3G in the Kingdom and the Middle East

by david.nunes
Saud Bin Majed Al-DaweeshIssue:Africa and the Middle East 2006
Article no.:7
Topic:3G in the Kingdom and the Middle East
Author:Saud Bin Majed Al-Daweesh
Organisation:Saudi Telecom Company (STC)
PDF size:92KB

About author

Saud Bin Majed Al-Daweesh is the President of the Saudi Telecom Company (STC). Previously, Eng Saud Bin Majed Al-Daweesh served in a number of executive positions including as acting Vice President responsible for the company’s overall network operations, as Vice President for Customer Services and District Affairs, and as the President of Al-Jawal, the Mobile Business Unit of STC. In addition, he played an active role in the transformation and restructuring of STC, and was responsible for the creation of the ISP Business Unit (Saudinet), which introduced the Internet in the Kingdom of Saudi Arabia. Saud Bin Majed Al-Daweesh earned a Bachelor’s Degree in Engineering at the University of Southern California.

Article abstract

3G mobile networks are spreading throughout the Middle East. Several countries including the Kingdom of Saudi Arabia and Bahrain have already issued licenses for 3G service providers. In Saudi Arabia, this will accelerate the Kingdom’s connection to the Internet – a huge step forward. Although mobile services drive telecommunications growth in the region, they have limited potential for future revenue growth. Operators look to the value-added services that 3G makes possible, such as MMS and e-commerce, to boost their revenues.

Full Article

You have seen the billboards and newspaper advertisements, heard the radio ads and read the articles, but why all this hype about 3G and what does it mean for our nation? During the past year, there has been much excitement and press coverage given to the development of 3G, third generation mobile networks, and its future in the Kingdom of Saudi Arabia (KSA). Since the Kingdom’s regulator granted the 3G service licences, mobile broadband technology has moved on to the next stage. In simple terms, the Saudi nation will be able to connect to the Internet much faster than was previously possible, which is a huge step forward for the Kingdom 3G is relatively new in the region and growing at a rapid pace, when HSPDA, High Speed Packet Data Access, a packet access technology for wireless networks launches in the region it will be a huge jump forward, as much of the kingdom still uses dial up and only 20 per centof households have an Internet connection. Our nation is a young one with 50% of the population under the age of 25, but they are very tech savvy; given this, together with the appeal of mobility, I foresee a huge demand for the service all over the Middle East and especially in the KSA. Saudis, by nature, have strong social ties and love to talk on their mobiles, so if you look at the average minutes of use in the Middle East, you will probably find that it is double that in the European Union, because people in the Middle East consider talking to be entertainment. The Middle East region has a number of opportunities for 3G in the areas of infrastructure, technology or service provisions. However, the success of such ventures will depend upon the presence of a number of critical factors including the availability of broadband access technologies, wireless and mobile technologies and digital asset management. The Kingdom’s operators have been leading the efforts to bring 3G to the region and they are firmly committed to the investment, technological evolution, continuous development and innovation needed to make this happen. The mobile market has been the growth driver of the Middle East’s telecommunications industry for much of this decade. However, with limited potential for future growth in services, carriers will have to look to added value services to grow their mobile revenues. With 3G services, by far, showing the highest average revenue per user, ARPU, in the mobile market, telecom operators will have to intensify their 3G capabilities, and persuade subscribers to use and pay for high-returning services such as mobile data and 3G multimedia. The market is changing, with rapidly increasing competition in the mobile sector and slowly reducing state involvement. Licence tenders to operate privately owned mobile networks have recently taken place. Mobiles are taking market share from declining fixed-line markets in the more developed countries. Internet use and broadband development are generally low for the relative levels of economic development except for the United Arab Emirates (UAE). Bahrain was the first country in the Middle East to fully liberalize its telecom market two years ago in March 2003, and many other countries have since followed their example. This has actually helped bring lots of investment to the region and has, as well, improved services and created new opportunities, both for customers and investors. Bahrain was also the first country to issue a 3G license and served as a good pilot project to test new technologies and new marketing strategies. According to the Yankee Group Research Company in Western Europe, 3G penetration is projected to be 20 per cent of the of the total mobile market by 2006; by 2009 penetration is expected to reach 60 per cent. The 3G handset market should account for over 80 per cent of the total handset sales by 2009, compared to the 42 per cent expected in 2006. In 2005, 3G handsets accounted for only 20 per cent of the total handset sales and eight per cent of the total mobile customer base The success of Multimedia Message Service, MMS, is setting the stage for a 3G take-off by changing user behavior, moving people away from Short Message Service, SMS, and creating demand for mobile Internet services. Once people are regularly using mobile multimedia services, there will be a natural rise in demand for the higher bandwidth offered by WCDMA – wide-band Code Division Multiple Access, CDMA, for services such as video streaming and video telephony. Other operators around the world have developed engaging content that has driven the use of the MMS. In Saudi Arabia millions of MMS’s are sent every day; it is an innovative way of communicating with friends and family, but it does have some sectors of our conservative society worried about the abuse of technology. However the Kingdom is changing and we like to think that people in general will use this wisely. One way of combating the abuse of this technology is by creating relevant content for different people. Sunrise in Switzerland, for example, offers MMS services in which subscribers can elect to receive a daily or weekly Garfield cartoon for kids and women are targeted with illustrated horoscopes. All these would work very well in the Kingdom. Italian operator Telecom Italia Mobile offers access to information on Italian football matches via TV program vignettes; this, again, would do very well for our football-loving nation. MMS brings added value to cross-media mobile multimedia services, for example sports enthusiasts watching a game on TV could use MMS to receive additional player and team statistics or alternative camera angles of a goal. Another application will use the latest traffic-status information and knowledge of location to generate a map of the quickest route to a destination, or even to display where the user’s friends are located. The investigation of the possibilities that MMS brings is only just starting. The initial success stories are often the result of building on existing popular services – such as adding images and audio to basic text services – to enhance the user experience. A similar evolutionary approach will be taken when 3G makes higher bandwidth applications possible. Eventually, the Kingdom’s operators and subscribers will catch up with their European counterparts. Yet in all regions of the world, the ultimate success of 3G systems depends on applications. Many industry observers believe, for example, that electronic commerce will be the ‘killer application’ that fuels widespread demand for 3G wireless services. That may turn out to be the case. However, people are likely to opt for 3G services, be they for e-commerce, Web browsing, or other high-speed data applications, only if those services are affordably priced and if the 3G handsets are easy to use. The essential rationale for deployment of a 3G network – gaining spectrum efficiencies, easing network capacity constraints, lowering operating costs, and expanding revenue opportunities through provisioning of data services – remains intact. We believe that the rising popularity of MMS and picture messaging will legitimize the culture of data consumption in a mobile environment and spur deployment of network infrastructure. It will not, though, be just 3G driving these developments; public wireless local area networks,WLANs, with ‘hotspots’ will also help in this development. Despite all these uncertainties, 3G wireless systems will emerge, and I expect the adoption of 3G to evolve with reasonable speed. We also foresee regulators easing the constraints on licenses and pushing for more competition.

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