News Column

Paying for more without assured service level

August 6, 2014

  The Communications and Information Technology Commission just released its "ICT Indicators Report" for the end of Q1 2014. It shows that with the total number of  mobile subscriptions falling, Saudi telcos are turning to mobile data subscriptions to wring more cash out of their remaining customers.

According to the report, at the end of Q1 2014, the total number of mobile subscriptions fell to 49.8 million, with a penetration rate of 165.1 percent. That's the lowest number of subscriptions since 2010. Prepaid subscriptions continue to constitute the majority, over 86.5 percent, of all mobile subscriptions. The continued decrease in the number of subscriptions is due to of the adoption of CITC's decision linking the sale and activation of pre-paid SIM cards with the national ID system. As companies deactivated a large number of unidentified SIM cards, this impacted the total number of subscriptions and national mobile penetration rate.

Fixed telephone line growth in Saudi Arabia is minimal. There are now 3.4 million fixed business lines, compared to 3.3 million lines in 2013. Over the same time, there was actually a decline from 1.41 million fixed residential lines to 1.4 million residential lines.

The one bright spot is in the area of broadband services. The report noted, "Recently, demand for broadband services has increased significantly compared to previous years, due to the society's need for broadband services, especially after the government's strong support for high tech projects which require good digital infrastructure. In addition, many government services are being accessed through e-government transactions.

The widespread use of Internet in society is another factor that led to this growth, where the Internet has become a major source of hundreds of thousands of applications that are downloaded to smart devices such as social networking, business applications, text messaging, security tools, games and more."

Fixed broadband subscriptions including DSL, fixed wireless (WiMax), FTTx and other fixed lines have grown to about 3.12 million subscriptions at the end of Q1 2014. The Fixed broadband penetration rate stands at about 46.3 percent of households. At the end of the quarter there were 324,000 leased lines and fiber (FTTx) connections. An additional 200,000 fixed wireless subscriptions were added during the quarter - the same number as added in the whole of 2013.

Mobile broadband subscriptions are growing at an even faster pace. At the end of Q1 2014, there were just over 20 million mobile broadband connections, representing a population penetration rate of 66 percent. More than 5 million dedicated mobile data subscriptions were added in the first quarter of this year. The CITC report cites strong competition, the healthy expansion in the use of smart phones, and the offering of various data

packages by mobile operators suitable for different user segments.

As would be expected, more broadband subscriptions led to more Internet users. More than 18 million people are now online in Saudi Arabia, resulting in a population penetration rate of 58.1 percent. Social networking applications, video downloading and gaming are the main online activities of Saudi Internet users. CITC found that customers are seeking higher speeds and larger packages resulting in heavy data traffic on both mobile and fixed networks. Unfortunately, CITC's report did not mention if the speed and quality of broadband services were being maintained or if customers were simply paying for higher speeds and larger packages in a desperate attempt to get any reasonable broadband service level.

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Source: Saudi Gazette, The

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