http://www.ameinfo.com/106114.html

Mobile substitution hits Saudi Arabia's telephony market hard as 
liberalization set to open market to competition, says IDC
The Saudi Arabian circuit-switched telephony voice market contracted by 
4 per cent to just over USD2 billion in 2005 and will contract an 
average of 7.6 per cent annually over the next five years.

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?

+++



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