Saudi VSAT tender to open 'major' market

Slow uptake of broadband services in Saudi Arabia will ensure significant opportunities for the four eventual winners of VSAT (very small aperture terminal) operating licences in the Kingdom, according to the Arab Advisors Group.

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By  Richard Agnew Published  June 8, 2003

Slow uptake of broadband services in Saudi Arabia will ensure significant opportunities for the four eventual winners of VSAT (very small aperture terminal) operating licences in the Kingdom, according to the Arab Advisors Group.

The tender, which has seen 27 companies lining up bids, has been expected to offer limited scope in terms of the services providers will be able to offer after the licences are awarded later this year. However, the analyst group predicts that the winners can still provide stiff competition to monopoly operator Saudi Telecoms Company (STC), particularly in areas outside the reach of its terrestrial networks.

“[We] foresee a major market for VSAT services in broadband internet connectivity,” says Jawad Abbassi, Arab Advisors Group president.

Factors working in VSAT providers’ favour include the low availability of DSL services in Saudi Arabia – 50% of applications for ADSL are currently rejected due to potential customers being outside the 5km range of STC’s exchanges.

“As wireline DSL is lagging behind due to technical limitations and population dispersion, VSAT could offer a viable alternative for companies and even individuals who wish to have access to high speed internet in areas not covered by STC’s DSL services,” Abbassi adds.

He expects the move to herald “a form of competition” in Saudi Arabia’s data comms market, however STC will retain its monopoly position over other data comms services such as X.25, Frame Relay and ATM, as well as remaining the sole provider of GSM, PSTN and international connectivity.

Meanwhile, the number of internet users in Saudi Arabia reached 1.5m by the end of last year, according to Arab Advisors. The number of internet accounts also rose to 581,000, representing a penetration rate of 2.64%. Abbassi also predicts that the Kingdom’s internet market will hold more than 1.6 million subscribers and 3.8 million users by 2007.

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