RIYADH, 15 May — The Shoura Council passed yesterday a draft bill to end the state’s monopoly of the telecom sector and allow foreign investors. The bill, which is subject to government approval, allows for the establishment of new shareholding companies while not ruling out foreign investors, Council member Abdul Aziz Al-Suwayegh said.
“The bill aims firstly to break the monopoly over the telecom service,” which is controlled by the Saudi Telecom Company (STC), Suwayegh said. The government has been considering plans to privatize the firm which also controls the Internet and mobile services.
The bill recommended the setting up of joint stock companies for providing services without stipulating a minimum capital. The bill aims at paving the way for the development of quality telecommunication services at cheaper cost with the free play of market forces. It will also help the sector to catch up with the rising demand from other sectors as well as the demands of the fast growing population.
According to another Council member, the new bill, which will expedite the restructuring of the telecommunication sector, will coincide with the founding of a Telecommunication Authority to supervise the whole sector and monitor the prices and the quality of services. However, the proposed authority will by no means reduce the significance of the Ministry of Post Telegraph and Telephone, he added.
The 11 chapters of the new bill cover general rules, licensing, rules of competition, frequencies, networking, machinery and equipment, utilization of real estate, and violations and fines.
The bill also defines the general policies of the sector and the general framework for expansion and development as well as the rights of the government, service providers and beneficiaries.
The Kingdom has more than three million land lines and almost two million mobile lines. Four foreign companies — Ericsson of Sweden, Finland’s Nokia, and Motorola and Lucent Technologies of the United States — are bidding to expand the GSM network by one million lines, according to the Middle East Economic Digest. Saudi Arabia also has just under 200,000 Internet subscribers and an estimated 600,000 users, figures which IT experts term modest for a population of more than 20 million.
They say introducing competition to the vast Saudi market would upgrade the service and cut its existing high rates. An international e-commerce conference in Riyadh last week, among a list of recommendations, called on the authorities to cut telecom rates and promote electronic trade in the Kingdom.
The conference said the Kingdom must have high quality and reliable telecom facilities, and that plans to upgrade the telecom infrastructure must be accelerated.
The policy-steering Supreme Economic Council in February drew up a list of sectors to be excluded from foreign investment, including telecommunications. But the list is being modified.
