Long-term revolution?: Although take-up of 4G services has so far been slow, growth may come as speed rises

Following a relatively slow start in launching 3G services, Saudi Arabia in 2011 became the first country in the region to launch long-term evolution (LTE) mobile broadband. All three Saudi mobile operators now offer the service, which has been rolled out to most major cities and is expected to cover almost all of the country within two years.

Uptake to date has been limited, and at the moment the service offers significantly – rather than radically – faster speeds than the most advanced 3G technologies. However, as prices fall and speeds rise, LTE-enabled handsets are likely to become more common as the popularity of the service grows.

Leading The Way

Saudi Arabia was a regional latecomer in terms of mobile broadband; 3G services were not launched until 2006, around three years after some other GCC countries, such as Bahrain and the UAE, launched their own similar services.

However, the Kingdom has led the way with regard to latest-generation technology in the region, namely LTE, which is sometimes described and marketed as a fourth-generation mobile technology, or 4G (though the term is not well-defined and there are competing minimum 4G threshold specifications).

Mobily, Saudi Telecom Company (STC) and Zain all launched LTE services in September 2011, making the Kingdom the first country in the Middle East to roll out the technology (the UAE followed later the same month). As of May 2012, STC’s LTE services were available across 38 cities. The firm was aiming to cover 65% of the Kingdom by the beginning of 2013 and 95% of the Kingdom two years after that. In September 2012 Mobily reported that its current LTE services covered 31 of the Kingdom’s cities, operated by its subsidiary firm Bayanat Al Oula.

Slow Uptake

Despite such expansion, initial uptake of LTE has been slow; the Telegeography GlobalComms Database put the Kingdom’s LTE subscriber base at around 8000 as of mid-2012, though other estimates were slightly higher. Obstacles to rapid adoption of the technology include the low number of customers who have switched over to 4G-enabled handsets, which are not yet widespread, and the fact that the difference in speed between LTE and advanced 3G services, though substantial, are not yet revolutionary enough to prompt a widespread migration by a large proportion of consumers.

Prior to the launch of LTE services, the most advanced and fastest mobile broadband connection available in the Kingdom and worldwide was evolved HSPA+, a third-generation technology sometimes marketed as 3.7G, which offers theoretical maximum speeds of 42.2 Mbps (theoretical because in practice typical download speeds are much lower).

In comparison, STC’s LTE network offers theoretical max speeds of up to 100 Mbps. Although more than twice as fast as HSPA+ networks in the Kingdom, and a significant increase in available speed, the difference is not one of orders of magnitude.

Furthermore, in practice the gap between LTE and HSPA+ is often smaller still; some tests of LTE networks in the US for example show the actual speed received at only 20-30% faster than HSPA+.

In light of this lack of dramatic increases in connection speeds, it remains open to question whether many Saudi consumers will feel that the additional expense, in terms of both data costs and paying for LTE-enabled phones, is worthwhile.

Past Lessons, Future Potential

However, not much can be read into the low uptake so far, as the technology remains in its infancy; while 3G was launched in the Kingdom in 2006, usage did not take off until several years later, and when it did it rocketed to penetration rates of nearly 40% by 2011. Furthermore, connections are likely to become faster over time, with LTE-Advanced technology able to support peak speeds of up to 1 Gbps. Alongside these developments, as prices begin to come down and LTE-enabled smartphones become more commonplace, uptake in the Kingdom will likely grow.

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The Report: Saudi Arabia 2013

Telecoms & IT chapter from The Report: Saudi Arabia 2013

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