Broadband Development

Saudi Arabia is the largest IT market in the Middle East by some margin. The telecommunications sector is enjoying phenomenal growth and the development of fixed and mobile broadband networks looks set to boost the strong levels of take-up even further.

  • E-Mail
By  the Gitex Times Staff Published  April 15, 2006

|~|saudimobile1_200w.jpg|~|Nesci believes that Saudi Arabia could become a market in which new technologies are trialled for the first time in the Middle East.|~|Saudi Arabia is the largest IT market in the Middle East by some margin. The telecommunications sector is enjoying phenomenal growth and the development of fixed and mobile broadband networks looks set to boost the strong levels of take-up even further. Despite the fact that a huge proportion of the Gulf’s IT spending occurs in Saudi Arabia, with the sector in the Kingdom projected to grow at a rate above 20% to 2008, the development of the telecommunications sector still appears to be immersed in a game of technical catch-up, compared to several other Middle East states. While the demand for advanced technologies such as broadband internet access continues to soar, the major challenge for companies rolling out these solutions is to ensure that they have enough capacity — both in a bandwidth and skill sense — to keep up. According to the CITC, the number of leased lines is expected to increase to 40,000 this year, expanding at an annual growth rate of 18.3% and the Kingdom is projected to invest more than US$10 billion in new data information technologies by 2020. Access to the internet via domestic servers has been available in Saudi Arabia since 1998. Users are now estimated to number in the region of 2.5 million, though the majority of these use dial-up. According to Arab Advisors, Saudi Arabia had an internet penetration rate of 4.16% in terms of the number of subscriptions at the end of 2003, with an equivalent ADSL penetration rate of 1.48%. The low ADSL penetration rate in the Kingdom was not on account of a lack of demand, but rather the fact that many applications were turned down on account of technical constraints. “The low (ADSL) penetration (in Saudi) is as a result of 70% to 80% of broadband activation accounts being turned down,” estimated Jawad Abbassi, president of Arab Advisors. “Users need to be within a 5km radius of the local exchange to receive ADSL and many prospective subscribers are not. This situation has given rise to the development of large grey and black markets for broadband services, offered through VSAT and satellites,” Abbassi added. VSAT refers to a small fixed earth station and comprises of two modules — an outdoor unit and an indoor unit. The outdoor unit consists of an antenna and radio frequency transceiver. The antenna size is typically 1.8 metres or 2.4 metres in diameter, although smaller antennas are also in use, with the indoor unit functioning as a modem. It also interfaces with the end user equipment such as stand alone PCs, local area networks or even telephones. Despite these teething problems, Saudi is on track to grow its broadband penetration through progressive moves such as the award of two data communication licences to compete with STC. In August 2004, the two Saudi companies, Bayanat Al-Oula for Network Services Consortium and Bayn Consortium were declared winners of the licence for public data communication services out of 11 companies pre-qualified for the bidding. These providers are set to launch service later in the year, with access to their own international bandwidth. The Kingdom also hosts five VSAT providers and counts more than 20 ISPs. The development of broadband networks in the Kingdom over the last year or so is very clearly a driving force within the region’s ICT sector and Saudi Arabia lies within that sweet spot. “STC does not (seem) to see economic value in deploying fibre to communities with a population lower than 1,000 inhabitants,” said Alcatel’s vice president for the Middle East region, Vincenzi Nesci, suggesting there is scope for alternative technologies such as WiMax to gain a foothold in the Saudi Kingdom before they do anywhere else in the region. “Around 10 kilometres is the difference between a (broadband) service and nothing (no service). So we will push for WiMax in certain areas given the regulatory environment,” Nesci added. STC is already utilising WiMax technology across the Kingdom’s four largest cities of Riyadh, Jeddah, Damman and Khobar for backhaul connectivity between sites. Given the official standardisation of the mobile derivative of the WiMax standard — 802.16e — on December 8th of last year, the expectation is that commercial orders are set to be placed during the course of this year, with a number of networks going live before year-end. Demand for computer hardware and software in the Kingdom is being heavily influenced by the growing use of voice over Internet Protocol (VoIP) for long distance calls. Currently, it is legal to use VoIP in and among Saudi government agencies. However, public VoIP is prohibited until an appropriate data licence is granted, which is expected to happen this year. ||**|||~|saudimobile2_200w.jpg|~|Vendors and operators are competing for KSA customer buy-in.|~|Once VoIP is licensed for commercial public use, STC would be well advised to follow the example of Jordanian state incumbent Jordan Telecom in embracing VoIP technology rather than waiting for more nimble newcomers to enter the market and utilise the technology at STCs expense. At the end of August last year, Jordan Telecom became the first telco in the region to launch an end-to-end VoIP offering on a commercial basis. Preferring to describe its product as voice over internet in order to differentiate its application of the technology from web-based, independent VoIP offerings, Jordan Telecom is of the opinion that IP-based dual- and triple-play services are the most effective way to reinvigorate the wireline business. “The uptake of ADSL was three times higher in Jordan in 2004 than in the last three years combined, and we see this new product, the Livebox, as the new residential gateway,” commented Dissa Jaimoukha, operational marketing director, Jordan Telecom. As part of a partnership with the Jordanian incumbent, Alcatel was selected to integrate and deploy the solution. While the French supplier was responsible for the Livebox projects overall systems integration, application components used in the project were sourced from Netcentrex, another France-based triple-play technology developer. “The move to VoIP, which was made possible by state of the art convergent technology and by the introduction of a new regulatory and licensing regime earlier this year, will extend services available to subscribers. In a second phase deployment, Jordanians will also benefit from video connectivity,” said Luc Savage, Jordan Telecom chief strategy officer. Organisations such as Riyad Bank, Arab National Bank, Tadawul, and the Saudi stock exchange, have all recently deployed advanced IT solutions that include VoIP, to deal with business challenges. “We’ve seen a dramatic increase in call volumes. In January 2005, we had 300,000 calls, and in October 2005 we had more than one million. With the fast growth we’re experiencing in Saudi Arabia, we’re expecting the banks business to keep expanding dramatically,” said ANB’s IT manager, Saad Al Khalb, who has overseen the implementation of a VoIP system. “We dont know exactly what new developments we will see, but the VoIP system will give us the flexibility to cope with the future.” Saudi has also been strong in developing its international data links and earlier this year the three national telecoms operators of the UAE, Iraq and Saudi Arabia announced having come together to begin the laying of a submarine cable connecting the three nations together. Etisalat, Iraqi Telecommunications & Post Company and Saudi Telecom Company have signed a Construction and Maintenance Agreement that will see the installation of FOG2, the second generation of the Fibre-Optic Gulf cables. The FOG2 terabit capacity system, initially equipped with 80 Gbps capacity over two fibre-pairs, is the first ever fibre-optic submarine cable to land in Iraq. It will initially connect Fujeirah in the UAE, the eastern coast of Saudi Arabia and Um-Qasr in the Al Basra province of Iraq, and stretches approximately 1500 kilometres. Extensions to potential new participants in the project across the Gulf could extend the total length to approximately 2200 kilometres. The tender is currently out for the project, with the system expected to be operational by the end of the year. Etisalat and STC have also united over SEA-ME-WE 4, another submarine cable connecting France to Singapore via the Middle East, which was inaugurated in December 2005. Designed to last 25 years with full reliability, SEA-ME-WE 4 has 32 times the initial capacity of SEA-ME-WE 3, which was installed in 1998. The new ultra-fast link will multiply the existing data transfer rate and is expected to ultimately reach 1.28 terabits per second, equivalent to simultaneously conducting over 15 million telephone calls. Satellite communications have also played an integral part in developing Saudi’s information technology capacity. According to a recent report published by the US - Saudi Arabian Business Council on Saudi Arabia’s ICT sector, in October 2003, the government announced that it would grant four local companies — High Capabilities Company, Nasser al-Harbi for Trading, Detecon Al-Saudia and Saudi Inter-national Telecommunications & Electric Company, — licenses to provide VSAT services. With satellite connectivity growing and increased interest in broadband access, Gitex Saudi 2006 is a vital event for many companies looking to build up their customer base.||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code