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Egypt’s future as internet cable hub at risk from proposed Google fiber optic network

Google intends to build a new corridor for internet traffic via a fiber optic network for the first time between Israel and Saudi Arabia, linking Asia to Europe, which is seen as a threat to Egypt's future as a major transit point for international submarine cables.
This illustration picture shows the US multinational technology and Internet-related services company Google logo on February 14, 2020 in Brussels. (Photo by Kenzo TRIBOUILLARD / AFP) (Photo by KENZO TRIBOUILLARD/AFP via Getty Images)

Egypt’s Supreme Council for Media Regulation (SCMR) decided Dec. 5 to prevent media presenter Osama Kamal from appearing on his own TV program “90 Minutes,” on Al-Mehwar satellite channel for two weeks. The TV channel was also fined 100,000 Egyptian pounds (roughly $6,400). The decision comes following the program’s episode during which Kamal accused Egyptian officials of corruption and held them responsible for making Egypt lose its position as a strategic central transit point for international submarine communications cables, to the benefit of Saudi Arabia and Israel.

The "90 Minutes" program continued without Kamal

Egypt is seen as a hub for submarine cables for transmitting internet from Asia and Africa to Europe, with 17 cables passing through Egyptian territorial waters via six major stations, according to the submarine cable map of TeleGeography, a Washington-based research and consulting company in the telecommunications market.

SCMR’s decision came after a complaint was filed with the council by the state-owned Telecom Egypt, the sole operator of terrestrial connections across Egypt for submarine internet cables. On his show, Kamal spoke of a project that Google intends to implement, by building for the first time a new corridor for global internet traffic through a fiber-optic network between Saudi Arabia and Israel, which will bypass Egypt.

Riyadh, however, has yet to give the green light on the deal. Saudi officials have not commented on the reports either.

The project, dubbed Blue-Raman, will have a submarine cable with the length of more than 5,000 miles and would cost up to $400 million, aimed at transmitting internet traffic from India to Saudi Arabia via the Red Sea, then through Jordan and Israel, and across the Mediterranean and Italy.

The Wall Street Journal, citing people familiar with the project, stated that the move aims to alleviate the congested internet traffic in Egypt, as most internet cables connecting India and Europe pass currently through Egypt, and to reduce chances of global internet problems in the event of damages to the Egyptian cables.

According to reports, Telecom Egypt, the local operator of cables through Egypt, charges exorbitant fees as they can add up to 50% of the cost of a route for a submarine cable from Europe to India.

Officials at Telecom Egypt and the Egyptian Ministry of Communication and Information Technology did not respond to Al-Monitor’s requests for comment.

Egypt has the second-largest number of internet cables after the United States, according to previous statements by Egyptian Communications Minister Amr Talaat. A Telecom Egypt official had said that 17% of the world’s internet cables pass through Egypt’s territorial waters, according to Enterprise Press, an online news service.

Alan Mauldin, research director at the Washington-based telecom research firm TeleGeography, told Al-Monitor that submarine cable operators are constantly seeking to have many different, diverse routes. Diverse in that they do not follow similar geographic routes. This is preferred because it provides more network resiliency, according to Mauldin.

Google is not the only company working to create alternative data transmission paths. Cinturion Corp. is planning to establish a competing line of cables, called the Trans Europe Asia System, which will pass from Europe through Israel before heading to India.

Mariam Wael, a telecom sector analyst at the private Pharos Holding for Financial Investments S.A.E., told the Egyptian daily Al-Ahram Dec. 3 that Google’s move would not harm Telecom Egypt, it would rather reduce its revenues in the future if global companies follow in the tech giant’s footsteps.

Some 60% of Telecom Egypt’s revenues are collected from the retail sector, not cables.

The fees collected from companies for allowing their cables to pass through Egypt go to the state treasury. In 2019, Telecom Egypt made 2.9 billion pounds ($184.5 million) in fees, or 10% of the company’s profits, in the first quarter of 2020, according to a report sent to the Egyptian stock exchange.

Cable traffic fees contribute to Telecom Egypt’s revenues by a rate ranging between 6.6% and 17.4% from 2008 to 2019, according to a Submarine Cable Map study.

In regard to whether the Google project is seen as an alternative to Egypt as a major destination in extending submarine cables to and from Europe, Mauldin said, “I would view it as an alternative. But this doesn’t mean the role of Egypt as a major transit point for submarine cable is going away.” He added that many planned cables such as the PEACE cable and 2Africa are transiting Egypt.

The PEACE cable extends for 12,000 kilometers (7,450 miles), with various landing points, as it crosses Egypt between the two landing stations in Zafarana in the Red Sea and Abu Talat in Alexandria, connecting Pakistan and East Africa to Europe.

Telecom Egypt is a partner in the 2Africa submarine cable project, as it joined a consortium of seven global communications service providers May 14, to establish a 37,000-kilometer-long (23,000-mile-long) submarine cable linking Europe, the Middle East and 16 African countries. It is one of the largest submarine cable projects in the world.

The 2Africa cable aims to provide a new route linking the Red Sea and the Mediterranean for the first time in over a decade, along with land routes parallel to the Suez Canal. The cable is expected to start operations by the end of 2023.

In regard to what Egypt should do to keep international telecommunications companies from turning away from it as the main destination for internet cable traffic, Mauldin said, “Telecom Egypt is making efforts to enhance trans-Egypt resiliency by offering new landing points and new terrestrial crossings.”

Egypt is distinguished by its unique geographical location connecting Europe and Asia, which makes it the ideal meeting point in the field of submarine internet cables in the world. In order to benefit from this advantage, Telecom Egypt acquired additional shares in the field of submarine cables and started laying new cables.

Telecom Egypt is a partner in many of the cables passing through Egypt, and it owns several other cables.

In 2018, the company fully acquired MENA Cable and signed the same year an agreement to provide services to countries in southern Africa, before signing a memorandum of understanding to expand the field of submarine cable services in the region.

According to independent reports and studies, Egypt’s infrastructure has not been able to keep up with the bandwidth required by modern cables, despite improvements by the government to enhance the country’s capacity.

In order to maximize Egypt’s potential, the state should provide more incentives to the private sector and allow it to contribute to building better infrastructure and improve legislation.

Egypt will need to act quickly to counter the escalating regional competition that threatens Egypt’s position as a hub for telecommunications cables. The crowded internet pathways that run through Egypt, and the numerous internet disruptions have prompted industry stakeholders to explore alternative and less expensive routes.

“I don’t see this as a matter of Egypt being ‘excluded’ [referring to the Google project] — it’s just an alternate route. Network operators will use many different routes — some will cross Egypt, some will not,” Mauldin concluded.

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