ISPs to ‘lose heavily’despite new rate cuts

RIYADH, 16 June — Internet Service Providers (ISPs) have said that they are losing heavily this season despite the discounted rates announced by the Saudi Telecom Company (STC) effective from July.

“The new prices only reduce the minimum ISP price per hour to 85 halalas. This is a reduction of 15 percent for the minimum price from ISP, but only one percent of the total cost to end users. The new cost for end users went down only from SR4 to SR3.85 per hour,” Kais Al-Essa, operations and technical services manager of Dammam-based Sahara Network, told Arab News.

According to Anwar Helmi, marketing manager of Arabnet in Riyadh, the new concession will benefit only large ISPs, while those in the middle range will lose heavily, especially during the start of the vacation season from this month. He said there are currently 28 ISPs, of whom only five are in the top end.

Only the major ISPs will be able to offer discounts to their clients, leaving the middle range service providers in the lurch. Moreover, KACST regulations do not cover companies providing Internet service via satellite.

The cumulative effect of all this has translated into an adverse impact on the middle-level ISPs, Anwar said, adding that the STC was earning three times more per hour than the ISPs.

Pointing out that Internet service charges in the Kingdom continue to be high compared to other Gulf states, Al-Essa said growth in Internet usage in this country would not be possible unless steps are taken to improve “the equation of cost” for the ISPs and increase the subscriber base by bringing down the cost for the end user.

The 50 percent discounts to the ISPs from STC and 42-71 percent discounts allowed by King Abdul Aziz City for Science and Technology do not go far enough to ease the burden on the ISPs, he said.

Al-Essa observed that the cost of providing Internet services to ISPs from the beginning has been so high that none of the ISPs was able to break even until they had high international capacities.

“These capacities reach over 20 Mbps from KACST. Keeping in mind that the current average ISP has only 6.2 Mbps, this leads us to believe that over 90 percent of the ISPs have been losing since the advent of the Internet in the Kingdom,” he said, adding that this is basically the cost of connectivity incurred by the ISPs to STC and KACST.

According to Al-Furaih, Saudi Arabia has the highest subscription rates in the region. “Here it costs around SR 250,000 for two megabytes, compared to only SR50,000 in Bahrain.

There are four tiers of subscription tariffs for Internet use in the Kingdom: the amount paid by ISPs to both KACST and STC and that paid by individual subscribers to the ISPs.”

According to Aarif Al-Suwaidan, director of public phones STC will slash international phone call charges by up to 63 percent to 223 countries from July 1.

He said STC will charge SR5 per minute instead of SR5,5 for calls to India, Bangladesh and Sri Lanka and SR4.5 in place of SR5.5 for calls to Pakistan.Callers to the United States and Canada will enjoy a 25 percent discount as the charges will be cut from SR4 to SR3 per minute.