Cisco tops list for $3bn Saudi fixed line

US networking firm Cisco Systems has topped a list of companies competing for building the infrastructure of a new private fixed-line phone network in Saudi Arabia, the chief executive for the US-Saudi joint venture said in a statement on Saturday.

CEO Zohair Azhar said the partnership of Saudi Optical Communication Co. (OCC) and US telecom titan Verizon Communications is allocating 11.25 billion Saudi riyals ($3 billion) for developing the infrastructure and services of its fixed-line network

Cisco will be competing with Nokia, Ericsson, Alcatel and other companies in constructing the advanced fiber-optics network that area planned to link 21 Saudi cities in its first seven years of operation, Azhar added.

Saudi regulators gave the OCC-Verizon alliance initial approval operate the first private fixed-line phone network in Saudi Arabia jointly with two other international consortiums led by Bahrain Telecommunications and Hong Kong's PCCW, ending the monopoly of state-controlled Saudi Telecom Co. (STC).

Telecom experts believe that OCC-Verizon alliance will implement the IP Next-Generation Network (IP NGN) technology in its fixed-line network. IP NGN offers a flexible and cost-effective platform for delivering voice, data, and video services over one line.

Mazin Tunsi, an expert on fiber-optics networking, said OCC-Verizon’s new network is set for success.

“All the competing companies have the latest technology and their project execution history in Saudi Arabia is very encouraging,” Tunsi said. “Some of the companies are investing a lot of money in the Kingdom due to the big accounts that they are handling.”

Cisco announced last April that it plans to invest more than SAR 1 billion riyals in the Saudi market. Part of this investment will be used to increase overall headcount of Cisco Systems employees in Saudi Arabia from about 70 to 600 employees.

Tunsi also said that it would be difficult for STC to compete in the fixed-line market after the entrance of the three new operators.

“STC’s network cannot be updated,” said Tunis. “It relied on huge bundles of fiber optics and it was a single-mode network. Today most fiber-optics networks are multi-mode thus they allow for more transmission of data.”

International telecom firms are more attracted to operate mobile-phone networks, but many analysts believe the Saudi market for fixed-line phone networks is still attractive due to its low penetration rate.

According to official figures, Saudi Telecom has some 4 million fixed-line customers in a country of around 22 million, which makes the penetration rate for fixed-line phones around 18%.

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