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Information and Communication
Technology
PERSPECTIVES ON THE
SAUDI ARABIA ECONOMY
Prepared by:
Team
Revision: 1.2
Sept., 2001
ICT Report
Version 1.2
Document Control
Any changes to the content of this document will be listed below. The updated document will be
distributed to all affected team members.
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Creation Bob .5 Sept, 2001
Update content, team feedback Bob .75 Sept, 2001
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Update content Bob 1.0 Sept, 2001
English edit of section one, add Bob 1.1 Sept, 2001
recommendations
Update document to align with presentation Bob 1.2 Oct, 2001
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TABLE O F C O NTENTS
1. INTRODUCTION .................................................................................................... 5
1.1 EXECUTIVE SUMMARY AND BACKGROUND ................................................................ 5
2. DEMAND PROJECTION FOR ICT SERVICES ..................................................... 7
2.1 KEY DRIVERS OF SAUDI ECONOMY .......................................................................... 8
2.1.1Population Growth and Demographics ..................................................................................................8
2.1.2Financial Resources ............................................................................................................................. 10
2.1.3Market Growth..................................................................................................................................... 11
2.2 FORECASTING ICT DEMANDS IN THE SAUDI ECONOMY ........................................... 15
2.3 METHODOLOGY ................................................................................................... 15
2.3.1 Population growth ................................................................................................................................ 15
2.3.2 GDP/ Capita ......................................................................................................................................... 15
2.3.3 ICT share of GDP ................................................................................................................................ 16
2.4 COMPONENTS OF ICT IN SAUDI ARABIA ................................................................. 18
2.4.1 Government Automation Projects ........................................................................................................ 18
2.4.2 Electronic Workspace .......................................................................................................................... 19
2.4.3 Teleducation ........................................................................................................................................ 19
2.4.4 Telemedicine........................................................................................................................................ 20
2.4.5 Telecommute ....................................................................................................................................... 21
2.4.6 Teleshopping........................................................................................................................................ 22
2.4.7 Tourism and Transportation ................................................................................................................. 22
2.4.8 Media/ News/ Information/ Entertainment .......................................................................................... 23
3. ICT REQUIREMENTS AND IMPERATIVES ........................................................ 24
3.1 TELECOMMUNICATION TECHNOLOGY TRENDS ........................................................ 24
3.1.1Network Trends ................................................................................................................................... 26
3.1.2Applications ......................................................................................................................................... 27
3.2 IT TECHNOLOGY TRENDS ..................................................................................... 28
3.3 TECHNOLOGICAL REQUIREMENTS ......................................................................... 30
3.3.1 Core Technologies ............................................................................................................................... 30
3.3.2 Access Technologies............................................................................................................................ 31
3.4 IMPERATIVES FOR ICT SERVICES .......................................................................... 32
4. ICT ROLE IN DEVELOPING NATIONAL ECONOMY ......................................... 33
4.1 ICT HISTORICAL INVESTMENT ............................................................................... 33
4.2 BUSINESS MODEL ................................................................................................ 34
4.2.1Telephone Call Cabinets ...................................................................................................................... 34
4.2.2Internet Service Providers (ISPs) ......................................................................................................... 34
4.2.3Pre-Paid Cards ..................................................................................................................................... 35
4.3 ICT AS AN INDUSTRY ............................................................................................ 36
4.3.1 Directly Enabled .................................................................................................................................. 36
4.3.2 Indirectly Enabled ................................................................................................................................ 37
4.4 FUTURE INVESTMENT ........................................................................................... 38
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4.4.1 Telco Infrastructure.............................................................................................................................. 39
4.4.2 Digital Economy .................................................................................................................................. 39
5. RECOMMENDATIONS AND SUMMARY ............................................................ 40
5.1 RECOMMENDATIONS ............................................................................................ 40
5.1.1 Role of Government............................................................................................................................. 41
5.1.2 Role of Private Sector .......................................................................................................................... 42
5.1.3 Role of Education ................................................................................................................................ 43
5.2 STC SUMMARY ................................................................................................... 45
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1. Introduction
The purpose of this document is to present the views of STC of the impact and future of
Information and Communications Technology on the economy of Saudi Arabia.
1.1 Executive Summary and Background
The Ministry of Planning has asked STC to participate in a seminar entitled “The Saudi
Arabia’s vision for 2020 “. STC, as the main telecommunications service provider in the
Kingdom will focus on the Information and Communication Technologies (ICT) sector.
The paper will focus on four themes:
1. ICT Demand Projection,
2. ICT Requirements focusing on Technology Trends and ICT Imperatives,
3. ICT Role in Developing National Economy, and
4. Recommendations.
Information and Communication Technology is a new term that reflects the convergence
of the two technologies: Communication and Information. ICT can have a great impact
on the economy of developing nations since it will increase the sharing of knowledge,
productivity, and the level of openness. Further more, the geographic obstacle to
development will be reduced to what we can call ‘the death of the distance’. In a society
like ours, where women and men workforce are not allowed to mix, such restrictions can
be resolved without compromising our traditions by the proper use of ICT. ICT will also
lead to reductions in consumer costs. A recent study by Andersen Consulting showed
that the cost of a banking transaction can go from $ 1.27, in traditional bank branch, to
$0.27 using ATM, and ultimately to $0.01 via Internet banking.
In this paper, Saudi Telecom Company reflects on the future perspective of this new
emerging field and how it would help other economic activities flourish. This paper
represents STC’s view in the Symposium to be held 20-25 Oct. 2001 in Riyadh. The
Symposium is organized by the Ministry of Planning under the theme ‘Vision for the
Saudi Economy in the Year 2020’.
A team of STC experts has participated in writing this document. When drawing the
main headline of the effort, the following thinking model was followed. The demand
created by the economy on the ICT industry in the future until 2020 needed to be
identified. This demand is forecasted by simultaneous growth in three dimensions: 1)
population growth, 2) the GDP, and 3) the Saudi market dynamics.
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It was not an easy task to forecast the growth up to 2020. Reasons are; the forecast
horizon is long. Second, there is a lack of precise figures and historical statistics which
makes it difficult to extrapolate and anticipate the future. To mitigate this in future efforts
we strongly recommend the establishment of solid simulation models to help in similar
situations. In spite of this issue, the team has put forward a tremendous effort to gather
as much as they could. Special thanks go to the Ministry of Planning, the World Bank
EIU, and generally available information on the Internet. Then we looked at what the
technology is going to offer in the next few years. Bear in mind that no one will dare
forecast what the technology will look like in year 2020. This was not meant to be a
science fiction novel. The main trends of both sides of the coin i.e., telecommunication
and Information technologies have been reviewed and linked to the near future demand.
ICT alone is not able to answer the challenge without the availability of a set of
imperatives from government, private and education sectors. We foresee a great
potential for ICT in developing the country and the well being of Saudi nationals. The
potential comes from several angles. Indirectly, via enabling other sectors like
telemedicine, e-Learning and e-Business as well as directly in the high tech industries
where huge demand in the international market will be there for the years to come. We
can confidently look to ICT as the second source of national income after oil.
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2. Demand Projection for ICT Services
Even though predicting the future is a risky exercise, some efforts have demonstrated
competence at this and we can learn from them. Methods of prediction, fall into three
categories:
1. Trend Extrapolation, which examines the consequences of current realities; it
works best when limited to 5-15 years in the future and breaks down for longer
projections because it does not account for how people react to the advancing
trend.
2. “Reading the Clearing”, which looks at the space of human practices --
historical, cultural, social, and technological. "Clearing" is a metaphor for a space
in the forest, a space in which motion and action are possible; actions outside the
limits of the "clearing" are not possible. This perspective reveals that
technologies do not "drive" social change, but rather interact with social
concerns, interests, and moods, producing changes in people's practices and
ways of doing things. This perspective is more successful than any other method
for projections beyond 20 years.1
3. Wishful Thinking, which expresses hopes, fears or expectations about the
future but offers little grounding for these opinions; it is perhaps the most popular
of the three methods, and the least successful.
In 1893, the Newspaper Guild invited 74 leaders of the day to speculate what the world
would be like 100 years hence and published their essays. In 1993, Historian Dave
Walter collected them into a book called Today Then. Strikingly, very few of the
predictions actually happened. Only five of the 74 authors discussed futures that
resemble the world, as we know it today. The others confidently predicted that
technology would eliminate the distinctions between haves and have-nots, reduce
postage to one cent, eliminate most crime, and give people more time to advance their
education, reduce taxation, and limit the scope of government. Only a few foresaw
universal electric power and telephone, a communication system resembling the
Internet, or a doubling of expected lifespan. No one foresaw world wars, the Interstate
1
Herbert Dreyfus derived the metaphor “the clearing” from the work of the philosopher Martin Heidegger (Dreyfus,
1990). The “clearing” is the space of possible human action. Fernando Flores coined the metaphor “reading the
world” to denote understanding how the world is moving (Spinoza, Dreyfus, and Flores, 1997).
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highway system, genetic engineering, mass state education, broadcast radio or TV, or
the computer.
We wonder what an observer 50 or 100 years from now will think of the predictions that
come from today. We see in retrospect that most of their predictions were wishful
thinking. A few of their predictions were trend extrapolations, all leading to the wrong
conclusions. The five who “got it right” were all clearing-readers.
The task before us is to extrapolate trends over the next 15/20 years, which is about the
empirical limit for extrapolations, and to read the clearing for predictions beyond that.
We most definitely want to avoid wishful thinking. Consequently, there is a lot of
emphasis on understanding all the assumptions behind every forecast.
When you consider the fact that the ICT industry is characterized by rapid, sometime
exponential growth, future estimation or projection for any particular year or period is a
challenge. Therefore, we had to search for method to determine the demand for ICT
taking in to account that this method should have logic and be reasonably acceptable by
the reader.
2.1 Key Drivers of Saudi Economy
The first step in deriving an estimate of the demand of ICT services in the Kingdom is to
understand the Saudi economy. This analysis has identified three main drivers of the
Saudi economy:
1. Population Growth and Demographics,
2. Financial Resources, and
3. Market Growth.
Each of these areas is detailed in the following sections.
2.1.1 Population Growth and Demographics
Saudi Arabia has one of the highest birth rates in the world and the majority of our
population is under 20 years old. Approximately 84% of the population is less than 40
years of age and 46% less than 15 years of age. Also, according to the latest figures,
the average Saudi household consists of five to six members.
As we can see from these figures, and the graph below, almost half the population is
young people with high capability to learn or adapt to future technological changes.
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The number of young people in the country is one reason that PC penetration growth in
the Kingdom is among the highest in the region with a annual growth rate of
approximately 20%. It is estimated that Internet household penetration will grow to 42%
by 2006.
80%
70%
60% 1997
50% 1998
40%
30% 1999
20% 2000
10%
0%
USA Jordan Lebanon UAE Kuwait Saudi
Arabia
Therefore, we expect that ICT will have strong demand in the future because of the high
population growth rate and the increasing PC household penetration rate. Our young
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people will expect automated and mechanized systems that will lead to improved
efficiency and productivity.
2.1.2 Financial Resources
Our ability to grow and diversify our economy depends on stable world oil prices. Oil
revenues continue to be the foundation of our economy. With this in mind, the
government has established quantitative indicators for its 7 th five years development
plan. These plans are comprised of three main dimensions: 1) diversification of national
income, 2) privatization and finally 3) the Saudization program.
The Saudi economy has continued to accomplish high levels of achievement and
positive growth rate despite of the challenges experience during the 6th five years
development plan, the severe fluctuation in the international oil prices as a results of the
economical crises of South-East Asian countries.
It is expected that in the coming two decades GDP will continue to grow at
an average growth rate of 2.2% per year. This figure is very close to the
annual growth in the 6th five years development plan.
It is expected that the Kingdom will continue to play a major role in the oil
market as it still consider the largest oil producer in the world. Oil GDP is
also expected to grow at the fixed prices, with an annual average rate of
2.19% during the coming two decades.
The public sector is expected to grow with an annual rate of approximately
1.28% in the coming 20 years. In addition, the role of the public sector is
expected to grow especially in the fields of the production, services and
public utility sector such as electricity.
The government will continue to support directly the education, health and
housing services to the citizen. This support will decline over time as the
private sector begins to take a major role in these fields.
The Saudi private sector is expected to make very big move toward
improving its productivity, efficiency and remove all constitutional
obstacles encountered in order to be able to develop an professional
industrial environment based on their competitive advantages in the field
of the Petro-Chemicals and capital & power intensive industries.
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Long-term indicators predict that the added value of the private sector will
grow in an annual rate of 5.73% during the next two decades.
We believe that the above economic indicators give positive impression about the future
prospect of the ICT market. For example, the government plans to give more space to
the private sector to participate in the development of the national economy that will
result in more demand on ICT. In addition, 7th five years development plan showed the
high support of the government to the education sector and medicine, which are major
players in shaping the ICT demand/ market.
2.1.3 Market Growth
There are several issues that must be considered in predicting the size of the future
Saudi ICT market: 1) the Saudi Telecom market will be partially liberalized, 2) Saudi
Arabia will join the World Trade Organization, 3) the globalization and regional
economic union of business and 4) the convergence of telecommunications and
Information technology.
The expected increase and the high growth in the number of business in the coming five
years could have significant impact on the ICT demand in the future. It is expected that
size of the business will increase by 25% in all business sectors as shown below:
BUSINESS UNIVERSE GROWTH -- SAUDI ARABIA
(2000 vs. 2006)
16,862
2000 21,213 2006
Total of 60K
9,556 Total of 48K
12,022 companies
companies
5,039
5,284 6,729 8,466 6,340
6,648
432
1,508 544
Services 1,897 Services
1,921 2,416
Industry Industry
233 236 Trade 293 297 Trade
189 Sector 237 Sector
33 Finance 42 Finance
Up to 19 Up to 19
20-99 20-99
100 + 100 +
Size (in Number of Employees) Size (in Number of Employees)
Growth Drivers
• Privatization, WTO membership
• Internationalization
• Assumption of 3.9%
yearly growth in businesses
Source: STC five years strategic plan
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2.1.3.1 Liberalization of the Saudi Telecommunications market
Saudi telecom market is expected to be partially liberalized over the coming four to five
years. This process began in 1998 when the corporation of the Saudi telecom was
established, followed by liberalization of the ISP sector in 1999.
The future plan is to start liberalizing the data sector in mid 2002, followed by partial
liberalizing the mobile/ GSM sector in the mid 2003, and finally the PSTN or Landline
sector in mid 2005. These events will have an impact on the ICT demand in the future,
as it will encourage more business/ entrepreneurs to exist. It will also provide Saudi
consumers with more choices, improved and new services, and lower rates.
2.1.3.2 World Trade Organization
The progressive growth in the world trade has been the main driver of the world
economic growth through the last 40 years. Countries who isolated themselves from the
WTO are now far behind while those, which adopted a model for interaction with the
international organizations have achieved positive results and growth. Therefore, Saudi
Arabia joining the WTO and realizing the advantages within the world economy, is
consider of critical importance to the future development of the Saudi economy.
Membership in the WTO will bring a wide range of benefits to Saudi Arabia. The
required changes in the Saudi trade regime will provide the foundation for economic
expansion in the Kingdom. Among other things, accession will require Saudi Arabia to
remove protectionist barriers, to place ceilings on tariffs, to further open key services
sectors to foreign participation, and to improve intellectual property rights protection.
These changes will result in an open, transparent, and rules-based trade regime. The
enhanced competition that will be engendered will introduce new efficiencies and
growth prospects to the economy. The result will be an improved investment climate
that will enable the country to attract substantial amounts of capital from both foreign
and domestic investors.
Membership will entitle Saudi Arabia, on a permanent contractual basis, to all the
benefits that have been exchanged between GATT and WTO members during the last
50 years. Foremost among these is protection against the arbitrary exclusion of exports
from Saudi Arabia to other WTO member nations. Membership will also provide Saudi
Arabia with a seat at the table of policy-makers who will shape the trade rules governing
the global economy in the 21st century. Participation in such deliberations will be
essential as Saudi Arabia seeks to preserve its position in the world economy.
International trade interactions are expected to continue with liberalization and free
customs duties and obstacles will be reduced for all industrial, agricultural products,
services and goods. We will benefit from increased markets for our goods and services
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and the reductions in import tariffs. More countries will join and adhere to world trade
rules, which will achieve more growth at the international level.
The process of liberalizing international trade, especially the services sectors, has
started recently and it is expected to achieve good progress in the future (e.g. increased
demand on tourism services). The current revolution in telecommunications, electronic
business and media systems will contribute to a strong growth in providing these
services across the Kingdom. Accordingly, we need to identify the services that we shall
have relative advantages, or could achieve a relative advantage, and head strongly
towards marketing such services in the international market.
The Kingdom exports of the commodities and services to GDP has reached 41.4% in
1419/1420H (1999) and it is expected to reach 44% by the end of the 7 th five years
development plan, reflecting the importance and the progressive of this sector.
2.1.3.3 Globalization and Regional Economic Union
Regional unions and free trade areas will grow fast i.e. the members of European
communities have increased recently and included countries from central Europe. In
addition, the establishing of free trade zone for the Mediterranean Sea countries, which
will foster trade between the Mediterranean Sea partners and provide them with
proportional advantages. Also, the union in the of the South East Asia countries, pacific
countries union will develop towards economic integration.
At the December 1999 GCC Summit, members agreed to establish a customs union, to
take effect in March of 2005, versus an original target date of 2001. The customs union
will establish universal three-tier tariff levels for members at the rates of 0%, 5.5% and
7.5%. These are significant decreases from Saudi Arabia’s current levels.
2.1.3.4 Convergence of Telecommunications and Information Technology
All indicators show the continuation of the fast revolution in information field. In the
information era, demand increases on advanced products that include special
technologies and designs and other innovations while demand will increase at a lower
rate on the other commodities.
The convergence of voice, video, and data onto a single data network is driven by total
cost of ownership and economies of scale. Parts of the world that attempt to hold on to
monopoly prices and practices will ultimately lose out to the forces of competition. All
kinds of carriers and service providers who once survived by selling basic connectivity
will be forced to find high value-added services to sell, and the basic connectivity
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providers that survive will be extremely efficient and aggressive with respect to pricing.
The first services these providers will look at will be those at the boundary of the
enterprise network-policy management, security services, network operations,
performance management, Web server farms, load balancing, and remote access, to
name just a few.
With the total predominance of the Internet Protocol and related standards, it has
become less expensive to interconnect an enterprise's network with those of customers,
suppliers and partners anywhere in the world. Reliable security and managed service
levels are within reach. Wireless products are waiting in the wings to fill in the gaps
where wire and optical fiber do not go, anywhere on the globe. Connectable non-PC
devices are predicted to outsell PCs in a couple of years. The ease and low cost of
global connectivity changes the meaning of work, makes many sorts of hierarchical
organizational structures irrelevant, broadens the points of contact between suppliers
and customers, and increases everyone's impatience with inefficient paper-based
procedures and other barriers to direct access to information.
Delays, queues, stockpiles, and redundancies are increasingly unacceptable to
customers and increasingly costly to suppliers. Successful enterprises will not only
develop automated management systems that traverse the end-to-end performance of
critical applications, but they will also incorporate business functions directly into the
management system. Thus, "order entry" or "credit card processing" or "shipping"
functions might issue alarms when they begin to slow down, or automatically schedule
additional workers and systems when a performance trend is detected. Systems and
network management will be extended across entire business missions, not limited to
hardware and software components.
Over the next few years, telecom operators in general will have to transform their
current network (pure voice carriers) to multi-purpose digital networks, which can create
and brings lots of advantages and benefits to the ICT market in the future as shown in
the diagram below:
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2.2 Forecasting ICT Demands in the Saudi Economy
Telecommunications and Information Technology are services that support national
industries. However, we know that ICT is required and used by these industries to
conduct their business. The main challenge of this research has been estimating the
value of ICT in our national economy.
In this chapter we will,
1) Explain the methodology used to estimate the ICT demands
2) Determine the future ICT demand
3) List key ICT sectors
2.3 Methodology
To determine the demand of ICT on the Saudi economy, the team used the historical
trends of:
Population growth
GDP/ Capita
and then estimated the ICT Share of the GDP.
The main source of information for the analysis is EIU report 2000, and the web sites
www.eto.co.uk and www.planning.gov.sa .
2.3.1 Population growth
Population has been increasing at annual growth rate of 3.2% for the 1996-2000
periods. We have assumed that the growth will remain the same for the coming 20
years.
2.3.2 GDP/ Capita
GDP/ Capita has been increasing at a compounded annual growth rate of 2.02% for the
1994-98 period. We have assumed that the growth will remain the same for the coming
20 years.
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2.3.3 ICT share of GDP
Using the average of the GDP spent on ICT of 18 of the world economies, and the
average rate of growth for the years 1993-1997, this information was used to baseline
and estimate the ICT demand in Saudi Arabia.
The average of ICT as a percent of the selected economies was 5.13% and the average
growth was 5% each year.
The table below illustrates the countries used to develop the baseline.
Sample ICT as % of GDP for Selected Countries
Information and Communication Technology (ICT) %
GDP
1993 1994 1995 1996 1997
Austria 3.4 3.5 3.6 3.8 4.1
Finland 4.3 4.6 4.7 5 5.2
France 3.9 4.3 4.4 4.5 4.8
Germany 4.1 4.1 4.3 4.2 4.3
Ireland 5.1 5.4 5.4 5.8 6
Italy 3.5 3.8 3.7 3.7 3.9
Portugal 3.8 4.2 4.4 4.6 4.9
Spain 3.5 3.3 3.4 3.7 3.8
Sweden 5.3 5.8 5.9 6.1 6.2
UK 4.8 5.5 5.8 6.1 6.3
Switzerland 5.3 5.5 5.7 6.1
USA 6.1 6.5 6.8 7
Japan 4 4.3 4.5 4.6
The GDP, the population and the ICT baseline were then used to estimate the
ICT demand.
Saudi Arabia: Key Economic Data (1996 -
2000)
(Current US$ billions unless otherwise noted)
Avg Growth
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1996 1997 1998 1999 2000
Gross Domestic Product 136 146 130 141 173
Real GDP Growth (percent) 1.4 1.9 1.8 0.5 4.5 2.02
Population (millions) 19.3 20 20.7 21.3 22
Avg Growth N/a 3.5% 3.4% 2.8% 3.2% 3.2%
Information and Communication 4.91 5.13 5.39 5.66 5.94 5%
Technology (ICT) % GDP
ICT in KSA 6.70 7.49 7.01 7.97 10.28
Using the above assumptions on population, GDP and the percent of ICT of the
economy were estimated and determined:
Forecast population of Saudi Arabia for the coming years.
Forecast the GDP/ Capita of Saudi Arabia for the coming years.
Estimate the nominal GDP of Saudi Arabia for the coming years.
Estimate ICT's current share of the nominal GDP.
Estimate demand for ICT in 2010 and 2020
300
250
200
150
100
50
0
1996 1997 1998 1999 2000 2010 2020
Gross Domestic Product 136.4 146 130.1 140.9 173 211.30 258.08
Population (millions) 19.3 20 20.7 21.3 22 30.1 41.3
Demand on Economy 6.70 7.49 7.01 7.97 10.28 20.43 40.67
Gross Domestic Product )
Population(millions Demand on Economy
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Using the average growth from 1996-2000, the above graph was produced to illustrate
the demand of ICT on the Saudi economy. From US$10 billion in 2000, the demand will
grow to US$20 billion in 2010 and then double to US$40 billion in 2020.
2.4 Components of ICT in Saudi Arabia
As illustrated above, ICT will grow from 5% of the GDP in 1997 to over 15% in 2020.
Where will this growth occur? ICT economic activity for all businesses on all levels and
across all sectors will increase. ICT will drive economic activity and the economic
activity will drive ICT.
Listed below are the main areas of ICT growth.
2.4.1 Government Automation Projects
The wide use of ICT within the Government leads to substantial financial benefits, not
only to the Government itself but also to the Saudi community. Through electronic
service delivery, the community can obtain public services online through a one-stop,
user friendly and interactive service interface. They no longer have to queue in line
physically in Government offices between regular working hours. The public can obtain
Government services at their own place, and at their own pace. The social cost that the
community can save is enormous.
A specific Saudi Arabian aspect and a very good example of streamlining governmental
activities using modern IT is the e-Umrah. Here specific efforts were taken by the Saudi
Arabian Ministry of Hajj by identifying three ‘Umrah Application Service Providers’
(UASP). These allow the online registration of about 5 million pilgrims every year. This
approach will soon be extended with online payment options as well as the usage of
smart technology to help identify and track pilgrims.
In Ontario, Canada, you no longer need to go to a government office to license your
automobile. Your renewal comes in the mail, and you can go to the local shopping mall
and visit an electronic kiosk. You enter your plate and license number, your banking or
credit card, and your car stickers are issued automatically. If you own any fines, you
can pay via your card.
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E-government enables us to provide more efficient and better quality public services,
enhance customer satisfaction and better serve the community. With the use of
advanced technology, we can streamline our procedures, re-engineer backend process
and cut processing time. In short, we would be in a much stronger position to meet the
ever-increasing demand and aspirations of the community in the Information Age.
2.4.2 Electronic Workspace
Office Automation involves the planned application of integrated information tools to
improve the productivity of people in office operations. Although the handling of
information by office people is the focus of this technology, other aspects of the office
will be affected. These include factors such as the organization of functions and lines of
reporting, training for new methods, workspace design, travel patterns, branch office
location, home vs. office work, hours of work, employee morale, and job classifications.
Advances in chip technology and the introduction of wireless communication protocols
will take office automation to new levels. Multiple levels of synergism will be at work
here. Online working will be the norm. Teleconferencing will increase and work related
materials will be shared and available on line. This will add value by collaborative
communication capabilities to integrate the capabilities of individuals into teams and
communities. The working methods of individuals will shift markedly as they settle into
use of integrated tools at the workplace. Evolution of the service system, evolution of
the individual's working life, and evolution of the organization's working mode -- all must
be provided for if an organization wants to capitalize significantly upon the potential of
the technology that is arriving or will be available.
2.4.3 Teleducation
Education is regarded as an important contributor towards the development of nations.
Research in the field of economics has shown that the development of human capital
has a positive and statistically significant effect on economic growth.2 Furthermore, the
quality of schooling, many researchers argue, is considered more important than the
quantity of education with respect to its effect on economic development3.
Annual Growth Rates of General Education
1415/16 - 1419/20 (1995 - 1999)
2
See for example Robert Barro: “Education and Economic Growth” ; February 2000. Also see Barro & Sala-Martin
(1997).
3
See R. Barro and Jong-Wha Lee “International Measures of Schooling Years and Schooling Quality”, AER,
86,218-223
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Elementary Intermediate Secondary
Variables Boys % Girls % Boys % Girls % Boys % Girls %
New Entrants 0.98 (-0.74)* 6.09 4.73 12.03 7.46
Graduates 2.50 5.31 6.07 6.19 17.08 13.53
Schools 1.88 3.14 6.06 5.87 12.87 8.91
Teachers 2.49 3.90 5.69 8.13 12.10 12.60
* Declining rate of growth is due to confining admission to elementary level to age six only
and not to admit anyone under six years old.
The total number of students in general education grew from about 3.8 million in
1415/16 (1995) (studying in more than 22,000 schools, with 170,000 classrooms and
286,000 teachers) to about 4.4 million in 1419/20 (1999) (studying in more than 26,000
schools, with 194,000 classrooms and 357,000 teachers).
Therefore, any factors that contribute to the quality of education should be encouraged
and supported. To this end, ICT can be regarded as one of these factors since it
contributes to not only the sharing of information and ideas, but also to the attainment of
knowledge and higher education thousands of miles away in the comfort of one’s own
home or library. The potential impact of such a revolution on the growth of the Saudi
economy can be tremendous. Such an impact is more likely in countries like Saudi
Arabia because a large percentage of its population is young.4
The effect of ICT on development can be further aided by the declining illiteracy rate,
the increase in the number of public and private universities as well as the various
technical colleges around the kingdom, the rise in number of students majoring in
science and technology fields, and the increase in the government’s expenditure on
education.
2.4.4 Telemedicine
Conceptually, a country’s human capital would include health and dimensions of social
capital, as well as education. The two basic measures of health capital used by
economists are birth and infant mortality. In both respects, the kingdom has come a
long way and its health indicators are at developed economy levels.
Hospitals, Beds and Health Care Centers
1414/15 - 1418/19 (1994 - 1998)
1414/1415 1418/1419 Increase
1994 1998
4
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(Number) (Number) Number Percent
Hospitals:
Ministry of Health 173 182 9 5.2
Other government agencies 34 39 5 14.7
Private sector 72 87 15 20.8
Total 279 308 29 10.4
Hospital beds:
Ministry of Health 26878 27428 550 2
Other government agencies 8357 9119 762 9.1
Private sector 6592 8485 1893 28.7
Total 41827 45032 3205 7.7
Primary Health Care Centers* 1719 1751 32 1.9
* MOH only
ICT can help contribute to development of health services through:
Allow rural health care providers to electronically link with major medical centers
and specialists. Only one or two general practice doctors serve many Saudi
Arabia rural areas. With telemedicine, a medical specialist located hundreds of
miles away can use video and other monitoring devices to examine a patient
living in a remote area.
The sharing of knowledge in the field of medicine with the developed world can
be accomplished. Doctors of various hospitals can, through information
technology and communications with other doctors around the world, attend
various seminars on the most recent healthcare advances at a much cheaper
price and without having to travel thousands of miles away. The result is a more
knowledgeable and more educated health care community and better health care
services for the citizens of Saudi Arabia. In turn, such advancements in health
will result in higher economic growth and further economic development.
2.4.5 Telecommute
The integration of computer and telecommunication technologies permits work outside
the office, i.e., "telework." Work has become portable and may be done on the road,
from the home, a customer's office, and a field office or at a "telecenter" (satellite office).
Telecommuting is working from home or a telecenter. Telecommute provides access to
jobs for the mobility disadvantaged, whether it is a result of physical impairments,
inadequate transportation, or other factors.
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2.4.6 Teleshopping
Teleshopping is the use of telecommunications and computers to shop for and
purchase goods and services. Teleshopping has existed since the first order for goods
or services was placed via telegraph. Modern mail-order catalogs, with 800-number
service and sophisticated computerized order-tracking and inventory systems, are a
recent step in the evolution of teleshopping. Because of the many benefits gained from
adopting this technique, total volume of teleshopping is becoming very popular
technique and it has been increasingly steadily, at the expense of traditional retail
shopping (Schuler, 1992). A part from being very easy technique and requires little
efforts to do shopping, teleshopping provide some type of privacy which can suite and
comply with our cultural, environmental circumstances.
2.4.7 Tourism and Transportation
As a result of the importance of tourism on the national economy, the Supreme
Commission for Tourism (SCT) has been established by the Council of Ministers
Resolution No (9) dated 12/1/1421H. The STC’s major task is to develop the planning
basis for revising the existing structures and system to stimulate the development of
tourism in a controlled and sustainable manner. The high ambition program set by the
Saudi government (SCT) to develop the tourism sector in the kingdom has considered
very much the ICT contribution in the development process.
One of the strong emphases of the SCT is to find ways to encourage more Saudi
nationals and expatriate to take holidays within the country and attract visitors from
neighboring countries to do special interest activities.
The kingdom’s five-year development plans, since their inception, have managed to
develop a strong infrastructure in transportation. Saudi Arabia boasts three
international airports, six major seaports, one hundred fifty thousand kilometers of roads
and nine hundred kilometers of railways. Such transportation infrastructure is essential
for any country’s economic development. ICT’s impact can enhance such infra-
structural development of the kingdom in various ways. For example, it can increase
the demand for quicker transportation requiring automation of the transport industry
(websites, online reservations etc.); it can increase the demand for an integrated
transportation service combining seaports, airports, railways and roads which require
the automation of all transport mechanisms; it can increase the demand for a cheaper
transportation by lowering its cost through automation and it can increase the demand
for and e-enabled transportation industry allowing buyers to purchase services online,
bid for services and track results.
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2.4.8 Media/ News/ Information/ Entertainment
Technological change in these industries is proceeding at a dizzy pace, such that the
previous lines between publishing, printing, broadcasting and entertainment have
become increasingly blurred. At the same time, these knowledge-based industries are
linking with the computer and telecommunications industries in the process of
multimedia convergence. The globalization of TV as seen by the plethora of satellite
channels and the flow of information/news across virtual borders will lead to
empowerment of individuals/ organizations, but may lead to problems in control and
governance. We are seeing the effects of Robert Murdoch’s News Corporation having
control over FOX, Star, BSKYB, thus allowing coverage of most of the globe. The
challenge to governments will be in trying to control information, which may be
detrimental to the local culture and traditions. With open bandwidth and connectivity,
video on demand, data streaming and similar innovations will become the norm.
The above factors are certainly not exhaustive. The impact of ICT on the Saudi
economy will be felt on all levels. As a result, consumer welfare will increase, business
activity will strengthen and the overall effect on economic growth will be positive.
However, it is important to note that for all the above to have any serious impact, the
institutional factors that tie all aspects of society and business together must be healthy.
For example, the administrative system must be efficient, the business laws and
regulations have to be amended to accommodate the expected changes, and a security
system must be implemented to ensure safe usage of all the above-mentioned services.
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3. ICT Requirements and Imperatives
Telecommunications technology is continuously changing the means through which
networks and services are structured. With quite remarkable pace change during the
past decade, the change in the coming years will even become more remarkable and
surprisingly radical. Future networks will have to satisfy the growing demands for large
amounts of data transfer, multimedia services, Internet applications, global mobility, and
personalized services. Furthermore, they will have to interoperate and integrate with
existing technologies, and to offer acceptable Quality of Service at affordable and
flexible charging schemes in a highly competitive environment. Telecommunications is
becoming part of every person’s daily business and living.
In this chapter, we provide an overview of the evolution and trends in
telecommunication infrastructure and services. The latest trends in the most important
areas are highlighted, and we also attempt to depict a vision of the shape
telecommunications networks and services will take in the coming 20 years.
3.1 Telecommunication Technology Trends
Since the inception of Telecommunications in the late 19th century and up to the 1950’s,
the focus was on connecting two fixed points together rapidly, efficiently and with high
“voice” quality over larger distances. During the 1960’s, Computers joined the scene to
support telecommunications. Convergence of the two technologies facilitated many
ideas of networking and services, which continue to shape the present and future
networks.
In order to depict possible future scenarios of visions, it is imperative to take a quick tour
into the milestones of the past evolution stages of the network underlying technologies
as outlined below.
1850 - Telegraph was introduced.
1878 - The first manual switch was introduced.
1892 - The automatic Strowger step-by-step switch was introduced.
1938 - The Electro-mechanical common control Crossbar switch was introduced.
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1950’s - Analog transmission systems with Frequency Division Multiplex (FDM) on Co-axial
or Microwave.
- Some form of in-band signaling tones (single and dual) were used.
1960’s
- The first Stored Program Controlled Switch (No.1ESS of AT&T) was introduced.
- Computers to support telecommunications.
- Satellite communication began as Frequency Division Multiple Access (FDMA).
- PCM digital transmission was introduced with speeds of T1 / E1.based on TDM
over copper pairs, coaxial
cables, microwave and satellite.
- Some form of data transmission, to connect terminals to remote computers, at 150
b/s.
1970’s
- Wavelength Division Multiplexing (WDM) (16 x 10 = 160 Gb/s) for commercial
deployment.
- Public TDM digital switching was introduced.
- Emergence of the concept of Integrated Services Digital Network (ISDN).
- Multi-Frequency-Compelled inter- exchange signaling (MFC-R2) was deployed.
- Dual Tone-Multi-Frequency was used as access signaling.
- Modems were used to achieve 2400 b/s and possibly 4800 b/s. Facsimile started
also to appear.
- A large number of Public and Private data networks emerged (Leased, Circuit
Switched and Packet
Switched).
1980’s
- Satellite communication uses TDMA carrying up to 1.4 Gb/s (24 transponders of
67.0 Mb/s each).
- Fiber Optics transmission with SDH was introduced provided up to STM-256.
- Released ISDN standards.
- ISDN Field trials were conducted in a number of networks.
- Common Channel Signaling System #7 was deployed in many parts of the world.
- Dedicated data networks at 2 Mb/s and beyond provide Teletex and Electronic
Mail services.
- Local Area Networks (LAN's).
- The first commercial cellular system.
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- Paging based on the POCSAG system (speeds: 512, 1200 b/s).
- ISDN technology offered up to 128 kb/s.
- 2 Mb/s repeatered twisted pair PCM was provided at a small scale.
- Optical Fibers provided speeds have 1.5, 2, 6.3 and 44.7 Mb/s.
1990’s
- Measurable ISDN was deployed in the mid 1990’s.
- Dedicated data networks grew to offer bit rates of several Mb/s. The use of
satellite for data
Communication increased (VSAT).
- Global System for Mobile GSM was deployed.
- High-bit-rate Digital Subscriber Line (HDSL) was deployed in the subscriber loop.
- New types of Interface standardized by ITU (V.5.1 and V 5.2).
- Wireless Local Loop (WLL) supports ISDN.
- Very Small Aperture Terminal (VSAT) supports ISDN and speeds up to 2 Mb/s.
- Asymmetric Digital Subscriber Line (ADSL), 6 Mb/s and 1.5 Mb/s, was
standardized by ITU-T.
- MMDS / LMDS
- Wireless Optics.
- FTTH
3.1.1 Network Trends
st
As the 20th Century ended and the 21 Century begin, the digital communication
revolution is nearly completed, leaving us with several extremely important results:
Communications are becoming more and more distance independent.
This implies that the revenue from long distance services is becoming less
important.
Perfect communications can be achieved by software approaches. In fact,
the performance of a communication system is getting more determined
by software rather than hardware, as traditionally was.
All forms of information can be digitized, packetized, switched and routed
over a common platform. This leads to more dominance of packet
switched technology.
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Communication is getting close to hundred percent secure, regardless of
whether the transmission medium is wire or wireless. The wireless
service, therefore, is becoming a predominant access choice.
Therefore, the network traffic has shifted from predominantly traditional voice, to data;
the network design philosophy has changed from centralized to distributed systems;
and most of all,
3.1.2 Applications
The astonishing rate at which applications emerge provides a glimpse of their trends.
Emerging applications aim to ease modern life pressure and increase productivity for
businesses and individuals.
Though future applications cannot be described accurately, they share a number of
common characteristics. They grow fast, are hungry for bandwidth, and place stringent
demands on the underlying network to provide QoS (i.e. reliability, accessibility, speed,
and security). Powerful service creation environment capability will allow administrators
and customers alike to design, configure, provision, and activate services along with
associated Service Level Agreements SLA placing more demands on Operation
Support Systems OSS.
Emerging applications includes:
- Intelligent highways / road systems,
- Remote sensing / control / monitor,
- Safety & security of objects and people,
- Machine-to-Machine communication,
- Telecommuting,
- Virtual reality,
- Telemedicine,
- E-business, E-Commerce, E-Government, …and
- Media streaming.
While those applications represent but a small sample of the anticipated future
applications, they are still in their infancy. They are expected to grow in sophistication,
expand and merge to yield yet new applications.
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Speed of provisioning, QoS and appropriate charging rate will minimize churn rate.
While the main challenge of the past was malicious calls, virus attacks constitutes
significant challenges for future network / services. Control of the network resources will
be turned into the hands of highly sophisticated legitimate and illegitimate customers
who can intentionally or inadvertently introduce detrimental effects on network and
services.
3.2 IT Technology Trends
In accordance with Moore’s law, the number of transistors per chip doubles every 18-24
months. This means that processor performance follows a similar exponential growth
trajectory. Current microprocessors can operate at over 1 Gigahertz, and provide
something like 1000 MIPS. In the year 2011, we expect 10 Gigahertz and 100,000
MIPS.
In 1988, the Cray Y-MP8/4128 Supercomputer had one Gbyte of RAM, peak Mflops of
1333, weighed more than 5000 lbs and cost approx. $14M. Today, that same
performance is expected of a Dell Notebook running a Pentium III, which will weigh less
than 5 lbs and cost under $4000.
Existing handheld devices such as the Palm VII or the RIM BlackBerry provide wireless
e-mail, two-way paging, and web access for under $500. These services will be
enhanced in the medium term to provide increasingly rich data access through such
technologies as the Bluetooth protocol. At the same time, mobile phones and pagers
will add features to become increasingly “smart”. Eventually all these products will
converge to create a (possibly modular) product whose overall characteristics and
features cannot be fully anticipated. In addition, the possible implications for user
behavior are presently boundless!
A large fraction of the world population will become connected in one form
or another (for numbers of Internet penetration, global comparison and
ISP subscribers in Middle East please have a look at5).
Digital personas. These personalized databases or “agent” programs
accumulate a history of the location, movement, actions, and environment
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of an individual. Much of this data is being collected now, e.g., in computer
browser “cookie” files, in geographic tracking information generated by cell
phones, and so on. “digital personas” will encourage their spread, subject
to some modest limitations.
Ubiquitous, smart sensors and wireless connectivity. The area with the
greatest possible impact in about 20 years. Mass production will lower the
cost of sensors to one dollar or less per unit. They will become ubiquitous
on devices, artifacts, clothing, and perhaps as embedded sensor/monitors.
Their viability would be improved if the sensors could extract power for
their operation from their environment. The largest impact may be in
medical applications, but initially applications may focus more on: smart
materials, construction uses, wide area networks for environmental
sensing, and so on.
Ubiquitous digital access to the net. Widespread accessibility of “the net”
from a rich variety of devices and locations is a common prediction.
Trusted mobile code. Mobile code is software that migrates over networks
to various client machines, for local execution. An example is an e-mail
attachment that executes in some manner when accessed – for example a
Word document with embedded macros that launch when the document is
opened.
Major advances in computer mediated human interactions, particularly
asynchronous ones. Electronic mail (e-mail) is the most widely used
application on the Internet. Video conferencing will become commonplace,
but it is deemed a less important revolution than advances in
asynchronous interaction, due to the major advantages of asynchronicity
in human communication.)
Optical communication Systems. The biggest technical development is
likely to be in optical systems. We expect to see commercially available
optical switches within the next 4-5 years, implying that end-to-end pure
optical systems will be a reality within the timeframe being considered by
this conference.
In 20 years, mass production will lower the cost of sensors to one dollar or less per unit.
They will become ubiquitous on devices, artifacts, clothing, and perhaps as embedded
sensor/monitors. Their viability would be improved if the sensors could extract power for
their operation from their environment. The largest impact may be in medical
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applications, but initially applications may focus more on: smart materials, construction
uses, wide area networks for environmental sensing, and so on.
Wireless technologies and immense miniaturization will drive the Internet from being
available at very limited locations (mostly desktops) to being virtually everywhere. This,
has the potential to change basic modes of behavior (e.g., information delivery,
payment, communication, authentication, entertainment), and brings up many entirely
new business opportunities, ranging from online advisory services and real-time
advertisements.
The convergence of computer technology with telecommunications and broadcast
media has brought about changes, which have deep significance for virtually all aspects
of our lives. Computer technology has become increasingly powerful, capable and easy
to use. Its cost has continued to fall at an increasing rate. Digital networks are making
very fast, very reliable and cheap. Businesses are seeing the benefits of utilizing the
web for growth and reach. This is leading to an increase in interactive services. E.g.
Interactive TV from BSKYB.
The distinction that once could be drawn between computers, televisions and
telephones is no longer valid: they have come together to make a new technology, and
that technology will transform all aspects of our lives - including, and especially,
economic.
3.3 Technological Requirements
The telecommunications network comprises core, access and CPE, along with network
management and signaling system. Network is migrating from service specific network
platforms to multi-service master network known as Next Generation Network “NGN”.
NGN supports voice, data, and video with narrowband / broadband requirements. NGN
is a network concept that aims to put puzzles of advanced technologies together to
achieve optimum network architecture.
While NGN is known at present to certain degree, it is in a state of rapid evolution
awaiting major breakthroughs. In the coming 20 years, it is anticipated that the present
NGN concept will traverse several NGN generations. Today we are sitting on the tip of
an explosive telecommunication / information technology revolution.
3.3.1 Core Technologies
To meet the above challenges, the next generation networks are required to have the
most flexible platforms available. They can be characterized by:
Large throughput
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Smallest granularity
Extreme Scalability
Powerful Service Creation Environment (SCE)
Remote Management and Diagnostics
Highest Reliability and Availability
Packet switching (mainly IP based) capability
IN-based
Switching elements will take several forms ranging from ATM to IP routers to powerful
Ethernet LANs to optical switches. A basic concern is the huge throughput capability
along with smallest granularity of the switching element. In optical switches, throughput
is extremely huge reaching practically infinity, while the lowest switching granularity is
carrying more than 40 GHz. While on the other hand, PSTN voice switches are
characterized by low throughput and switching (64 Kbps). Core transmission will rely on
fiber optics technology where light will be utilized all the way in the fiber and cross
connect equipment.
The most important technology trend is the commercial introduction of Dense Wave
Division Multiplexing (DWDM) systems. DWDM provides a new dimension for
expanding the installed optical infrastructure. The trend is towards multi Tb/s by the year
2005. ATM switches and DWDM networking, through optical Add/Drop and cross-
connect, will change the traditional SDH structure of establishing the demanded
connectivity among the existing network nodes.
3.3.2 Access Technologies
Nowadays, emerging broadband access systems explore different media (air, wire), use
different carriers (electric signal, EM wave, optical signal, and acoustic) and employ
advanced technologies (coding, modulation). Emerging broadband access
technologies include:
- xDSL
- Fixed Broadband Wireless Accesses (FBWA)
- FTTH
- Wireless Optics
- 3GM
- Satellite
- Cable modem
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3.4 Imperatives for ICT Services
In coping with the above requirements and technical challenges, businesses need new
types of mobile applications to reduce cost, and to satisfy the need for "anywhere,
anytime" customer services, and to bridge supply chain gaps. Technological
developments and the decreasing price of mobile equipments are making new types of
applications technically and economically feasible. Mobile phone ownership will
approach 100-percent penetration of economically active customers.
Specific areas of Saudi Arabia will have to assume a leadership role to permit our
businesses to take advantage of the future technologies. These will be discussed in the
summary and recommendations section.
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4. ICT Role in Developing National Economy
When we see the STC mission, who indicates that STC business is main source of
people’s cultural and economical values, it clearly explains the major and important role
of STC (mainly ICT) to the national economy.
During the Future financing Seminar held March 29-30th, 2001 at Riyadh, Telecom
participation in the economy and growth was the highest sector in the kingdom of Saudi
Arabia where the growth was estimated 30% for last four years and expected to
continue 20% through the coming five rears. In addition, it was mentioned that the
investment in the telecom sector would approach forty billion Saudi Rials during coming
five years.
4.1 ICT Historical Investment
From the past MoPPT had shared revenue during 30 years of its services prior
privatization. MoPtt used to endorse Billions of Saudi Riyal yearly to the Ministry of
Finance and National Economy where it was considered as one of the major GDP
contributors after the OIL Revenue, During the fiscal year 2000/2001 the total STC
Revenue is expected to reach SR 20 Billions.
ICT contribution through its TEPs Project such as:
August 1994 Lucent Technologies (Formally AT&T) has awarded the TEP6 Project
modernizing telecommunications in KSA; Lucent is broadly and deeply involved in
providing the complete spectrum of telecommunications products, services, and
technologies in the Kingdom through its participation in the following projects:
TEP6/GSM: 1.5 million digital telephone lines, 500K GSM lines and network
expansion.
WLL: 171K Wireless Local Loop lines provided by Lucent's Air loop products.
TEP7: Replacement of 334,244 PRX exchange line replacement and 311K
telephone line expansion of the switching network.
GSM 500K: Installation of additional 500,000 GSM subscriber line capacity.
Y2K: Replacement of 812K switching lines to meet Year 2000 compliance and
switching growth.
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Internet: Implementation of ATM and Postmaster 4 systems to provide 50,000
subscribers with dial-up Internet access (contract in preparation).
Currently Thousands of locals employed by ICT Sector. As an example STC hired more
than 23000 employees all over its departments in the country, this is considered a great
job provider for the Saudi generations, in addition to that if we consider number of data
centers in both general / private sectors will add extra thousands of jobs in the field of IT
also.
4.2 Business Model
STC provides most of its telecommunication services through out its subscription offices
established all over the country. A number of services are provided by the private
sector such as:
4.2.1 Telephone Call Cabinets
Over 3200 Call cabinets (kingdom-wide) Managed by the private sector through
opening of telephone call cabinets. These cabinets spread throughout the Kingdom.
Provides suitable conditions for making calls such as air conditioning, appropriate
lighting and a relaxing environment. Also provides special rooms for families.
This type of service permits local, national and international telephone calls.
4.2.2 Internet Service Providers (ISPs)
The Kingdom is the largest market in the region for Information Technology, E-
Commerce, and Office Automation systems Computerization at the work place and at
home is rapidly spreading in the Kingdom.
Saudi Arabia accounts for 40% the region's IT market and the demand for related
peripherals is continually rising. Another 116,000 new Internet subscribers and a
phenomenal growth rate estimated at 8% per month are further fueling the demand for
communications hardware and system expansion.
The Kingdom's telecommunications market is receiving a further significant boost now
that the Internet is becoming operational in the Kingdom. There is a high level of
demand from businesses that are keen to take advantage of the commercial
opportunities the Internet has to offer. Saudi Communications will showcase business
and professional Internet and Intranet products and related communications equipment.
The evolving technology seminars will also offer special opportunities to deliver
information on the latest technologies.
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4.2.3 Pre-Paid Cards
It’s a service that allows the beneficiary to contact a free number (800) form any normal
telephone with or without an international zero (access) where the costs are paid by the
number contacted and not by the number used for executing the call. These types of
services enable national and international contacts from any fixed telephone, even if it
has no zero for these calls.
4.2.3.1 Outsourcing Projects
With a Huge Expansion projects STC can not by itself executes all parts of the projects
by its crews, the normal way is to outsource most of its expansion activities and there
where the STC most contribution of steering the economy of the country. STC through
its TEP6 Project has a partnership with its main vendor (Lucent Technologies)
establishing Telecommunication Factory, which produced central office switching and
transmission systems equipment. In addition to the technology transfer, training, and
support.
A huge company like STC has offices through out Saudi Arabia. Naturally, it consumes
a large quantity of office supplies at the same time it provides a number of business
opportunities in this sector which leads to enrich the economy of the country.
4.2.3.2 Construction Projects
Hundreds of local firms had business opportunities with STC for the past and future. As
Part of contribution the local businesses, the Telecom projects has enabled many
opportunities for the Saudi Companies, In addition to that the creation of some Offset
companies has benefited from the projects such as the Advanced Electronic Company
(AEC) and International Network Engineering (INE), plus hundred of vendors. The
largest market in the Middle East, just got larger...
The Kingdom enters the next phase with one of the world's largest telecommunications
network expansion projects, offering unmatched opportunities for suppliers, The latest
phase of one of the Middle East’s most ambitious telecommunications expansion
project's is under way. Saudi Arabia’s TEP-8 is a 4 billion US$ project that entails the
installation of an additional 2 million fixed lines, 500,000 line expansion of the GSM
network, wireless local loop systems, microwave systems, and long-haul fiber-optic
connections. This work is to start as soon as the current 4 billion US$ TEP6 and TEP7
are completed. These projects coupled with the announced privatization of the
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telecommunications services, and opening of Internet access, have created unmatched
demand and opportunities for the suppliers of the full range of telecommunications
products and services.
4.3 ICT as an Industry
Traditionally ICT has been viewed as a service to the Kingdom economic activities. The
oil, government, banking, agriculture, etc. sectors depend on ICT infrastructure to
conduct their business. It must be noted that ICT not only provides a service to the
economy, it also generates manufacturing, construction and technology oriented
employment.
The following section highlights industries enabled either directly (manufacturing) or
indirectly (telemedicine) by ICT.
4.3.1 Directly Enabled
ICT with its dynamic development required creation of products and industries directly
connect to both Telecommunication and Information, these products either
manufactured inside the country or imported for ICT needs.
4.3.1.1 Communication Products
Cabling Products
Satellite Communications
Telephone Equipment
GSM Accessories & Batteries
Mobile Networks and Equipment
Transmission Equipment
Microwave Systems
Video Conferencing
E-mail & Voice Mail Systems
Multimedia Communications
4.3.1.2 Internet Products
Internet Products & Technology
Internet/Intranet Services
Internet Service Providers (ISP’s)
Local Area Networks (LAN)
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Wide Area Networks (WAN)
Communications Hardware/Software
Test and Measurement Equipment
4.3.2 Indirectly Enabled
E-Government
The internet and e-business will assume an increasingly larger role in many aspects
worldwide, in the kingdom of Saudi Arabia such initiative are taking an aggressive steps
toward regulations and implementation of this type of new trend in business. STC is well
aware of building the needed infrastructure, which enables the success of E-
Government initiatives.
ICT will enable the kingdom of Saudi Arabia to effective participant to the e-market
place created by the so called digital economy, such new market will have a better
return on the business in the country and increase the trade volume, in addition to this
the trade balance will be higher.
Telemedicine
Ministry of Health provides health care to the people of Saudi Arabia through its health
centers; furthermore, it went a further step implementing the telemedicine by contacting
the famous health center worldwide, with the aggressive development of ICT in the
country the health care and medicine will increase in both quality and services.
FDI
Foreign Direct Investment (FDI) not meant only finance or liquid money to the country
but including the technology transfer, market access for goods and services, also it will
raise the country total productivity and link local market with others.
According to the FDI Authority, FDI successful factor are:
Saudi liberal economic environment
Political stability
Stable economic environment
Saudi market size is the second large in the region
Saudi geographical location as a major route linkage between Asia, Europe and Africa.
Having cheap, competitive natural resources.
Software
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Software development can become a key component of the Saudi economy.
Web services - software components that can be accessed over public networks using
generally available protocols and transports will be the next big step in Internet software
development. The future of XML and JAVA is bright in the short to medium term. Long-
term new protocols/ models may prevail.
Adaptive Systems - hardware or software systems that can dynamically manage their
own resource allocation to respond in real time to changing requirements, using
techniques such as genetic algorithms, fuzzy logic and neural networks will come to the
fore.
Write once, run anywhere applications– with cross-platform capability will let
programmers maintain only one body of code. This will free the enterprise to develop
applications without having to legislate the technology used by those running the
application and without having to absorb the costs associated with building multiple
instances of the applications.
Automatic platform adjustment will become the norm. This means that "user" logic runs
on a client or a server device, depending on the server's decision as to whether or not
the client has the resources to run it. If the client can run the application, it is
downloaded; if not, it runs on the server and the results are broadcast to the client.
Opportunities (Teleworking & Women)
ICT will enable women to do their business from home by Teleworking (estimate more
than 20 types of business activities). The Saudi population will be around 40 millions by
2020, half of them being women (Aljazeera 1417-32). According to the country sixth
plan 465,139 women are expected to enter the workforce. However, the market will
only absorb 78,700 where 386,439 will be unable to find employment. Women’s
participation in the economy will grow as a direct result of the expansion of both
telecommunication and IT facilities in the home.
Education E-Learning
ICT as a major contributor to the economy not directly but rather through the ‘skilled
minds’. Knowledge has now become a major factor of production; education and
training will be increased by ICT development, not only the size but by quality too.
4.4 Future Investment
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The Kingdom of Saudi Arabia, under the leadership of Custodian of the Holy Mosques,
King Fahad Ibn Abdulaziz al Saud and the leadership of the Ministry Of MoPtt at that
time has played an extremely role in turning the development vision of the country into a
concrete reality through the construction of modern highly advanced public Telephone,
Telex and networks including the Intra-Kingdom Coaxial Cable Networks and the
satellite earth Stations, which provide communication services to most of parts of the
country.
4.4.1 Telco Infrastructure.
Saudi Arabia is not only one of the fastest growing infrastructure equipment markets,
but also the world's fastest growing market for mobile phones. A nationwide installation
of an additional 250,000 GSM line network is currently in progress to cater to the high
level of demand. The Fiber Optic Link around the Globe (FLAG) project to which Saudi
Arabia will be connected will also create a strong market for high-speed data
communications equipment.
The Kingdom is currently in a period of massive expansion of the telecommunications
infrastructure. The current expansion plans. The work involves fiber optic networks,
thousands of miles of fixed telephone lines, hundreds of exchanges, undersea cable
links, earth station and satellite services. Private sector demand is also high for the full
range of fixed, mobile telephone equipment, and PBX systems.
4.4.2 Digital Economy
ICT becoming a self-sustained source of income, it has a bright future in contributing to
the economy of Saudi Arabia. In some literature it is expected to be the third or even the
second source of national income in the kingdom after the oil revenue, Banks and
Financial Institutions definitely will increase their transactions and activity through the so
called Digital Economy.
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5. Recommendations and Summary
The major requirement to meet the above-mentioned scenarios is ubiquitous network
accessibility via wire line or wireless (Saudi Arabian wireless penetration by 2005 at
30%). The amount of necessary resources depends very much on the success of the
upcoming access/connected technologies and their market penetration.
There are currently more than 2.04 million Internet users (Saudi Arabia: 190 000
subscribers, 570 000 users, 2.59% penetration rate; (UAE 12.5%, Egypt 1%, USA 50%)
in the eight Middle East countries.
Gulf Business magazine states6 that ‘even with no net immigration, if current rates of
fertility, mortality and Saudi migration are maintained, by 2020 Riyadh with a population
of between 9.8 and 11.1 million people will account for between 33 and 36 per cent of
the total population of Saudi Arabia’ and ‘would result in Riyadh becoming the first
mega-city in the Arabian Gulf’.
The expected move to packet-switched technology will require extensive installation of
new technology. Providers as well as governments have to find a solution for the urban
vs. rural divide (rural access).
On the side of technology, leaders each society has to take care for an extremely
focused and frequently updated educational system. As mentioned at other places in
this document lifelong learning will be the standard due to the pressure of constantly
changing and improving technological options. Each member of the society will be
exposed to the new learning requirements of the ever-changing technological
environment.
5.1 Recommendations
In order to achieve sustained growth of our economy, the government, our educators
and the private sector will have to take a leadership role.
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5.1.1 Role of Government
In coming years Role of Government will be very import. The new applications, like E-
Commerce, Telemedicine, etc, need rules and regulations to protect subscribers,
telecom operators, business service providers and ISPs.
The Government has to take the responsibility of the following:
5.1.1.1 Leadership
Set the Strategic direction for the country in the rollout of ICT
Provide funding to Schools, Universities and Hospitals and other
government departments for the installation of fiber optics infrastructure
Provide funding to government departments to implement electronic office
space projects
Offer a favorable business environment (e.g. accepted principles of
fairness, speed and dependability of execution, effective enforcement and
compliance with international norms) that will increase foreign direct
investment and trade
Provide a non-distorting tax regime that will not discourage investment
and entrepreneurial efforts
Be the role-model in adopting ICT products and services in the public
sector
Should encourage ICT deployment by enterprises to make them more
competitive and efficient
5.1.1.2 Regulatory Framework
Develop a comprehensive regulatory framework to avoid slowing the
development of competition in the sector, expansion of ICT use, and
enterprise growth
Deregulation can have a positive influence on the development of
infrastructure. The benefits of competition will not only improve the
infrastructure but will increase foreign investment
Regulatory Framework
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Provide transparent and inclusive government processes, which are useful
for the expansion of ICT
Processes can be facilitated by the use of ICT (e.g. internet can be used to
access legislation, taxation codes and government services)
Government bodies have to streamline their internal processes and not only adapt but
also utilize to new technologies and options developing.
Government should review its legal procedures, make new rules and laws, which can
help and make the telecom attractive for the domestic and foreign investors to invest.
One outgrowth of the information revolution is increased availability of information:
More information flowing with less obstruction
Information flowing independent of distance
Increasing opportunities for economic cooperation across borders
People being inundated with vast quantities of information
The democratization of information
The empowerment of the individual through access to increased information
The government will have to lead us through the issues that will impact our society and
culture.
5.1.2 Role of Private Sector
The private sector will be the main enabler and user of ICT.
The Private Sector has to take the responsibility of the following:
5.1.2.1 Infrastructure
Focus on developing network infrastructure capacity for key sectors to
take advantage of leading edge technologies
Include a reasonable level of global connectivity to take advantage of
worldwide opportunities
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Complement focused capacity by interventions to promote ubiquitous
access through:
–Universal access funds
–Support of community networks
–Public access points
Ubiquity and the move toward universal access become more and more
feasible with the declining costs for networking and telecommunication
technologies
5.1.2.2 Entrepreneurship
Excessive need for motivated entrepreneurs and people with business
expertise to leverage new opportunities
Adopt a supportive policy environment and provide opportunities for
development on top of entrepreneurial skills and financing
Provide access to credit and financing to have a smooth functioning of the
development dynamic. Hence the development of the two key financial
sectors, banking and venture capital, is crucial
5.1.3 Role of Education
Technology is changing the way our teachers teach and students learn. As
technological advances are introduced into the educational system, campuses are more
and more attracted by the promise and potential of technology for enhancing access
and learning. Faculty, staff and administrators need to understand what technology can
and what it cannot do. Technology is seen by some as the panacea for budgets cuts:
some see visions of hundreds of students sitting in front of monitors, with talking heads
providing cheap, mass education. Others see technology as a critical complement to the
educational experience, opening more opportunities for the learner than can be
encompassed by one campus. To reap benefits in the area of education and learning,
there needs to be an increased concentration on supporting the development of new
and IT based ways of learning. We must teach our children about technology and
introduce ICT concepts in our schools.
The Ministry of Education has to take the responsibility of the following:
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Define the current and proposed role of information technology in the
classroom.
Educate government on the telecommunication requirements to enable
telemedicine, Teleducation, etc.
Promote the concept of learning technology and involve all members of
society. This includes: government, professional societies, faculty,
teachers, librarians, students, publishers, and designers/manufacturers of
learning technology products.
Focus on educating and retaining a core of professionals with the
technical capabilities to provide and maintain ICT infrastructure and
related ICT services
Encourage teaching staff to take computer and technology related
courses.
Encourage the deployment of computers and related tools in the
classroom at all levels.
Consider and be willing to adapt or revise current teaching and learning
techniques to utilize the benefits of using technology in the classroom.
Experts should be brought in to the classroom to explain the benefits of technology to
our teachers and students. Our educators must insist on computers in the classroom
and connectivity to the Internet.
5.1.3.1 Corporate Education
The corporate sector will drive innovations in the areas of professional education and
life-long learning. The adult education market is growing, as evidenced by the rise of
corporate universities. Although universities have not been as innovative or as flexible
as the corporate sector in their course offerings for adult learners, in the past they had
the advantage of being able to offer certification.
Open locally basic digital communications courses, seminars, and workshops on weekly
or at least bi-weekly bases, and encourage technical staff members to attend regularly.
If required, the qualification of each staff member may have to be reviewed with respect
to his or her job. If this action is taken seriously, the attendance of some staff members
may become compulsory. The contents of these courses, seminars, and workshops
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must be planned with clear objectives. The fundamentals of digital communications
systems should be covered:
Review Modulation Techniques
Source encode
Encryption
Channel encode
Multiplexing and Multiple access
Frequency Spread Spectrum
Use in-house experts to teach these subjects, and use the existing products for hands
on the practice. If necessary, the company decision makers should be involved in
selecting highly qualified instructors for these subjects. This will be the most effective
approach toward improving employee's skill and a good way of transferring
technologies.
5.2 STC Summary
Telecommunications is moving towards data, mobility, higher transmission speeds, the
Internet, multimedia, wireless, optics, new services, customized applications,
personalization, globalization, distance independence, liberalization, standardization,
and lower charging.
Fortunately, we are now at a point of time where juice of the research and development
over the last 30 years is just being materialized for us. Almost all factors of success are
met: the Internet with its massive and global applications, low cost LANs and
multimedia PC’s, reduced cost of high capacity transmission and switching, higher rates
on the copper, access choices, optics, mobile and wireless. These will compete and
complement one another for different applications.
Almost all old exchanges will disappear in few years. New combined PSTN/ISDN
exchanges will survive for more than 5-10 years.
Existing ATM backbone networks and ATM Service Nodes will provide far better service
and will more economically carry long distance IP voice, video and data traffic. It is the
choice of today. Tomorrow, we may implement a more sound technology for “backbone
cloud” that integrates with existing systems (e.g. IP over DWDM). We have to increase
our DWDM capacities, even before we decide how to fill it with chargeable traffic.
We deploy Access Nodes with the varieties of UNI’s for ADSL, LANs and other high bit
rates as soon as standards and cost become reasonable. ISDN, ADSL, LAN and VSAT
more complement each other than compete. Each has its applications, cost and
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customers. We expand mobile and paging with enhanced data services and
interworking with the Internet.
We compete with other ISPs attached to the “backbone cloud” and search for and/or
develop applications that satisfy the different sectors of the society such as: E-
commerce, Telemedicine, Banking, Industries, Education, Government, Business,
children, teenagers, women, students, etc. They need value and practicality at
affordable cost. Our mission is to make them happy, comfortable and productive, while
filling our transmission with chargeable traffic.
To enable our network to meet the requirements of our customers, STC will deploy
various technologies and services over the next few years in anticipation of new
business needs.
These technologies include:
1) DSL, FTTB, FTTH and FTTC in urban areas
2) MMDS, LMDS and WLL in rural areas
3) OADM in the fiber network
4) OXC in the transport layer
5) MPLS enabled routers
The future STC network will run Fiber Optics, depending on the requirement, to the
building, to the home, or to the cabinet. To service our customer in the rural areas of
the Kingdom, we will utilize various wireless technologies (Multichannel and Local
Multipoint Distribution Services and Wireless Local Loops). We will also deploy Optical
facilities to enable the new services.
These services include:
1) VOIP
2) Broadband wireless
3) WAP enabled applications
4) Intelligent Network Services
5) Public radio services
6) Satellite Services
7) Applications to support e-business and commerce
Large Business Small Bus, Large Residential
Residential
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Free Phone Multi Location Ringing Switched Services
VPN & Centrex Voice Mail
Voice
Premium Rate Calling Card
Customized Services Multiple Lines
Dedicated IP Digital Subscriber Line Dial Up IP Access
x.25 Frame Relay Broadband IP
ATM Leased Line
Data
Wave Length Services E-commerce
Data VPN
VoP PBX Continuing Education Internet Call
Converged
Telemedicine Customer Self Service Waiting
Customized Services Multimedia Conferencing Integrated Access
Distance Learning for Distance Learning
Schools
However, there will be many challenges. We have to cope with the Internet traffic,
which have been growing at a 1000% per year with calls Mean Holding Time increased
from 2 min to 30 min. Security, signaling complexity, learning, training, frauds, and
billing are among the major challenges.
Equipment suppliers and network operators will have to boost their research and
development and marketing efforts to meet the demands of fast changing technology
evolution in order to stay competitive.
Regulators are expected to be always on top of all the issues in this volatile
environment of technology and services without impeding its progress. Frequency
management is definitely a major issue. They will face considerable challenges to
maintain a fair competitive market. They will need to continuously acquaint themselves
with all emerging services and applications to make sure they are fairly charged. We
need some blessing, but no one should wait to miss the opportunity.
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