STC defends Internet pricing policy

Khalid Al Molhim, CEO of Saudi Telecom Company, insists that Internet prices in Saudi Arabia are in line with other Gulf states and that STC will keep on lowering them.

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By  David Ingham Published  May 1, 2002

Khalid Al Molhim, the CEO of Saudi Telecom Company, has rebuffed suggestions that STC is to blame for what most Saudi Arabians consider high Internet access costs. Rather, the CEO of Saudi Telecom Co. insisted that prices in Saudi Arabia are already competitive with other regional countries and says that a round of price cuts are coming.

“There’s lots of talk about us having higher prices than others,” says Al Molhim. “We have lowered our prices to reach those of other Gulf countries and our policy is to keep on lowering them.”

Al Molhim made his comments at last week’s E-Commerce 2002, the Kingdom’s major annual Internet and e-business conference. In his keynote speech, Al Molhim claimed that rather than price being the problem, factors such as the cost of PCs and parents’ fears about unsavoury content are holding back the Internet in Saudi Arabia.

Whilst saying that pricing is not the issue, Al Molhim revealed that he does, however, have a plan to lower prices. This “programme to lower prices”, he said, aims to increase the number of Internet subscribers from 300,000 now to 500,000 in the coming year.

In a Q&A session after his keynote, Al Molhim faced tough questioning, however. He was asked several times why Internet access still costs SR4 per hour; he responded by repeating that price cuts are in the pipeline.

One questioner also criticised the quality of digital subscriber line (DSL) services, which are supposed to provide high speed Internet access and thus get round the quality of service problems that frustrate Saudi’s Internet users. “I agree with you that DSL is ineffective now,” admitted Al Molhim.

Pressed further on who should be blamed for pricing, he replied: “I don’t want to say. Three entities share the problem.” Those three are STC, King Abdulaziz City for Science and Technology (KACST) and the ISPs.

One senior Saudi analyst, Dr Said Al Shaikh, chief economist at National Commercial Bank, is amongst the voices urging more action to boost telecommunications usage. In a presentation to E-Commerce 2002, Dr Al Shaikh said that a typical dialup subscriber will spend $60 per month using the Internet.

He says that this is something like 8% of the average monthly income in Saudi Arabia. In comparison, US citizens spend an average of 0.8% of their monthly income using the Internet, he added. “We have a long way to go in terms of developing the telecommunications sector,” said Dr Al Shaikh.

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