Previously a monopoly operated by the Ministry of Post, Telephone and Telegraph (MoPTT), the mobile sector opened up to competition in 2004 under the regulatory oversight of the Communications and Information Technology Commission (CITC), and has since become the largest telecom sector in the Middle East, boasting over 56 million mobile subscribers and £13.6 billion in consolidated revenues in 2011.
Healthy competition among the three largest operators – Saudi Telecom Company (STC)
, the oldest and largest of the three, Etihad Etisalat (Mobily) and Zain – has led to a continuous improvement in the quality of voice and data services. The former promises moderate growth despite the already high mobile penetration rate of over 180 per cent, but the true growth area in the medium and long terms will be data services.
The improvement in service quality has been simultaneous with an unprecedented growth in demand for both mobile and fixed-line voice and data services, which is driven by Saudi Arabia’s fast growing, young and tech-savvy population, 64 per cent of which is under the age of 30. Operators have made efforts to cater to these customers, efforts that resulted in a surge in the provision of high-speed data options like 3G, and Long Term Evolution (LTE) or 4G, in recent years. Smart devices are increasingly popular in the world’s second fastest growing Twitter nation, while broadband – a fairly recent phenomenon – has reached a penetration rate of almost 50 per cent in 2012, up from nil in 2005.
Such developments point to the fact that the country is on the verge of a broadband boom, which accompanies and complements the equally impressive advances in infrastructure, education and research, and which together can unleash Saudi Arabia’s potential to become a knowledge-based society.
Looking ahead, the telecommunications sector is poised to play an ever-increasing role in the Saudi economy. Its contribution to GDP (2.7 per cent in 2012) and direct and indirect employment creation (generating approximately 60,000 jobs per year) are only small measures of the importance of this sector to the country’s development.
As Saudi Arabia transitions into a complex and diversified economy, telecommunications will be quintessential to supporting the need for advanced communications solutions to improve the competitiveness of both the private and public sectors. Businesses, big and small, are increasingly operating based on mobility, functionality and web-based technologies.
The public sector, in turn, has put forward a number of e-projects as part of the National Communications and Information Technology Plan (NCITP).
These include the King Abdullah Science Park (KASP) and the Information and Communications Centre (ITCC), which require major investments in telecommu-nications infrastructure.
Furthermore, the large-scale infrastructure plans in the works at the moment – the King Abdullah Economic City, the Knowledge Economic City, King Abdullah Financial District (KAFD), the numerous universities and research centres founded after 2010, and even government services like country and city mapping, healthcare provision, drug standardisation and census and data collection – are all dependent on state-of-the-art technology solutions, meaning that telecommunications are the guarantor of the country’s sustainable development.
STC: maintaining leadership thanks to innovation and customer centricity
The largest telecommunications company in the Middle East and 14th largest in the world, STC was established in 1998. The company is the only fully integrated operator in the kingdom, offering fixed, mobile, voice, data, internet, and IPTV services. STC has preserved its leadership in the sector throughout the years, in spite of the fierce competition from the newer entrants Mobily and Zain, thanks to its diligent efforts to innovate and to its customer centric management style.
Boasting a 54 per cent market share in the GSM segment in Saudi Arabia, STC boasted a customer base of 30 million subscribers as of May 2013 and a 58 per cent share in the total revenue of the telecommunications sector. It also enjoys a superior position in the DSL segment thanks to its robust network of more than 150,000 kilometres of fibre-optic cable line. It has been the innovator that introduced such services as 4G LTE and fibre to the home (FTTH) to the Saudi market, and is the only Saudi telecom company that has successfully expanded abroad into markets like Turkey, India, Malaysia, Indonesia, Kuwait, Bahrain and South Africa.
According to Chairman Abdulaziz AlSugair, one of the main drivers of STC’s obvious leadership is its customer centric management style, whereby the company strives to meet and exceed the customers’ expectations instead of dictating them based on a pre-existing corporate strategy. According to him, STC “puts customers at the heart of all its activities and, over a period of time, has gained the trust of individual consumers, businesses and government institutions alike.”
|In May 2013, STC was appointed as the provider of fibre to the home technology (FTTH) to King Saud University|
Examples reflecting STC’s devotion to serving its customers’ needs through innovation abound. To address the demand for integrated services, the operator launched “InVision”, a package of telephony, broadband internet and TV/video-on-demand services, which boasts almost 80,000 customers to date.
Responding to the high demand from the business community, STC focused on offering fully integrated solutions that include fixed and mobile voice, broadband internet, data and ICT services, and has secured more than 435,000 corporate accounts as of 2012. Proof of the trust these services enjoy are the clients themselves, as STC lists some of the most prominent Saudi companies among its roster of customers.
Last year, it became the provider of smart technologies to the largest holding in Saudi Arabia, Kingdom Holding, through an agreement that concerned the provision of a smart fibre-optic network for integrated IT solutions to the Kingdom Land mixed-use residential/business district.
Other flagship projects won by STC include a complete triple play (fixed voice, data and video) in KAFD, ITCC, and 17 industrial cities in the kingdom managed by Saudi Industrial Property Authority (MODON). Knowledge Economic City in Madinah was the first economic city in the country to adopt the all-fibre triple play deployment approach implemented by STC.
Perhaps the main contribution to the country’s overall development is STC’s contribution to the national infrastructure development plans and its provision of integrated, smart solutions, namely broadband, fibre-to-the-factory, WiFi, WiMAC, VAS, cloud computing and M2M technologies to the economic cities.
The sheer impact of this contribution will be tremendous, as the economic cities are expected to generate hundreds of thousands of jobs and, most importantly, know-how to develop and diversify the Saudi economy into sectors like industry, minerals, logistics, technology and life sciences, among others.
True to its mission of being the enabler of a knowledge-based society, in May 2013, STC was appointed as the provider of FTTH technology to Saudi Arabia’s premier university, King Saud University, through an agreement that would see the telecom operator install a fibre-optic network to enable high speed services to campus residents. And, in yet another example of innovation and sensitivity to the needs of the Saudi society, in 2011 STC became the first operator in the kingdom to launch a cloud computing service for eHealth solutions called Easy Clinic.
A provider of broad, robust and modern telecom infrastructure
Having the longest presence on the market of all the telecommunications companies in Saudi Arabia means that STC has developed the most advanced infrastructure for fixed and wireless voice and data services. The company’s constant investments in this area have resulted in its capacity to support 2,496 TB of daily traffic as of May 2013 and to manage over 90 per cent of the data traffic in the country.
In the words of Mr AlSugair, the company has been successful at creating an “availability of broad, robust and modern infrastructure within the kingdom and beyond in the form of fixed line network, fibre to the home technology and undersea cables that many operators in the region rely on.”
STC is a founding member of, and has significant investments in, Terabit-sized systems such as SEA–ME–WE 4 (Southeast Asia–Middle East–Western Europe), IMEWE (India Middle East Western Europe), and EIG (Europe India Gateway). This has enabled STC’s Jeddah Landing Stations to become the Middle East hub for international traffic between Europe and Southeast Asia, and it has enabled STC to secure long-term international capacity requirements for Saudi Arabia’s emerging knowledge-based society.
STC manages its international data traffic through huge pipes on these cable systems with its capacities currently exceeding 450 Gbps and growing rapidly. These cable systems are further complemented by other smaller systems as well as terrestrial routes via Jordan, Syria and Turkey into Europe, thereby enabling STC to offer the most comprehensive, diverse and reliable international connectivity to the West as well as to the East.
A key aspect of the company’s corporate strategy looking ahead is to ensure its leadership in next generation broadband services. STC has already made a promising start in this regard by launching the 4G mobile services for commercial use in Saudi Arabia in 2011, in partnership with the leading international network companies. But the company is looking to further pursue this area in order to ensure its “presence in ICT across the board” and to support the government’s vision to develop knowledge-based industries.
According to Mr AlSugair, “STC is now looking to develop a comprehensive strategy to pursue the ICT field, which will result in further acquisitions, both domestic and international, and niche capabilities that will enable the company to grow faster and have an even broader market presence.”