Uncertainty looms over Saudi internet charges

Saudi Telecom Company (STC) has reduced the prices of the internet bandwidth it sells to King Abulaziz City for Science and Technology (which in turn sells bandwidth to the Kingdom’s ISPs). However, if and when the rates KACST offers ISPs are in turn lowered, there is doubt over whether all ISPs will pass these savings onto end users.

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By  Matthew Wade Published  May 1, 2006

Saudi Telecom Company (STC) has reduced the prices of the internet bandwidth it sells to King Abulaziz City for Science and Technology (which in turn sells bandwidth to the Kingdom’s ISPs). However, if and when the rates KACST offers ISPs are in turn lowered, there is doubt over whether all ISPs will pass these savings onto end users. STC has reduced the price it charges KACST for each 1Mbyte of monthly data by 37% (down to SR 5630 or US $1500). According to STC’s press statement, KACST is then expected to charge ISPs SR 8580 ($2288) per megabyte per month. However, the ISPs Windows Middle East has spoken to claim this reduced rate has yet to be brought in. “KACST hasn’t formally announced what the new rates for ISPs will be,” explained Imad Ayoub, the CEO of Cyberia Holdings (one of Saudi Arabia’s several ISPs). “We understand the rate will be around SR 8580, down from SR 13,600 right now, but we’ve not received formal communication of this,” he said, adding that ISPs had been expecting this price reduction to occur on April 1. No spokespeople from KACST were available from comment, though if and when KACST does confirm its widely expected rate cut, there are mixed messages coming from Saudi’s ISP community regarding what this might mean for end users. Ayoub told Windows that Cyberia would bring down its end user prices, though he couldn’t confirm by how much. “This move (KACST reducing the amount ISPs pay) will definitely lead to us reducing customer prices,” he said. “The prices won’t come down by the same amounts though, because ISPs are working on very thin margins.” Not all ISPs look set to adopt a similar policy however. According to Dr. Naser Alnabolsi, the marketing manager at Nesma, his company hasn’t yet decided whether it will reduce its fees, while Abdulaziz S. Al-Helayyil, the products and marketing manager of AwalNet's Al Faisaliah Group of Companies, is more pessimistic. “ISPs were promised this discount last year and did their pricing discounts based on this. These are the prices now available on the market,” Al-Helayyil said. “Because of this and because ISPs were suffering during the last year of losses they had, I don’t think ISPs will do any discount on the prices for the near future.” STC’s price cut follows the recent launch of two data service providers in the Kingdom; Bayanat and Integrated Telecom Company (ITC). Bayanat is already offering international internet bandwidth, for 30% less cost than KACST.

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