Mobile substitution hits Saudi Arabia's telephony market hard as liberalization set to open market to competition, says IDC

According to a soon-to-be released IDC study on the fixed-line telephony market, the primary culprit is mobile substitution; the migration to mobile, however, did not stem the growth in connections, which should rise 5% in 2006 according to preliminary data.

'The new lines are a reminder of the under-penetrated nature of the Saudi telephony market but also of the rising demand for Internet access,' says Mohsen Malaki, Research & Consulting Director, IDC CEMA. 'Fixed-line connections and calls are less expensive to users than mobile subscriptions in the country and also enable the use of VoIP, which is surging along with demand for ADSL, and which will also eat into fixed-line call traffic and spending.'

In response to the technological changes affecting the Saudi Arabian market, the government is expected to continue pursuing its telecommunications liberalization process. According to IDC, a new license is likely to be issued in the first half of 2007 and the telecom regulator likely to open the market to voice over broadband (VoBB), further spurring competition and opportunities for both the incumbent and the new operator.

'ADSL and other broadband technologies will open the door to voice over broadband services in the country, and that will help mitigate the effects of the contracting circuit-switched telephony market,' says Said Irfan, Research Analyst, IDC MEA. 'But operators will need to do more to express the value of their services by developing novel offerings for consumers and integrated solutions for the businesses.'

IDC's Saudi Arabia Telephony Services 2006-2010 Forecast and 2005 Analysis study sizes, analyzes, and forecasts the circuit-switched and voice over broadband (VoBB) telephony services market in Saudi Arabia. The study provides answers to key questions: What are the primary trends affecting the market for the period 2005-2010? What will be the outcome of the current liberalization process? When will a domestically provided voice over broadband service be available in the market? How should the incumbent face the upcoming challenge of competition?