Increasing Broadband Internet Penetration

In the OIC Member Countries

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In this context, the government has sought to increase the number of players in the mobile

sector by promoting the entry of Mobile Virtual Network Operators (MVNO). In June 2013 the

Communications and IT Commission shortlisted three companies for MVNO licenses: Lebara

(targeted to migrant communities and relying on Mobily’s network), Virgin Mobile (targeted to

the youth segment and using STC’s network) and Friendi (aimed at expatriates). The first two

launched service in the fourth quarter of 2014

, while the third had its license cancelled for

not having submitted the full application. These two operators have started gaining some

market traction, particularly Virgin which has signed up to one million subscribers as of 2016.

State of competition in broadband market

As noted in the earlier section, the Saudi broadband market consists of two convergent players

(Saudi Telecom Company, and Mobily), two fixed broadband “pure plays” (Etihad Atheeb and

ITC), one mobile broadband operator (Zain), and two MVNOs. Competition in the fixed

broadband segment is infrastructure-based, while in the case of mobile broadband, it is a mix

between infrastructure-based and service-based

Created in 1998 from the state-owned telecommunications monopoly, the Saudi Telecom

Company (STC) remains the dominant player in the broadband market with 2,190,960

subscribers in fixed broadband (71.6 % share) and 13,310,000 mobile broadband customers

(50% share). In addition to being the sole ADSL provider in the country, STC started rolling

FTTH technology in February 2011 offering speeds of up 200 Mbps. By the end of 2015, the

operator had passed 1,770,000 homes with fiber optics in most Saudi cities. STC dominates the

fixed broadband market because its copper access network has much greater reach than its

competitors, providing direct access to DSL. Furthermore, until recently the fixed network

remained largely not liberalized, thereby limiting the competitive threat. Alongside its fixed

broadband network, STC has deployed LTE technology, serving approximately 85% of the

Saudi market. In July 2016, the regulator issued a draft Market Definition and Dominance

Report establishing that STC was dominant in 11 national markets and 4 submarkets. It

recommended remedies to promote competition linked to Interconnection and Access to

Physical Facilities.

Mobily, partly owned by Etisalat of the United Arab Emirates, is the country’s second

convergent player, controlling 79,560 fixed broadband (2.6% share) through its Bayanat al

Oula subsidiary, and 7,719,800 mobile broadband subscribers (29% share). While remaining a

much smaller player than STC, Mobily has been actively deploying fixed broadband

infrastructure. The company owns 66% of the Saudi National Fiber Network after the

acquisition of Bayanat al Oula, the holder of a WiMax license. As of the end of 2015, existing

Mobily and STC fiber networks are 90% overlapping in dense urban geographies.

“Lebara launches MVNO services in Saudi Arabia”.

Telegeography

, December 16, 2014.

Infrastructure-based competition is based on players deploying their own networks, while service-based entails operators

purchasing facilities from another provider and competing on the basis of service offering and quality of customer

experience.