No. 5, Fall/Winter2000

Special Issue:
The Arab World

The Regional Satellite Giants

Will it be cooperation or competition for Nilesat and Arabsat, the Middle East's two major satellites? And what will be the impact of Cairo's new Media Free Zone on any competition?

TBS Senior Editor Hussein Amin spoke with Arabsat Assistant Director General Omar Shoter in Paris, and TBS Cairo Correspondent Heba Kandil interviewed Nilesat Deputy Chairman and Chief Engineer Salah Hamza in Cairo.

Heba Kandil: This October at a CNE board meeting a motion was passed to restructure CNE and NCN as Media Free Zone companies. What are the implications of such an act for Nilesat?

Salah Hamza: Actually when the authority announced the Media Free Zone they specified that its infrastructure consists of three companies: Nilesat, Egyptian Media Production City, and CNE. In the first board meeting for the Media Free Zone they accepted these three companies and asked for the approval of the companies themselves. Nothing has changed since then, since NCN and CNE are the same people.

This does not affect Nilesat at all. Nilesat by nature is located in a free area in space; it doesn't belong to any country or subscribe to issues of customs. So Nilesat by nature will not be affected by the Media Free Zone. We might benefit from the zone because some channels will be established in this zone and by nature will become clients of Nilesat, such as the new Egyptian Arabic-language channels, Al-Mehwar and Tameema. Tameema belongs to Hani Mohamed Fathi. This is already a shopping channel, but it will also become a general entertainment channel in addition to being the shopping channel. It will be the first Egyptian private free-to-air satellite channel.

With this cooperation agreement we are ready to work together on anything with [Arabsat], whenever and wherever.

Kandil: Is Nilesat thinking of launching its own channels?

Hamza: Nilesat is a TV service provider. We're not going to try and build our own TV channels. By nature we can't compete with the channels we already have on the satellite—we are service providers for these channels. With the Internet it's a different story. Regarding the Internet, we already established a company with Mena Net, International Data Broadcasting Company (IDBC). It is operating now, but is still completing its registration papers. The clients are the Internet users, either companies or private end users. We're targeting the end users, not the ISPs.

Kandil: In an interview with TBS [at right], Assistant Director General of Arabsat Omar Shoter said that Arabsat and Nilesat should seek to combine forces in some sort of cooperation rather than compete. What is Nilesat's position on such a stance?

Hamza: We signed a memo of understanding with Arabsat in which we mentioned that we have to cooperate and combine efforts instead of competing. And this MOU still exists. It was signed in November 1998.

Kandil: And what does "cooperate" entail?

Hamza: More than this signature, I don't know, it's like a friendly handshake. With this cooperation agreement we are ready to work together on anything with them, whenever and wherever.

Kandil: In your opinion, what has been the secret of Nilesat's success? How has Nilesat been able to transcend the limits of public-sector psychology?

Hamza: We are not a public sector company. ERTU is a shareholder and a client, but we are not at all a public sector company. ERTU is a shareholder company; they get profits from their shares, that's all, and as a client they are treated like any other client. We are an investment company, and that's why we are going to be an investment company in the Media Free Zone. We succeed because we are not a public sector company.

Kandil: ERTU is the largest single shareholder in Nilesat, with 40 percent. Are they involved in any day-to-day decisions and operations?

Hamza: No. Nilesat is a completely independent company.

Kandil: How does Egypt's Media Free Zone compare with the zones in Dubai and Jordan?

Hamza: The only difference is that the Egyptian Media Free Zone already has the infrastructure to start. The others have announced plans for media free zones and then they are going to build the infrastructure. We've had the infrastructure for Egyptian Media Production City since 1985, and that provides the infrastructure for the Media Free Zone. The Nilesat company exists as a means for this Media Free Zone and we have two satellites, one of which is fully occupied. Dubai and Jordan have just started. This is from the commercial point of view. From another point of view, we have a different approach; to what extent is not yet clear. Dubai will concentrate more on data and Internet and providing satellite services to others. The most important thing is that Egypt's Media Free Zone started with existing infrastructure.

Kandil: How do you envision the future of Egypt's Media Free Zone?

Hamza: As I told you, the zone is starting with private sector companies. They are looking for success. Except for CNE, NCN, and ERTU, our shares were initially sold in a public offering, and our shares are bought and sold on the stock market. We have to show a profit at the end of the year, so we will work for success. Historically speaking, Egypt has the infrastructure in the broadest sense: not only in hardware but also in "software," the writers, directors, movie actors. When you have all that, it will be a success. TBS

Hussein Amin: What is the role that Arabsat is playing in the region?

Omar Shoter: Arab media have always played an influential role in the global media arena, though it has always been accused of lack of organization and planning. Arabsat has been a step in developing and orchestrating cooperation among Arab media players to satisfy their audiences and serve their functions. It has also aided in overcoming the knowledge gap between core and peripheral countries within the Arab world. So Arabsat will certainly continue its efforts to appeal to the people, despite audience fragmentation due to digital and satellite technology.

Arab broadcasters have been forced to reshuffle their own self-conception because of transnational television. The prevalence of a simple entertainment-oriented perspective transforms itself into more well-structured and mature approaches compatible with the new media order, while retaining our cultural heritage. Satellite broadcasting serves those forgotten people living in remote areas. Besides, it has enhanced the concept of Arab nationalism regardless of particular ideologies. Furthermore the decrease of cost and size of satellite dishes has made them accessible to the ordinary citizen.

Amin: Does Arabsat play any significant role regarding Arab culture?

Shoter: On the one hand, the rise of Arab satellite channels focuses light on how to use this technology to meet people's needs and desires. For example, transnational broadcasting involves the exchange of cultures. Before this overwhelming satellite invasion, for example, Egypt was solely an exporter of its own production to other countries, not an importer. Indeed, it has a profitable business, yet it deprived the Egyptians of encountering other languages, histories, and identities. But competition in this field has now become so fierce that it has barred the way to any collaboration and turned the far-fetched dream of inter-Arab cooperation into a dream that may never come true.

Amin: What are the advantages of satellite broadcasting for the developing world?

Shoter: Indeed, satellite broadcasting is relevant to the top as well as the bottom line in the third millenium; it yields political freedom and social responsibility as well as financial revenue. The best examples are Al-Jazeera, LBC, and Future, which have initiated new margins of freedom, program content, and breaking news coverage. But the expenses involved burden such channels with a drive to find sponsors or else face collapse. These facts make it urgent to have regulations governing satellite operations. It is important to note that news coverage, scoops, and competition are different faces of the same coin. Thus news gathering, credibility, and objectivity are basic elements of broadcasting success.

The Arab media scene has witnessed the blossoming of globalization, and has encountered foreign investment and development without losing faith in our cultural heritage. Undoubtedly the new media order does not refer to negative absorption of western culture, but healthy interactive dealing. The margin of freedom is a priority in this global, no-boundaries operation that esteems creativity, cultural democracy, and boosting the information superhighway. This is a naturally given right to people to have free access to knowledge, regardless of race, education, and nationality.

Amin: What is the relationship between technology and quality programs on Arabsat?

Shoter: Improving the use of existing technology is another requirement to lift the quality of program content. Making use of virtual space would be meaningless without well-studied and carefully structured programming that uses a combination of ingredients that involve visual appeal, creativity, and communications skills.

Amin: Are there other factors affecting the success of broadcast satellite programs on Arabsat?

Shoter: The promise of superior Arab satellite programming can never be attained without close integration and cooperation between private and public sectors. Appropriate planning, plus utilizing skilled and trained manpower, are among the requirements. In an attempt to have an objective assessment, one cannot ignore what impedes the potential of Arab satellite broadcasting. The lack of any research centers and comprehensive market research makes any strategy or study a tedious task with uncalculated results.

For any scientific project, a careful feasibility study must be done to analyze the market and the audiences. It is vital to estimate an investment's potential revenue to maximize its chances of success. Finance is a key word that affects the selection of an orbit and the synchronization of the satellite applications. Moreover, it enables comprehensive coverage to the maximum area.

Amin: Are there any other barriers affecting the development of satellite projects in the region?

Shoter: Unfortunately, the collaboration of Arab satellite broadcasters faces an indefinite number of obstacles. For example, satellite orbits are usually jammed with different players and their signals are overlapping. This makes urgent the need to compromise and deal with giant foreign media players, even when it comes within the Arab zone. Besides, there is the constant challenge of designing a modern satellite and then the need to immediately build it; otherwise it becomes obsolete.

In order to establish a satellite industry there must be well-structured marketing to make it a profitable business. One should resist any sort of monopoly, always adopting a neutral and objective management attitude. Pricing must be carefully calculated to deal with the competition factor, without neglecting other economic considerations.

Amin: Is there any competition between the two Arab satellites, Arabsat and Nilesat?

Shoter: There is a healthy competition between Nilesat and Arabsat; the threat is from other satellites that promote obscenity or want to win the market regardless of the consequences. Some foreign satellites adopt marketing plans that serve their targets without considering the situation on the macro levels in their search for short-term excessive profits. There must be a sort of coming together and joint acquisitions by Nilesat and Arabsat for the welfare of their operations. This sort of joint-venture support might range from sharing technology, production, and management to developing their own strategic campaigns and enhancing solidarity against the other operations. TBS