The information and communications technology (ICT) sector has benefitted from rising smartphone sales and expanding broadband reach, but further growth is contingent on infrastructure, particularly the expansion of the nation’s broadband capability and its integration with international networks.
Analysts are warning that without expanding the spectral allocation for mobile broadband operators and harmonising spectrum with the international community, Saudi Arabia could miss an opportunity to reap the benefits of new technology.
Already the region’s largest ICT market, accounting for more than 50% of all ICT investments in the Middle East region according to the Saudi Arabia General Investment Authority, the Kingdom is on track to ramp up spending even further, thanks both to state projects and an increasingly wired up and logged on public.
Information technology spending in the Kingdom is expected to reach $5.7bn by 2014, up from $3.5bn in 2010, according to a recent report by market research firm RNCOS.
The report said that with more than 60% of the Kingdom’s population below the age of 30, spending would be largely driven by its tech-savvy younger generation, supported by the flow of new state projects in fields such as health, education and industry, all of which require high levels of ICT. The country’s commitment to making the maximum number of government services available on line through e-government projects will also require a major investment in ICT hardware and infrastructure.
With mobile broadband take-up continuing to rise, coupled with growing demand for technology such as smartphones and tablets, a study by financial services firm Fitch concluded there is still room for growth in Saudi Arabia’s mobile phone market, despite penetration rates approaching 200%.
The study, issued in early May, noted that the Kingdom’s smartphone penetration rate of 25% was significantly lower than the 47% held by the UAE. It did, however, add that Saudi Arabia’s favourable demographics should be instrumental in closing the gap.
The country could miss out on regional investment opportunities if it doesn’t move to expand its spectrum allocation, however. A study conducted by telecommunications, media and technology market researchers Analysys Mason on behalf of GSMA, a global organisation representing the interests of mobile operators, suggested that the Kingdom could boost its economy by as much as $95.5bn by 2025 if the government releases an internationally-harmonised spectrum in the 800 MHz and 2.6 GHz bands.
It added that by expanding the spectral allocation to Saudi mobile broadband operators, coverage would be extended across the Kingdom’s vast rural areas, providing education and information platforms with the potential to create 424,000 jobs by 2020.
The study, which was released at the end of May, warned that delays in releasing the harmonised spectrum beyond 2013 would significantly cut into these gains. A five-year delay, the study concluded, would reduce the total economic boost by 2025 to $26bn and create 75,000 new jobs.
The study also cautioned that unless Saudi Arabia brings its spectrum allocation in line with international broadband norms, users will have to make do with higher-cost, lower-performing devices.
Peter Lyons, the GSMA’s director of spectrum policy for Africa and the Middle East, said that Saudi Arabia’s current spectrum allocation for long-term evolution (LTE) in the 2.3GHz and 2.6GHz bands was completely non-harmonised.
“In Saudi right now, there are no smartphones or tablets that can use 4G spectrum because what they have deployed is a unique configuration that is only being used in Saudi Arabia,” he said. “All they have is dongles for laptops. If they were to have a harmonised spectrum and use these international-standard bands they would be able to support a much higher throughput of traffic.”
Saudi Telecom is upgrading its coverage to provide up to 65% of residential areas in the country with access to 4G services LTE before the end of 2012. However, the coverage will not fully serve the Kingdom, nor will it allow full utilisation of the latest technology unless there is a broadening of the spectrum, local media has reported.