Saudi Arabia’s ‘free’ internet plan is for real
The so-called ‘free’ internet access idea originates from the ISPs themselves and a formal proposal will be presented soon to STC and the telecomms regulator.
Awalnet, Saudi Arabia’s largest ISP by number of subscribers, has confirmed that plans to provide ‘free’ internet access in the Kingdom are for real.
The system will work something along the lines of Egypt’s free internet model — the ISP subscription charge would be done away with and users would pay only a monthly phone bill charged at SR3 per hour spent online (a rate that is predicted to drop to SR2 in April.) The revenue from the phone bill would then be divided between the phone company and the user’s ISP.
Abdullah Aldubaikhi, chief executive of AwalNet, told Arabian Business that the plan originated from the ISPs themselves and that a formal proposal will be presented soon to Saudi Telecomms Company (STC) and the national telecomms regulator.
“STC currently charges SR3 per hour [for using the internet] and we want to encourage STC to split the SR3 with us,” explained Aldubaikhi. “It will be much easier to do it this way.”
By having STC take care of billing procedures, ISPs would no longer have to worry about the distribution of pre-paid cards, the method that most Saudi consumers use to pay their subscription charge.
Distributing the cards to retail outlets is a headache and an expense for ISPs, according to Aldubaikhi, and doing away with them would free ISPs to focus more on value added services and infrastructure.
However, there is likely to be a drop in revenue as the new system is introduced, a drop that Aldubaikhi believes will be offset by rapid growth in user numbers and internet air time. “There will be a period when we have a drop in revenues and then they will shoot up,” says Aldubaikhi. “We will benefit from greater volumes overall.”
Saudi Arabia’s internet market is certainly in need of a boost. The number of internet subscribers has stagnated at somewhere around 400,000 and few ISPs are making a profit. Awalnet, with 100,000 subscribers, claims to have only recently broken even.
“The growth has not been as anticipated,” concedes Aldubaikhi. “We expect with the free internet that it will really boom.”
The ‘free’ internet model could be seen, however, as a risky option to take. The model was introduced into Egypt in 2002 and ISPs suffered as revenues dropped in the short term and Egypt Telecom failed to pass on revenues to ISPs.
However, it might be seen as a good thing if free internet were to cause a shakedown in Saudi Arabia’s ISP market. 25-plus companies currently fight for the business of the country's 400,000 subscribers, a key reason why ISPs remain unprofitable.
Last year saw two large mergers, one involving TriNet and Dallah and the other involving Naseej, AwalNet and Alamiah.net. At least two smaller ISPs have recently withdrawn from the market and further consolidation is expected. “Before the end of the year, there will be two or three more mergers,” predicts Aldubaikhi.
As for the free internet plan, there is no guarantee at this stage that it will happen. ISPs must first of all put together a proposal and then submit it to STC and the country’s telecomms regulator, who will then make the final decision.