Saudi Telecom cuts internet tariffs by 70%

LONG CALL: STC now has one million internet subscribers. (Getty Images)

State-controlled Saudi Telecom Co (STC) has slashed internet tariffs by 70 percent in the hope of capturing half of the internet users in the Gulf Arab region's largest market as competition intensifies.

STC now has one million internet subscribers, Saeed Dhafer Al Qahtani, STC's executive director for sales and marketing, told Reuters late on Sunday. "We actually reach five million since the average Saudi household counts five members," he said.

The company hopes to capture 50 percent of internet users in the country of some 25 million, Qahtani said without setting a timeframe. "Even countries like (South) Korea can't exceed 70 percent penetration," he said.

STC, which has so far been competing only with two mobile phone operators Etihad Etisalat (Mobily) and Zain Saudi Arabia, is set to lose its fixed-line monopoly with the expected arrival of three fixed-line operators.

STC has been facing competition on the Internet only with Mobily, which provides broadband Internet services.

The new operators, led by US Verizon Communications Inc, Hong Kong's PCCW and Bahrain Telecommunications Co, have said they would deploy the latest Internet and multimedia technology, such as WiMax.

Internet will be crucial to the three new fixed-line operators in presenting strong enough incentives to STC's existing subscribers to switch to their networks.

"Competition will be good for the market ... We had a 40 percent mobile penetration (before competition came) now we are at 120 percent," Saud Al Duweish told reporters at a ceremony to mark the company reaching one million Internet subscribers.

STC has formed a joint-venture with a local publisher and a Malaysia-based media services provider to develop media content services and is also tapping the expertise of its foreign affiliates operating in more advanced markets such as Malaysia and Turkey.

"We will provide new services like television and others," Duweish said. (Reuters)

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READERS' COMMENTS

nice research doug ... can you also find ...
Posted by Mohammed, dxb on Wednesday 11 March 2009 at 14:50 UAE time


Doug, you seem to have done a lot of research on internet pricing. Could you please also find out where in the world does it take about 35 days to shift your broadband connection from one location to another within the same city. Etisalat did this to me a few months back.... at least we should expect a little better service from the most expensive internet provider. It comes down to just one factor - MONOPOLY which makes corporations complacent.

More examples?
Posted by Luis, Dubai, UAE on Wednesday 11 March 2009 at 14:45 UAE time


Check denmark, ok so it is not ypical because it is small and advanced (unlike Dubi I guess), then go and check the Balticks. Where did Skype relocate?

Economies of scale neither in CAPEX nor OPEX have anything to do. Thye could justify, at most a 10-15% premium. We are talking huge differences here.
Besides, I would argue that because most of the building in dubai are new the cost of deploying FTTx is much lower than retrofitting into existing cities.

Lack of competition and higher-prices, this it is one of Dubai's hidden taxes.

By way of comparison, I just checked the cost of a 2 mbit leased line in Manila for business, less than 20% I would be charged here.

rgds

Misunderstanding
Posted by Doug, Dubai on Wednesday 11 March 2009 at 13:45 UAE time


Farhan, I think you've misunderstood. I'm not disputing that businesses in the UAE need some sort of broadband access. But here's the thing. Out of those 80,000 potential subscribers in the Caymans, most of the probably need good quality high-speed access to do their job. Now let's look at the UAE. There's around 4 million people here. Most of those people are expats, and most of those expats are construction workers who work 12 hours a day sticking bricks together and then sleep in a labour camp. Do they need broadband access to do their job? Doubtful.

As for banking, it's not really in the interest of banks here to deal with online transactions in the same way that the Caymans do because firstly, the majority of people making international transfers are sending them to people who probably don't have computers (or the senders don't have them themselves). Dubai isn't really transferring massive sums for individual companies trying to avoid tax loopholes.

I'm not disputing that the TRA leaves A LOT to be desired (after all, isn't it time that the prices we were paying for access 2 years ago changed?) but to expect the UAE to be able to magically create a European-style broadband infrastructure when there isn't the same requirement is a bit optimistic.

I differ
Posted by Farhan, Dubai, UAE on Wednesday 11 March 2009 at 10:55 UAE time


Sorry Doug but I differ from your views.
Firstly, high speed internet requirements are probably the same in Dubai if not more. Banking, though might not be as sophisticated over here, but still has a huge data transmission requirement. Even the construction industry (and other multinationals) operate on a far more sophisticated structure, than envisaged.
The main issue over here is lack of competition due to complete TRA monopoly and barriers to entry. With a high market penetration rate, even a small population justifies market entry.

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