ALKHOBAR, 24 July 2007 — Problems with connectivity in the Kingdom are nothing new. People forget those terrible times 20 years ago when a five-year wait for the installation of a fixed telephone line wasn’t unusual. I remember when mobile lines became available. I wasn’t one of the first subscribers to Al-Jawwal, but eventually, when they reduced the price of a mobile line to SR5,000, I got one. Could you imagine paying SR5,000 for a mobile connection now?
These days, problems with Internet connectivity, especially broadband Internet connectivity have everyone in a rage. Before launching into a discussion of this issue there’s one number that everyone needs to know — $20 billion. According to advisory firm Delta Partners, Saudi Telecom (STC) has $20 billion on hand for investment.
Despite the recent availability of fixed broadband from other providers such as ITC and Bayanat Al-Oula, most individuals and businesses still depend on STC for broadband data transmission.
But industry analysts believe STC has no intention of massively growing its business organically — that is by increasing the turnover of its existing business through investment in the Kingdom’s networks. No, instead, STC has its sights set on growing inorganically or through mergers and acquisitions of other companies, especially in countries outside Saudi Arabia.
STC is a public company, and this is certainly not an incorrect strategy for the company and its shareholders. From a purely business point of view, STC should not have any consideration for the fact that its $20 billion war chest was gained thanks to profits earned through high service fees and inadequate service to the Saudi market. It earned that $20 billion fair and square and it should invest those monies in ways that bring maximum return to its shareholders.
Should we all be outraged at this strategy? Of course. But the truth is that our outrage should be directed at the telecom regulator, the Communications and Information Technology Commission in Riyadh. The CITC is responsible for such items as licensing of telecom providers, maintaining quality of service and approving the rates the telecom providers levy. So immediately I would encourage everyone to direct complaints in regards to connectivity in the Kingdom to the CITC. At their website, www.citc.gov.sa, is an extremely nasty complaint form to fill out. It is located under the icon of a person with an exclamation point above his head on the CITC home page. This form asks a dozen questions that have nothing to do with poor telecom or Internet service so it would seem that the CITC hopes to discourage complaints, but if you are angry enough, take the time to fill out the form.
It is necessary to be precise when filling out the form and there is a need to provide details of the issues involved. Let’s take my own lack of connectivity situation at home as an example of how to construct a rational complaint. My Internet service provider (ISP) and I have been struggling for three months to solve my broadband connectivity problems. The ISP’s technician has spent four miserable nights at my home investigating the issue. A trouble ticket has been open at STC for three months about my slow or nonexistent DSL service.
Why do I think my connectivity situation is obnoxious? Well, except for the hottest months of the summer, I pay more for my home Internet connection in the Kingdom than I do for my home’s electricity. I give SR240 monthly to my ISP for a 512 Kbps Internet connection. I also pay SR120 monthly to STC for that same connection. This works out to SR360 per month or $96 for 512 Kbps. In Dubai for that money I could have a 2 Mbps connection. In fact a report, “The Broadband Revolution” (http://middleeastbroadband.pbwiki.com) found that a 100 megabit connection in Japan, the lowest worldwide, costs $27 per month, or $0.27 per megabit — making my pitiful 512 Kbps connection in Saudi Arabia 700 times more expensive. The report pointed out that of the world’s Top 10 broadband markets, the range of price between 1st place Korea and 10th place Canada is between $0.45 and $6.50 per megabit per month. In Saudi Arabia that same megabit costs a minimum of $160 per month.
I know that the numbers I’m providing here are unbelievable. So see for yourself. Click to the website of British Telecom (BT) at www.bt.co.uk and you will note that it costs a consumer 25 pounds per month for a home Internet connection of 8 megabits. That works out to SR197 per month for eight megabits. Remember that a one megabit connection in the Kingdom is SR600.
Even worse, although I am paying an exorbitant amount for connectivity, I don’t get what I pay for. My ISP provided me with my Internet Access Report since March 2007. In March, I managed to stay connected for 728 hours. In April, I was connected for 565 hours. In May it was only 471 hours and in June the situation hardly improved at 483 hours. In a 30-day month I should be connected for 720 hours.
It’s important to point out that in the limited number of hours that I am connected, my connection speed isn’t anything close to what I pay for. My ISP has noted that the most data I have ever consumed, which means sent or received on my connection, in one month has been 1,753MB. That amount is low for a 512 Kbps broadband connection and indicates that probably due to issues in the quality of the connection that I am unable to stream video, make VoIP phone calls or download music with ease.
I am required to pay for the 720 hours of connectivity in advance and neither the ISP nor STC offers credit or a refund when service is not provided — although both companies have agreed that the lack of connectivity is not due to any fault from my side.
Once again, I must state that while outrageous, the actions and policies of both the ISP and STC are perfectly allowable under the current regulations. CITC has done nothing to legally compel either STC or the ISPs to provide a minimum service level to subscribers. It does seem strange that a country which claims to be working hard to attract foreign investment would not provide guarantees that such basic services as telecom and Internet connectivity would be available to a certain standard, but in Saudi Arabia no one in a position of authority has stepped forward to make such assurances. So if foreign investors can’t get such guarantees, individual consumers in the Kingdom are most certainly without recourse.
Also, despite STC having a huge sum available for investment, $20 billion, for its own enrichment, CITC has done nothing to force STC to lower the cost of bandwidth or increase services. An executive at STC advised that lowering the cost of bandwidth would only create more havoc because demand for DSL already outstrips supply. Until STC’s current network upgrade is complete and stable, the STC executive thought it would be inadvisable to encourage a huge growth in broadband users. In a June 2007 report the CITC found that 50 percent of all requests for DSL from consumers are turned down because their homes are located more than 5 km from one of STC’s DSL enabled exchanges.
Saudi consumers may hope that with new data providers offering broadband through WiMax, fees will come down. This is not likely. In fact, the fees from those providers are actually more expensive than the current DSL fees charged by STC and the ISPs. Trying to escape local providers, tens of thousands of Saudi users are turning to international satellite communication companies for broadband connectivity, with poor results. Using these services, consumers must pay equipment purchase or subscription charges, pay in advance for the connectivity and even pay for service calls if there is a problem with the connectivity. Plus, there is no service guarantee. Maximum connectivity speeds from such services are usually 512 Kbps. Fees start at a minimum of $122 for 256 Kbps monthly, with some European providers requiring $600 per month for a 512 Kbps guaranteed unlimited connection.
What is the outlook for broadband connectivity in Saudi Arabia? There will be an increase in the availability of broadband services but the cost will remain unacceptably high and out of reach for many families, especially when compared to global costs for connectivity. The report “Telecom Sector Reforms in Saudi Arabia,” posted at the CITC website, shows that by 2010, CITC is projecting that the cost of broadband in the Kingdom will come down by just 50 percent. That reduction will be far too little, far too late.
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