The Evolution of Mobile Phones in Saudi Arabia (Present & Future)

Introduction  

       In my previous paper I shed the light on how the mobile technology has evolved and how it affects the Saudi society in general. I started by providing a brief history about landline, wireless, portable, and car phones. Also, I had examined the monopoly phone company STC (Saudi Telecom Company) and stated its strategy and services. In addition, I attached some numbers and statistics regarding the uses of mobile technology vs. other technologies such as the uses of internet and landline phones. Last but not least, I pointed out some social changes regarding dating and flirting after the emergence of mobile phone technology. In this series of papers, I will explore the uses of mobile technology in the present time and the future of this technology in the region. It is very important to know what are the technologies and services that this culture adopts now and will adopt in the future and why. To know the effective media of such and an extremist and conservative society is very important to alter some wrong believes and norms. Also, I will elaborate on the negative impact of using this technology on the conservative kingdom. This negative impact has mainly derived from the misuse of mobile enablers such as the misuse of Bluetooth and camera phone.

 

 Mobile Phone Market 

Mobile phone market penetration is an excellent measure of technology uptake in different regions around the world and according to new analysis from Wireless Intelligence the Middle East has surged to become the second-fastest growing mobile phone market in the world. With penetration set to cross the 50% mark, over 150 million handsets in circulation and a 30% growth rate in 2006, the Middle East is now only trailing Africa as the fastest-growing market. Turkey, Iran and Saudi Arabia represent almost 70% of total connections in the Middle East. In these markets, the average market penetration is around 67%, which is above the average market penetration rate for the region (50%). And as I noted before in my previous paper that the adoption of mobile technology is accelerating dramatically in Saudi Arabia, it is very evident in here by the increasing number of buyers in the mobile phone market. Saudi Arabia is the second biggest market in the Middle East; it represents about 15% of total connections in the region. At the end of 2006, Saudi Arabia passed the 20 million connections mark, and the market is expected to grow by almost 20% this year. EAE Mobily (the second operator company) has been the fastest growing operator with 38% growth of its installed base between Q1 2006 and Q1 2007. It is the second biggest operator in the country with a market share of 29% this quarter. The Saudi telecom market has grown rapidly from a relatively low base over the past four years, largely as a result of liberalization. However, fixed-line penetration remains low by regional standards, at only 16.3%, according to figures provided by CITC, and broadband penetration is particularly poor, at only 1.5%. The mobile sector has expanded rapidly both before and after the award of a second license to a Saudi-UAE consortium, with Etisalat as the operator. Etisalat’s Mobily service, which was launched in May 2005, had acquired 2.3m subscribers by end-2005, compared with 11m for Saudi Telecom, giving an overall penetration rate of 57.1%. According to Arthur D Little, a US consultant advising CITC on the development of the industry, the 45% growth rate of mobile-phone subscribers in 2005 was primarily a result of new users, rather than churn from the existing operator to Mobily. Over the past five years total revenue from telecom services has grown by 15% per year, reaching US$9.1bn in 2005, of which mobile services accounted for US$7.8bn.

Cellular Connections vs. Penetration Rate

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3G Mobile Telecommunication 

I suppose that in many respects, adopting 3G technology would make sense. Saudi Arabia is a wealthy enough country, and they need data just like everyone else coming down to their mobile devices. Also, the lack of entertainment activities plays an important role in adopting this technology.  So, I guess that seeing a developing market for 3G would work effectively. 3G, the third generation of developments in wireless technology, and its high-speed upgrades offer Web access some 100 times faster than normal fixed lines and 350 times faster than GSM, the widely used digital mobile-phone system. 3G also allows television reception.

Saudi Telecommunications Company (STC) officially announced the commercial launch of 3G HSDPA services on May, 24 2006. The operator launched trial services in January 2005, and currently has more than 3,000 customers using the offering. The Kingdom of Saudi Arabia represents a promising market for GSM and 3G mobile telecommunications services combining scale, best-in-class wealth and excellent growth prospects. The country has more than 24 million inhabitants, over 6 million are foreign residents, and its GDP per capita of US$ 8,500 is the highest in the Middle East & North Africa region for countries with a population of over 5 million. Moneimne said the number of mobile-phone users in Saudi Arabia was set to rise to 22 million in 2009 from 10 million in 2002. Oil-rich Saudi Arabia, with its gadget-obsessed population and low Internet-penetration rate, offers particularly good opportunities for mobile phones with third-generation technology. The mobile penetration rate in the KSA is approximately 31% and is expected to be more than double over the next few years. “Saudi operators hope that interest in 3G could also benefit from the kingdom’s low Internet penetration compared to other Gulf countries”, said: Mobily’s IT chief Ahmed Al-Oraini.

 

Mobile TV

 

It is the most talked about and invested in content type over the past two years. As we emerge from the research and test phases, we are beginning to learn what really works, what the consumer want from Mobile TV and realistically how much we can invest to earn a fair return. Find out how to develop a business model for a successful and profitable launch, learn from the latest case studies and debate future business models for ad-funded mobile TV as well as incorporating interactivity and user generated content.

Many mobile operators already offer on-demand and downloaded video content. Broadcast Mobile TV goes a giant step further, empowering broadcasters and mobile network operators to offer high-quality live video programming to their customers… wherever they want it. But as incredible as it is, Mobile TV’s “place-shifting” functionality is only its initial benefit.

Unleashing interactivity by fully integrating Mobile TV with a robust software platform is the key to taking the user experience to another level altogether. It is also a key to capturing the mainstream market with interactive applications like shopping, advertising, instant replays, online voting and beyond. Mobile TV has the potential to revolutionize the lives of consumers and become a key component of the next great platform for social interaction.

Around the world, mobile TV and video services have been product offerings for several years. Wireless operators are moving out of the experimentation phase as trials wrap up, broadcasting technologies are chosen, and additional TV and video content is offered. With S2M, Mobile TV is a lot more than TV on your mobile. S2M offers a unique personalized and interactive TV experience to consumers anywhere, anytime and everywhere they go. S2M’s broadcasting TV solution will deliver abundant channels of high quality on any type of mobile devices:

  • Mobile phones
  • Portable media players
  • In-car media devices
  • Laptops computers

S2M Mobile TV will be available anywhere and anytime to users throughout the Middle East and North Africa.

  • Spare time: Watch TV while waiting or traveling – on cars, trains, planes, and buses
  • Must see: Don’t ever miss your favorite show
  • Catch up: Keep updated wherever you are
  • Quick escape: Entertain yourself during your breaks
  • Background radio / video: Use mobile TV as background entertainment at work or home

Users will be able to interact with their favorite shows more easily than ever:

 

  • Video and Music on demand:  Customized and Selectable Content (e.g.  music and video downloads, sports updates)
  • Interactive Advertising: Customized, Interactive and Selectable Advertising
  • Interactive Messaging: TV Voting, TV Gaming, and TV Chatting
  • Interactive Media: Shopping TV, Travel TV, and Education TV

 

   Social Amplifications 

       A very noticeable and important outcome of such a conservative society is the misuse of Bluetooth technology by young men and women is increasing in Saudi Arabia. A recent study found that pornographic material accounted for nearly 70 percent of messages exchanged by teenagers. Abdullah ibn Mohammed Al-Rasheed, associate professor at the College of Dawa and Information in Riyadh, who conducted the study, said 88 percent of girls had been victims of such misuse. Rasheed presented his study at a seminar organized by the King Fahd Security Academy. The study focused on teenage boys detained by the Commission for the Promotion of Virtue and Prevention of Vice for harassing girls in the Qasim region. “The flash memory of mobile phones taken from teenagers showed 69.7 percent of 1,470 files saved in them were pornographic and 8.6 percent were related to violence,” said Rasheed. About 99.2 percent of people surveyed, mostly students, military officers and businessmen, used Bluetooth in public gatherings.

Hard to tell if the 70% figure is based on all teenagers or just that demographic of busy-hand boys that the study “focused on.” As written, it sounds like it’s the former, especially since they also surveyed teenaged girls. Speaking of which:

99 percent believed that the device had broken the barrier of social taboo and traditions. Al-Eqtisadiah newspaper reported on Thursday that Saudi Arabia will overturn a ban on the import and sale of cell-phones with built-in camera in the conservative Muslim kingdom. Although widely used across the country, camera phones are illegal in Saudi Arabia and have been condemned by religious leaders who say they are used to invade privacy, particularly of women. Al-Eqtisadiah quoted unnamed sources as saying authorities had asked the Interior Ministry to put in place regulations to prevent “the negative use of the camera equipment in the phone.”

Female Students who are carrying cell-phones on campus in any college in Saudi Arabia could face a SR500 fine ~$133, taking the cell-phone for at least a week, and a 3-year suspension under recent regulations issued by the Ministry of Education.

Woman fired over mobile snapshots- this was an article about a Saudi woman who has been expelled from her university for taking pictures of unveiled colleagues with a camera-equipped mobile phone posting them on the Internet.

When the Saudi people finally rise up in revolt and throw out the House of Saud, fellow Saudi blogger, Alhamedi Alanezi says: “it won’t be for democratic reform, and it won’t be for an Islamic republic. It’ll be about mobile phones.” Saudi Arabia enforces ban on camera phones, the Saudi government began enforcing a ban on the sale of camera-equipped mobile phones. This results in creating a black market to sell banned camera phones.

 

 The Future of Mobile Marketing 

Advertisers are continually seeking alternative and more effective means to reach and connect directly with their target audiences. The convergence of the telecom and media industries is leading to new opportunities in infotainment-related value added services, including mobile marketing. This development could prove to be an effective way to invigorate the historically underdeveloped direct marketing industry in the region and open an attractive new option for advertisers.The rise of the mobile value-added services industry is already evident from the proliferation of mobile ring tones and logos and the emergence of services such as SMS breaking news from Al Jazeera TV. The wide range of media, technology and telecom players are involved at the various stages of the value-added services value chain in order for content to eventually reach the mobile phone screen. Content supplied by the likes of Disney and Rotana channels is delivered by service providers using specialized IT applications via mobile operator networks to be displayed and manipulated on mobile devices. Half of the current market value is in the form of mobile personalization services such as ring tones, logos, wallpapers, etc. Operators, media owners, and independent value-added services providers are already tapping into this market. As a result, future growth is expected to come from value-added services categories such as general entertainment, interactive media services, gaming, and information, bringing the total market to over US$1.7 billion by 2010.
Gabriel Chahine, Principal with Booz Allen Hamilton and a member of the Global Communications, Media, and Technology group based in Dubai, said: “Augmenting the mobile value-added services industry with the classical direct marketing activities of customer database management, creative, and campaign services management instantly creates an altogether new industry for mobile marketing. Mobile marketing seems to be one of the most attractive options for advertisers.”
The upside potential and unique nature of mobile marketing at the intersection of media, telecom, and advertising is attracting four types of players with varying business models. 

1. Telecom operators are attempting to leverage existing application and service provisioning to build direct marketing capabilities. Operators’ key advantage lies in their existing mobile portals, billing relationships, large customer databases, and their position on the value chain as the gatekeeper to customer access. However, operators are not advertising agencies and have no experience in designing and running campaigns. Therefore, many have been content to focus on simple format, high volume consumer campaigns, such as TV voting or selling SMS in bulk to corporate clients. Notwithstanding the above, some operators have created new mobile marketing divisions such as O2 Interactive and Vodafone Target. Similarly, NTT DoCoMo created D2 Communications as a wireless advertising subsidiary to deliver advertising on i-Mode. 2. Advertising Agencies are extending their traditional media services offerings into the mobile marketing space. The key strategic objective is to complement traditional media campaigns with mobile marketing vehicles such as SMS in order to differentiate their offerings to existing clients and attract new brand relationships. Most agencies, such as Carat Interactive and Oglivy One, are partnering with content and application service providers to secure technology and delivery capabilities. Some new entrant players, such as 12Snap, aim to position themselves as new media agencies specialized in interactive mobile marketing by focusing on mobile marketing creative services and partnering with application service providers such as Lucent and NeoMedia for mobile software and patented technologies, such as PaperClick – an application to capture bar codes and ISDN product codes through a Nokia mobile camera and retrieve product information including the retail price in alternative outlets. 3. Operator Partner Companies are spin offs from mobile operators in order to prevent the momentum of the much larger core business from subduing the creativity and entrepreneurial spirit of their new mobile marketing ventures. Mindmatics, a mobile marketing market leader in Germany, has T-Venture (the venture capital arm of T-Mobile) as one of its main investors. Mindmatics has built up extensive in-house marketing and creative services capabilities, as well as a wide range of mobile applications as part of its core portfolio. At the same time, a strategic alliance with T-Mobile allowed Mindmatics to co-develop a 6-million-profile database in the UK along 100 different selection criteria and to leverage T-Mobile’s pan-European network connectivity while maintaining enough independence to work with all mobile operators in any given market.

4. Independent Players are green field entrants offering specialized mobile marketing applications, content, and services including integrated creative and campaign management services. For example, Flytxt is developing multiple proprietary application platforms and offering business strategy, marketing, and technology consulting services as shown in figure 4 below. Players such as 12Snap are more focused on creative services and aim to position themselves as new media agencies specialized in interactive mobile marketing. In the Middle East, players such as Spot Cell are starting to build their own consumer databases, develop creative services capabilities, and procure sophisticated marketing applications from international vendors.   


Annotated Bibliography

_El-Affendi, A. (1993). Eclipse of reason: The media in the Muslim world. Journal of International Affairs, 47(1), 163.  Retrieved November 30, 2007, from ABI/INFORM Global database. (Document ID: 727014).

 

Over the last 2 decades, Saudi Arabia and other oil-rich Gulf countries have gained control of the most influential publications in the Arab world and expanded their influence to Europe. They have managed to force independent voices from the Muslim world using market manipulation, bribery, and sheer intimidation. But media manipulation is having opposite effects. The Muslim masses have learned to decode skeptically messages from their discredited media organs. As a result, the messages of the co-opted media are either not heard or are read quite differently than intended.

_Cherry, S. (2005). The VOIP backlash. IEEE Spectrum, 42(10), 61-63.  Retrieved November 30, 2007, from ABI/INFORM Global database. (Document ID: 909604771).

 

In some countries, such as Saudi Arabia, regulations protect a phone company’s revenues, prohibiting customers from saving money by making phone calls using any service other than the national carrier, Saudi Telecom, based in Riyadh.

 _Hanley, D.C., (June 30, 1999). The Washington report on Middle East affairsWashington: Vol. XVIII, Iss. 4;  pg. 116. Retrieved October 21, 2007. (Document ID: 592493911).  

Dr. Jon Alterman, program officer in the Research and Studies Program at the United States Institute of Peace, discussed the implications for Arab policies of recent developments in satellite TV and the Internet at the Middle East Institute in Washington, DC March 11. Alterman, author of New Media, New Politics, pointed out that while faxes and phone lines can be monitored and printed material can be impounded, satellite TV and the Internet take users outside the realm of government censorship.

 _Latest phones at i2, offering exquisite style and state of the art technology. (2007, October 16). Middle East Company News,1. Retrieved November 10, 2007, from ProQuest Newsstand database. (Document ID: 1366716121).

Founded in 1993 in Saudi Arabia, i2 is the region’s largest and most diverse mobile phone provider. Over 1,300 employees across 340 stores in 22 countries are dedicated to providing i2 customers with technological solutions and services that enhance their lifestyles and shopping experience. i2 stores offer the widest range of mobile phones, PDAs, wireless technology, software, value added services and mobile accessories in the region.  

_Saudi Arabia: Saudi telecoms opens to private investment. (2002). International Financial Law Review, 21(10), 68.  Retrieved November 26, 2007, from ABI/INFORM Global database. (Document ID: 230499071).

 

Saudi Arabia established the Saudi Communications Commission last year to serve as the regulator for the Kingdom’s telecommunications sector in advance of the long-awaited opening up of this sector to private investment. The first phase of this privatization scheme is a proposed floatation of 30% of the shares in the monopoly telecommunications operator Saudi Telecommunications Company by year-end.

  _Saudi Telecom launches world’s largest EFM network with Zhone to provide up to 45 MBPS on existing copper infrastructure. (2007, October 10). Middle East Company News,1. Retrieved November 10, 2007, from ProQuest Newsstand database. (Document ID: 1361349621). 

Zhone Technologies, Inc. a global provider of advanced communications equipment and a leader in VoIP, IPTV, and Ethernet over copper and fiber access lines, today announced that Zhone’s Ethernet in the First Mile (EFM) solution has been selected by Saudi Telecom Company as a cornerstone business access technology in STC’s preeminent converged all-IP network initiative. 

_ Winston, B. (1998). Media technology and society. London: Routledge. 

_ Wootton, C. (2005). A practical guide to video and audio compression. Oxford, UK:  Focal Press Publications. _Zhone technologies, Inc.:

_Saudi telecom company (STC) leverages high- density Efm aggregation with Zhone’s Malc to deliver high bandwidth services over bonded Copper. (10 October). M2 Presswire,1. Retrieved November 10, 2007, from ProQuest Newsstand database. (Document ID: 1361617551).

Saudi Telecom Company is the incumbent operator in the Kingdom of Saudi Arabia, the largest wireless and wireline network in the Gulf. Since its independence from the Ministry of Posts and Telecommunications in 1998, Saudi Telecom has embarked on what is recognized as one of the world most advanced network transformation projects, migrating from legacy TDM to pure IP packet technology.

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5 thoughts on “The Evolution of Mobile Phones in Saudi Arabia (Present & Future)”

  1. I’m MBA student in japan and my research is about the effects of mobile ads on the saudi telecom market. I’ve read your blog and I’m interesting with what you’ve written here.
    You may heard about the japanese company called “D2 communication”which is a partnership between NTT docomo(japanese telecom company) and Dentsu marketing agency. D2C give a wide opportunities to advertise via mobile phone by design mobile websites and so on ..
    I’m wondering if STC or new entree companies in Saudi Arabian has such as partnership ?

    Kindly

    Sultan

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