Atheeb’s ambition

Compared with its vibrant mobile market, fixed-line and broadband internet have long been laggards in Saudi Arabia's communications sector. But all that could change with the launch of a nationwide WiMAX network. Dr Ahmed Sindi, CEO of Atheeb Telecom, tells George Bevir about his plans to challenge the status quo in the country's telecoms sector.

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By  George Bevir Published  January 7, 2009

"We have a desktop device that has phone ports, that has Wi-Fi and that has data plugs. There are USB dongles, PC cards and we hope by the middle of 2009 probably some handheld devices, so there is a whole slew of devices that will be available for consumers to access our networks.

Devices are available at very affordable prices now. It is a reality, it is not a discussion. They are available in commercial quantities. We're talking Motorola, Chinese manufacturers, Samsung and Alcatel."

Simplifying communications

Sindi says that Atheeb Telecom can achieve its goal to "simplify the way people communicate" by making sure people have robust, nomadic broadband connectivity available to them wherever they go.

"We have deployed the largest WiMAX network in Europe, Asia and the Middle East. Our coverage of WiMAX in the major cities in Saudi Arabia is very methodical. It is coverage that does not leave blank spots and that is fairly uniform within the city.

This will support the ubiquitous availability of broadband connectivity whether in the office, having coffee, in the playground, in the mall - wherever your daily activity takes you."

Geographically, it is quite a challenge. Saudi Arabia covers an area of 2.1 million sq km - an area slightly more than one fifth the size of the US, with many of its major cities spread across the country.

Although Sindi is confident that Atheeb Telecom will not struggle to reach the coverage targets set out in its licence, the final list of cities that will be covered by the WiMAX network will only be revealed when Atheeb Telecom is "closer to launch."

"We're covering the major provinces, and we will exceed our targets of covering Saudi Arabia. The minimum requirement is to cover three provinces in the first three years, seven provinces in five years and the whole 13 provinces in seven years. We will beat this significantly. And we're embarking on quite a bit of accelerated coverage effort."

Availability and affordability are the keywords in Sindi's description of Atheeb Telecom's approach to network roll out. Although Sindi will not reveal details of Atheeb's pricing structure, other than to say it will be "very competitive", he makes no secret of his desire to target the country's sizable youth market.

"Saudi Arabia is characterised by a young population - more than 60% of the population are younger than 35 years old. Young people have interesting buying habits. They use technology in interesting ways, and that's why we are in business in Saudi," he says.

The size and speed of the network are two areas that Sindi is confident that Atheeb Telecom will perform well in.

Regulator's role

Most new entrants to the market call for a firm hand from the telecoms regulator in order to create what is usually described as ‘a level playing field', and in this regard, the Atheeb Telecom boss is no different.

"There is a lot of competition in the Saudi market, and if the regulator does not come there with strength the chances are you will see a lot of consolidation and a lot of investments will be lost, unless the regulator steps in with clear leadership," Sindi warns.

"I think the challenges going forward are pretty significant and the jury is still out on that. Specifically in how the regulator would actually curb the actions of the incumbent to drop the prices to bundle the services like the fixed and the DSL, to bundle their ISP offering with their voice offering and the continuous reduction of prices that they are taking."

Sindi is unhappy that wholesale prices offered to the new operators are not at a discount to prices offered to consumers.

"The interconnection rates for fixed-lines are actually higher than some of the retail rates offered in the market, and this is something that needs to be looked at and studied. There is still room for strong regulatory action as far as implementation is concerned and as far as ensuring that the dominant players don't bundle their services in such a way that it will be considered anti-competitive."

Price control for the incumbent operator, STC, and any operator deemed to have significant market power, is what Sindi says he would like to see in the Saudi Arabian market.

"We think it is likely to happen," he says. "The regulator has launched an effort to study mobile, fixed, and data service provision market. We await the results of this exercise which hopefully will declare some of the existing service providers as dominant in ISP and also some new service providers as dominant in data service provision.

"The regulator must ask itself, what is it that they require? If they want broadband - especially in the Middle East - if they want broadband to really explode, to offer all of these services so that we develop our region in unprecedented ways, there is no shortcut."

Sindi is confident that the strategy Atheeb Telecom has developed in Saudi Arabia could be replicated in other countries in the region.

"What we are trying to do is prove that this business case works, but you need to have few strategic commitments and you need to have the strategic vision that will enable this type of service to actually be a mainstream service rather than a niche service offered only for a certain limited segment. "We're interested in Egypt, whether through this corporation or through some of our founding shareholders.

We keep our eye on other opportunities, but the focus right now is to make sure that this business model works in Saudi Arabia and delivers the results that we are promising it will deliver."

Local Loop Unbundling

For Dr Ahmed Sindi, WiMAX was the obvious choice for developing a fixed network in Saudi Arabia. He says the technology has advantages over local loop unbundling because the success of the latter, in Saudi Arabia at least, is reliant on the implementation of fair regulations.

"The first choice was WiMAX, the second choice was the LLU, bit stream access. LLU will work only if the challenger can control the quality of service and if the price and proposition is reasonable: if you take any of these two elements you are finished before you start," Sindi says.

Sindi says the crux of the matter for LLU is pricing methodology. "LLU and pricing of the service has got to be designed in such a way to reflect the costs. We're not talking about the costs the incumbent has paid for their network, that doesn't matter. They cannot pass on their inefficiency to the new operator," he says.

"The devil is in the detail. Regulatory framework is necessary, but not sufficient. The sufficient part is to make sure the pricing and service level agreements are commensurate with the regulatory regime and are actually being enforced in a timely fashion."

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