New VSAT licenses herald competition in Saudi datacomm market
Saudi Telecom Company (STC)’s monopoly over Very Small Aperture Terminal (VSAT) services will end in 2003, as four VSAT licenses will be awarded this year. Twenty-seven companies have been pre-qualified for the tender, which will have a limited scope when compared to STC’s services.
Saudi Telecom will retain its monopoly over other datacomm services, including X.25, Frame Relay and ATM services, in addition to being the only provider of PSTN, GSM and International connectivity in the Kingdom.
On the ISP front, several consolidations occurred in the Internet Service Provider market, making the total number of ISP licenses 23, down from 30 in 2001, with 21 ISP currently operational. There are no future plans to issue new ISP licenses, so as to encourage further consolidation between ISPs.
“Despite having a relatively low penetration rates for Internet users and subscribers when compared to other Gulf countries, Saudi Arabia has a substantial Internet market. The number of Internet users reached around 1.5 million by yearend 2002, a penetration rate of 6.6 percent, served by 581,000 Internet accounts, a penetration rate of 2.64 percent,” reported the Arab Advisors Group in a recent study. Internet subscribers a projected to exceed 1.6 million in 2007, while Internet users are expected to reach 3.8 million the same year, with penetration rates of 6.5 percent and 15.7 percent respectively, said Arab Advisors Group’s President, Jawad Abbassi.
“The slow uptake of ADSL in Saudi Arabia has a supply side cause; some 50 percent of the applications for ADSL are rejected due to the fact that applicants’ premises are not located within five cable kilometers of the STC’s exchanges.” Abbassi added. “This is why, the Arab Advisors Group foresees a major market for VSAT service in broadband Internet connectivity. As wire-line DSL service is lagging behind due to technical limitations and population dispersion. VSAT could offer a viable alternative for companies and, even individuals, who wish to have access to high speed Internet in areas not covered by STC’s DSL services.”— (menareport.com)
© 2003 Mena Report (www.menareport.com)