DAMMAM, 9 July — The latest price cuts by King Abdul Aziz City for Science and Technology (KACST) and the Saudi Telecom Company (STC) are of no use to the end-users. The cuts will only help the Internet service providers (ISPs) to break even and improve their infrastructure.

The new rates which came into effect on July 1 have had very little impact on subscribers. The rates for small ISPs remain unchanged while those for medium and big ISPs have been slightly reduced. For example, prior to the new rates, ISP Sahara Network was charging SR99 for one month’s unlimited access. Now it has brought the price down to SR90 for the same service. The bigger ISPs have cut prices between 20 to 30 percent. They are now charging from SR100-SR110 for one month’s unlimited access.

Haitham AboAisha, general manager of Sahara Network, said, “No doubt price reduction has helped ISPs who have been incurring losses since the Internet service was launched. The reduction will help ISPs to upgrade their infrastructure and improve services.”

The end-user, however, will not benefit unless STC reduces its dial-up charges, AboAisha said. STC General Manager Saleh Al-Jasser has ruled out any reduction in dial-up charges, which will continue at SR3 per hour. Al-Jasser refuted the contention that the Kingdom’s rates were the highest in the region. He said that rates in many Gulf countries were heavily subsidized.

ISPs say that STC policies are wrong. STC projected the number of Internet subscribers to reach at least three million but AboAisha dismissed this figure and said it was barely 1.5 million. “How can STC expect subscriptions to increase with the present rates. It is not Internet charges which are discouraging users; it is the STC dial-up charges,” he said.

According to AboAisha, many ISPs experience constant losses and as a result the Internet service is substandard. “To compensate for losses, many ISPs took on more subscribers than they could serve and this affected service.” He said that the new rates have helped the ISPs at least to break even and that this should have a positive impact on service.

There are currently 28 ISPs in the Kingdom. Some of them have merged to reduce losses and improve services. These mergers will surely weaken smaller ISPs who cannot compete with them in services or charges.

To reduce anomalies and unfair advantages, KACST should introduce a uniform rate for all Internet subscriptions after consultation with ISPs. At present, each ISP has it own rate structure. But ISPs say that even making charges uniform would change nothing “unless STC reduces its dial-up charges. If STC wishes to see the Internet grow, it must be bold and imaginative,” AboAisha said.

ISPs allege that STC is earning three times more per hour than ISPs and should therefore pass some of its profits on to the end-user. Saudi Arabia, we are told, has the highest subscription rates in the region. According to one ISP, it is SR250,000 for two megabytes compared to SR50,000 in Bahrain.