Free internet debate tops KSA agenda

Gitex Saudi Arabia is likely to be buzzing with talk about the free internet model. Under this model, users will only pay for the time they are logged on to their respective internet server.

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By  Hitesh Uchil Published  April 3, 2003

Gitex Saudi Arabia is likely to be buzzing with talk about the free internet model. The plan, which appears to have the buy-in of most internet service providers (ISPs) and monopoly operator, Saudi Telecom (STC), proposes doing away with subscription payments and migrating to a revenue sharing model between the ISPs and STC. Under the free internet model, users will only pay for the time they are logged on to their respective internet server. The revenue for the call is then split between the ISP and STC.

Advocates of the scheme predict it will lead to an explosion in the number of internet users and lay the foundations for a more mature internet market in the Kingdom. “The move to a free internet model will improve business,” says Abdallah Aldubaikhi, general manager, AwalNet.

“Initially, there is likely to be a fall in the number of subscribers, but that will be offset by the increased number of internet users and the greater amount of time they spend online,” he adds.

The shift to a revenue sharing model will also enable ISPs to streamline their operations. Currently, the Kingdom’s ISPs have to maintain a chain of resellers for their prepaid internet subscription cards. However, resellers claim a hefty commission—anything between 20 and 35% of the cost of the card. The revenue sharing model would make the channel redundant and save the ISPs much needed cash reserves.

Arguably more important than the financial solvency of the ISPs, is the hope that the free internet model will lead to a value added internet market. Currently, cost remains the main competitive dynamic in the market, however, by removing that ISPs will be forced develop and deliver value added services. “The ISPs must focus on value added services in this market. At the moment this market is all about price. The margin is squeezed by the distributors,” says Rashid Al Snan, executive director, Atheer.

“This model will force companies to compete on value.”

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