

This chapter introduces the dissertation topic with a brief note on the research problem, research inspiration and focus. The rationale for the research, the questions that the research attempts to address, research aim, objectives, and finally the dissertation outline is briefed.

1.5.2.   Chapter 2 Literature review

This chapter demonstrates the level of understanding of the related topic of the research. Several arguments and discussions studied in the existing literature and theories have been facilitated in this chapter to demonstrate the level of knowledge gathered from relevant publications. The chapter is devised into three parts first part is the introduction to the topic second part is History of mobile phones in Egypt and UK. The third part has recent figures and previous researches about mobile phone penetration nowadays and how both countries are acting towards the mobile technology.

1.5.3.   Chapter 3 Research Methodology

This chapter defines the methodology used for the research study. At the beginning it discusses the research approaches in the research onion and provides the justification for every choice. Also it discusses on the methodology adopted, which was Mixed methodology, justification for the choice, survey design and interview. In addition to that, it defines the research outline that has been used for the research and the ethical issues.

1.5.4.   Chapter 4 Findings and Analysis

This chapter solely dedicated to present the data collected from the online survey and interviews with showing figures from survey results and comparing values.

1.5.5.   Chapter 5 Discussion

This is the most significant chapter, which facilitate a discussion on the results presented from the online survey and interviews in Chapter 4. This discussion is structured with reference to the findings published in the existing literature in Chapter 2 (Literature review). This also compares and contrasts with the hypothesis predefined in the chapter 3 as a verification process.

1.5.6.   Chapter 6 Conclusion

This chapter draws the conclusions based on the findings and related discussions with regards to the proposed hypothesise. Also this chapter evaluates the defined research question, aims and objectives as to verify whether the research has the met the answer to the research question, aim and the set of objectives. Finally discusses the limitations confronted during the research study and provide suggestions for related further studies.

1.5.7.   References and Appendices

This is where the list of Bibliography, references and relevant information, which have not been included into the main body of text, are provided.

Chapter 2: Literature review

2.1. Introduction

When the telephone entered our life early within the twentieth century, it was primarily served as an associate extension to face-to-face relations. Neighbours and business colleagues may communicate with one another while not caring about the inconvenience of transporting themselves bodily. (Gergen et al, 2003) In several countries, the social landscape is changing as a result of people understanding the routines and rituals to incorporate mobile communication; therefore the mobile phone is into the standard of living. However how people socialize and behave in public areas, as well as cafes and train stations, is now changed and formed by the presence of the mobile phone. The physical landscape is also changing; billboards are now encouraging people to subscribe to mobile phone services. (Aakhus et al, 2003)

The arrival of the mobile phone and its fast and widespread growth is seen in the historical context as the foremost important developments within the fields of communication and in data technology over the past twenty years (Plant, 2000). The expansion has been phenomenal by many standards. Rice and Katz claim that currently worldwide there are more mobile phone subscribers than fixed line subscribers and possibly TV house owners. By 1999, there have been slightly below 500 million mobile telephones being used worldwide. (Aoki and Downes, 2003)

Mobile phones became a necessity within the daily life of individuals all over the world, as well as the developing world. According to the International Telecommunication Union (ITU), mobile subscriptions within the developing world increased from 53% at the end of 2005 to 73% at the end of 2010 (ITU, 2010a). Till the arrival and uptake of mobile phones, individuals within the developing countries had minimal access to telecommunication technologies since the uptake of landline networks. (Esselaar et al, 2005). In 2010 only 1.5 per 100 inhabitants of the African continent had a fixed landline connection, compared to 40.3 per 100 inhabitants in Europe (ITU, 2010b). Because of promoting basic and low cost mobile phones, the introduction of pay non-subscription plans (Minges, 1999) even the individuals at the bottom of the financial gain pyramid have mobile phones. For the first time they are participating within the telecommunication society, which signals a crucial landmark for the ways in which individuals communicate. (Castells et al. 2006)

A lot of analysis has been done on the social and cultural impact of mobile phones and their existence in developing countries, and how mobile phones will be applied for developmental process functions. (Forestier et al., 2002) For example, mobile use will foster economic growth and also the well-being of the poor and how mobile phones will eliminate the ‘digital gap’ that exists between the developed and also the developing world. (Velghe, 2012)

Understanding the causes and consequences of the digital divide between developing and developed countries has recently become a preferred area of research. Yet the stakes of properly understanding the digital divide are important, since information technologies play a vital role in social development round the world (Weber and Bussell, 2005). Indeed, some researches have already pointed to a powerful positive relationship between access to information and communication technologies and a country’s level of income, in addition to its prospects for democracy (Quibria, 2002). However, the causes of the digital divide aren’t clear. Throughout most of the Nineties, the digital divide was primarily one that was technical in nature: international connections to the internet were created through dial-up services, few countries had their own domain names, and few countries had the capability to maintain (much less manufacture) computer technologies.

Historically, most of the world’s technologies were combined through scientific exhibitions that allowed developing countries to compare technical systems and choose the best technologies to meet their national needs (Rogers, 2003). More recently, market-driven international adoption and complex patterns of diffusion have emerged that are not simply explained by regime type or economic wealth (Howard, 2007). Often, individuals adapt to a particular technology but do a significant amount of work adapting and redesigning it to fit their own needs and capabilities. As an example, consider the alternative kinds of digital technologies that people around the world use to connect to the Internet. Mobile phones have now become an important way of accessing the Internet, especially in poor countries where connectivity through mobile phone providers is relatively cheap and ownership of personal computers is relatively expensive. Indeed, the number of connected mobile phones has surpassed the number of computers connected to the Internet. Global differences in technical standards and capabilities, diverging market prices of various technologies, and the presence of local adaptations and innovations all make the process of technology diffusion both uneven and complex-and understanding the digital divide all the more difficult.

Early analysis found that economic factors outweighed others so much in determining on which side of the digital divide a country fell. However recent studies recommend that political and social variables may also have a sway (Corrales and Westhoff, 2006). For several numbers of studies, income, education, telecommunication infrastructure, and also the regulatory system are all key determinants of technology diffusion (Chinn and Fairlie, 2004). In Dedrick and Kraemer (2003) study of 31 countries throughout the time 1985-95, as an example, it is found that a country’s economic structure, financial gain level, telecommunication infrastructure, and human capital help increase the cross-national patterns of investment in ICTs. However, alternative studies have pointed to the role of literacy, core-periphery status within the world economy, further as a country’s level of “cultural cosmopolitanism” as statistically vital predictors (Guillén & Suarez, 2005). Several of those sizable amounts of studies conceive to measure the impact of regime kind or politics on technology adoption; however, they are doing thus with terribly broad indices of democratic character, or perception rankings of the final business surroundings. In distinction, it is proposed that it is crucial to specialize in the general public policy reforms that governments initiate specifically to improve technology adoption.

2.2. History of mobile phones in Egypt

In 1994, Orascom Telecom acquired interest in Egypt’s initial ISP, InTouch, marking its beginning in providing services within the communications marketplace. Since the communications sector in Egypt began to be privatized, Orascom continued to feature additional service firms to its portfolio, and was a participant during a venture that was awarded Egypt’s initial license for VSAT technologies, and a lead member to make Egypt’s initial personal payphone network.

Within the year 1996 was the first Installation of the mobile network in Egypt adopting the GSM technology. Privatization of the telecommunications operator has greatly improved in many developing countries like Egypt (Kelly, 1995). Telecom Egypt was given exclusive concession to supply basic national and international telecommunications service and infrastructure, with associate exception for personal VSAT networking (UN-ECA, 1999). Telecom Egypt additionally includes a producing arm, the Egyptian Telephone Company (ETC), that has entered into venture agreements with Siemens, Alcatel, and Ericsson for the manufacture and assembly of digital switches, PBX’s, and telephone sets. Additionally, restricted competition has been allowed within the mobile telephone industry since 1997 (ITU, 1999). An offer of a 30% stake in the state- run Egyptian Mobile Phone Service Company was more than 50 times oversubscribed (ITU, 1999). The National Bank of Egypt stated that the offer had closed after 10 days because of the intense demand for the 18 million shares being sold. By the end of 1998, Egypt’s teledensity was well above 5.0 per 100 people (UN-ECA, 1999).

By 1997, Orascom was in a position to participate within the bidding method for a GSM license in Egypt, having tested itself within the marketplace as associate IT and medium hardware leader, additionally to assembling up the ability and skills in managing giant scale comes and understanding native market conditions. Orascom continued to add more service companies to its portfolio, and was a participant in a joint venture that was awarded Egypt’s first license for VSAT technologies, and a lead member of a consortium formed to create Egypt’s first private payphone network.

In 1998, Vodafone Egypt (formerly Misrfone Telecommunication Company/Click GSM) entered the Egyptian telecommunication market because as the second operator; as an association between Vodafone international, Air Touch, and local/international partners. In 1999, Vodafone acquired Air Touch share and in 2002, it acquired International Partner VIVENDI France share. In January 2002, Click GSM was rebranded to Vodafone Egypt. Since 2007, Vodafone Egypt’s shareholders structure consisted of Vodafone cluster with 54.93%; telecom Egypt with 44.94% and a minority free float of 0.13%. (Vodafone)

Since May 1998, Mobinil has strived to keep up its position as the leading Mobile service operator in Egypt. Honouring the trust of quite thirty million customers, Mobinil is providing the most effective quality service for the customers, high worth for our shareholders and proudly contributing to the development of the community. Shareholders, Orange and Orascom telecommunication Holding are international leaders within the realm of telecommunication. Mobinil has benefited from years of expertise in a world context to become the biggest wireless service supplier within the Middle East. A recent nationwide survey by the National Telecommunications Regulatory Authority [NTRA], where Mobinil customers reported over 97% satisfaction rate in the products, services, and customer service levels offered. (Mobinil)

Egypt is seen as the leading country for GSM development and innovation, in Northern Africa. Conference Producer Carolyn Davies told the press that the growth has been tremendous among the spectrum of growth, Egypt stands at the forefront of a race that business individuals say is not slowing down. The region grew by 30% in 2002 and expected to grow once a year, said John Everington, Africa and Mideast analyst. The amount of subscribers for geographic region reached 12.11 million at the tip of 2002, with 99% of these being GSM. Increased competition has controlled the introduction of exciting new services and valuation among the region and operators are presently considering their client desires. With fixed line users quickly adopting to mobile phones in many of the countries among the region, additionally because the entry of second and third operators in Egypt, Nigeria, Algeria, Republic of Tunisia and Morocco, as new sources of investment to expand new and existing networks, the North African market provides potential investment opportunities. The number of mobile phone users in Egypt soared from 3.39 million in December 2001, to 4.39 million just 12 months later. By March 2003, the amount jumped to 4.65 million. Figures for North Africa shows a whole promise of future growth. In December 2001, North African cellular subscribers numbered 9.29 million, climbing to 12.11 million one year later, and up once more to 13.01 million in March 2003 according to the EMC World Cellular information. (El-Rashidi, 2003)

Etisalat is a leading international telecommunication company operative in eighteen countries around the world. Egypt was one in all the countries where operation was launched in May 2007 as the initial 3.5G operator. Etisalat’s entry to the Egyptian market accompanied a new era for the telecommunication trade. Etisalat Misr primarily introduced the market to 3.5G services, such as video calling, mobile TV, mobile broadband Internet and data services. During a bolder step, 3.75G was introduced and assumed absolute market leadership in providing the quickest broadband Internet within the market through USB modems and 3G mobile handsets. Etisalat’s entry dropped at the market an array of competitive and innovative rate plans that attracted one million subscribers within the initial fifty days of operation. Due to the entry of Etisalat to the market, mobile users in Egypt currently have wider choices, higher service quality, a lot of innovative services and higher worth for cash. (Etislat)

In 2007, the common wholesale price of a mobile was at $174 and kept trending downward. By 2009, it was only $161. In other words, the yearly revenues from telephone sales are on constant order as the recent gross domestic product of nations like, Egypt. It has to be taken under consideration that these revenues represent only a part of the cash flow that spurs the technology’s rise. Not simply the financial gain from device sales, however additional networks, energy offer, replacement parts and re pairs, and in particular usage contracts and costs, to call a couple of, yield giant earnings for the arena. (Reller, 2009) The market is growing, the choices are growing and population penetration is most positively on the rise. From ranking businessmen to the men selling bread on the road, the nation as a full is thanking God for having mobile phones. If experts are right, it will be a while before mobile phones to become things of the past. (Kalba, 2008)

2.3. History of mobile phones in UK

In the UK the primary land mobile services were introduced within the 1940’s.

During the summer of 1954, The Duke of Edinburgh, has been seen possessing a telephone integrated coupé sports car that had a radiotelephone with which, via associate Admiralty frequency and a Pye relay station au fait the Hampstead hills in north London, he may speak directly to Buckingham Palace. (Ager, 2010)

When expensive mobile phones first appeared business users largely adopted them. These first car-phones were too heavy, cumbersome, and expensive to use for more than a handful of subscribers and it was not until the mid of 1960’s the Post Office were beginning, reluctantly, to change their policy on interconnection. An experimental South Lancashire Radiophone Service had begun around Manchester, Liverpool and Preston in 1959. In 1965, an extremely

Exclusive and expensive service, called System 1 had been launched in the well-to-do Pimlico area of West London. The chauffeurs of diplomats and company chairmen used it. The radio set cost £350, the service cost over seven pounds a quarter year, and calls cost one shilling and three pence for three minutes.

By 1968, there were 6,100 private mobile systems authorized, a complete 74,000 stations altogether, and a growth rate of 17% per year, the official attitude was still that the integrity of the telephone network was paramount and any interconnection of the noisy, lawless mobile radio to the state-owned system may barely be countenanced: ‘The policy of refusing affiliation of private mobile systems to the general public network has lasted nearly twenty years. (Lacohée et al, 2003)

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In fact in the 1980’s within Great Britain, there was a negative image of mobile phones, as they were possessed by a certain type of brash, young, usually male business users, especially ones working in the financial centres of the city of London. Pictures of them using their mobile phones circulated in the media drawing attention to themselves through their ostentatious use of mobile phones in public spaces (Green, 2009). In the 1990’s, not just the wealthy had mobile phones in fact one British study argued that certain users had served to make mobile phones familiar and visible. These didn’t carry negative connotations and in this sense they prepared the way for a consumer product (wood, 1993)

1985, The Vodafone analogue network was the first cellular network to launch within Great Britain – and therefore the first decision was created from St Katherine’s Dock in London to Newbury on one Gregorian calendar month. Vodafone simply had a dozen masts covering London and therefore the M4 passageway whereas Cellnet launched with one mast, stuck on the BT Tower. Neither company had any glimmering of the large potential of wireless communications and therefore the dramatic impact that mobile phones would wear society over future quarter century. Within the year 1991, Vodafone launches its digital (GSM) portable service – the primary within the Great Britain.

1994, Vodafone is the first network operator within the Great Britain to launch knowledge, fax and text electronic messaging services over the digital network. 1996, Vodafone is the 1st network operator within Great Britain to launch a Pay monthly analogue package Per-second asking on the digital network is introduced, additionally as choices to shop for ‘bundled’ minutes and create off-season native calls to landlines.

1999 5th January, Vodafone connects its five-millionth Great Britain client. (Vodafone uk)

Ericsson and Motorola pioneered mobile phones within the Sixties and the Seventies, the first mobile phone call in Great Britain was created by Vodafone to celebrate New Year’s Eve, 1985. By the peak of the Eighties boom, yuppies were regularly carrying mobiles larger than purses. Those handsets used on first generation, analogue networks like Vodafone’s were usually dominated by massive batteries, and evolved in tandem with mobile phone technology itself. Increasing networks demanded new mobile phones to deal with increasing numbers. However as every mast creates its own cell, the industry had to solve the problem of one phone call being handed over between different cells without it being dropped. (Warman, 2010)

The first ringtone was downloaded in 1998. Statistically, by 2004, there were more mobile phones within the country than individuals. (Wray, 2010)

Digital networks, solved several issues, and offered a lot of new possibilities. This was the time of explosive growth in mobile phone usage driven by Nokia’s basic, easy-to-use handsets, weighing just a pound, and by the beginnings of text electronic messaging within the middle Nineties. These 2G networks additionally allowed information traffic, which meant that the Internet as it evolved, was accessible on mobile phones too. Advanced handsets like the Motorola StarTAC began to feature in films. These new services drove demand for information services, and for the 3G networks that currently offer the majority of Britain’s coverage. These modify theoretical most information transfers of higher than 300kbps; enhancements to 3G referred to as HSDPA (high-speed downlink packet access) enable speeds of up to 14mbps, that puts most broadband networks to shame. (Farley, 2005)

2.4. Mobile phone usage and smart phone penetration in Egypt

2.4.1. Recent mobile phone statistics in Egypt

The number of mobile phone subscriptions in Egypt rose 18 percent to 83.43 million during the last years, shrugging off an economic crisis sparked by the overthrow of President Hosni Mubarak. In December 2010, Egypt’s three mobile operators – Etisalat Egypt, Mobinil and the Egyptian unit of Vodafone – had 70.66 million subscriptions. Vodafone and Mobinil – controlled by Egypt’s Sawiris family and France Telecom -have been competing fiercely for market leadership. Subscriptions now roughly equal the country’s population and the companies are seeking to maintain revenue growth by encouraging customers to use more data services. Egypt is the Arab world’s most populous country, with more than 80 million people. (Egypt independent, 2012)

The latest report by the Ministry of Communications and Information Technology has revealed that the number of cell phone users in Egypt is 92 million, with a prevalence rate of 113 percent, and an annual increase of 27.8 percent.

The same report, published on the ministry’s website, said the number of Internet users is 30 million, with a prevalence rate of 37 percent and an annual increase of 26 percent. ADSL users have reached 2 million, with a yearly increase of 29 percent, according to the report.

Mobile Internet users, meanwhile, hit 11 million, with an annual growth of 33 %, it added. There are 3 million USB Internet users, jumping by 73 % per year, it said.

The same report detected a drop in the number of fixed-line telephone users, now 8.5 million, with a prevalence rate of 11 percent, and an annual drop of 12 percent.

The report showed that the number of firms working in the communication and information technology field now stands at 4,500, with an annual growth rate of 13 percent. The number of individuals undergoing professional training in information technology reached nearly 43,000, a yearly increase of 3 percent. (Egypt independent, 2012)

Although Egypt has a young population eager for new technology and keeping up with the latest trends, household incomes have decreased during the Jan-March period, leading to much lower usage of mobile phone services and products, another official explained. Talaat Moustafa, the Chairman of the Telecommunications Engineers Association, said that the majority of the Egyptians have reduced their usage of mobile phone service since January 25 to save money. (The Egyptian Gazette Online)

2.4.2. Recent mobile phone Adoption statistics in Egypt

Egypt has shown a fast adoption towards mobile phone usage-the International Telecommunication Union estimates that there were 83.4 million mobile phone connections in 2011 among a total population of about 82.1 million. But smartphones have made slower progress in penetrating the population. A January-March 2012 survey of individuals in Egypt commissioned by Google as part of their “Our Mobile Planet” study, conducted by third-party research firms, found the smartphone adoption rate to be only about 26%. (emarketer,2013)

But those who do have smartphones and other internet-enabled mobile devices have quickly adapted to using both the mobile Internet and apps, according to an April poll in Egypt conducted by mobile advertising network Plus7. The survey found that more than six in 10 respondents accessed a mobile website or used an app several times a day, while about one in 10 did so at least once a week.as shown in figure 1.1,

Description: E:145276.gif(figure 1.1)

Users in Egypt also demonstrated a greedy appetite for apps. Two-thirds of those surveyed had downloaded more than 10 apps, with downloading activities most common among those ages 19 to 24. Web presence seemed to be the most important factor in driving downloads-41% of respondents said they had gotten an app because they had seen it online somewhere, while 35% cited its presence on an app store. Word-of-mouth recommendations from friends trailed both of those sources, at 17%.(emarketer,2013)

Description: Macintosh HD:Users:yasmineshehata:Downloads:145279.gif

(Figure 1.2)

As shown in figure 1.2, Given Egypt’s uncertain political climate and the low rate of fixed broadband subscriptions, it’s expected that the most popular use of the mobile Internet was to access news and information, an action performed by 57% of users. That was followed by social network use (43%), searches (42%) and email (40%). Younger people in Egypt were more likely to use smartphones to play games or send instant messages, much like younger smartphone users everywhere else. (Emarketer, 2013)

The high growth in mobile use will be driven by the appearance of new operators in the market, which will serve rural areas, says the report.

It also forecasts 15 per cent of mobile subscribers will be using 3G by the year 2015. (Ahram online, 2012)

2.5. Mobile phone usage and smart phone penetration in The UK

Description: Macintosh HD:Users:yasmineshehata:Downloads:149879.gif

(Figure 1.3)

As shown in figure 1.3 The UK is a world leader in mobile adoption and mobile advertising. Advertisers spend more per mobile Internet user on mobile advertising in the UK than any other country in the world, according to eMarketer estimates. Smartphones are driving that trend, with data from Portio Research anticipating continued growth in the market in the UK.

Description: Macintosh HD:Users:yasmineshehata:Downloads:149878.gif

(Figure 1.4)

As shown in Figure 1.4 at the end of 2012, the UK had 83 million mobile subscribers, according


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