Mobile Substitution hits Saudi Arabia's telephony market hard

In response to the technological changes affecting the Saudi Arabian market, the government is expected to continue pursuing its telecommunications liberalisation process.

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By  Christopher Reynolds Published  December 24, 2006

A study by information technology and telecommunications advisory firm IDC has revealed that the Saudi Arabian fixed line voice market shrank by 4% to US$2 billion in 2005 and is set to contract on average by 7.6% annually over the next five years. The decline of the fixed-line market is primarily due to consumer migration to mobile services. However, due to the low cost of fixed-line calls in comparison to mobile and the momentum gathering behind VoIP, the growth of mobile telephony has not stemmed the growth in fixed-line connections, which are set to rise 5% in 2006.“The new lines are a reminder of the under-penetrated nature of the Saudi telephony market but also of the rising demand for internet access” said Mohsen Malaki, research and consulting director, IDC CEMA. In response to the technological changes affecting the Saudi Arabian market, the government is expected to continue pursuing its telecommunications liberalisation process. According to the IDC’s Saudi Arabia Telephony Services 2006-2010 Forecast and 2005 Analysis study, a new licence is likely to be issued in the first half of 2007 and the telecoms regulator is likely to open the market to voice over broadband (VoBB), further spurring competition and opportunities for both the incumbent and the new operator. "ADSL and other broadband technologies will open the door to voice over broadband services in the country, and that will help mitigate the effects of the contracting circuit-switched telephony market," said Said Irfan, research analyst, IDC MEA. "But operators will need to do more to express the value of their services by developing novel offerings for consumers and integrated solutions for the businesses."

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