Like many markets in the Middle East, Saudi Arabia is sparsely populated areas outside the big cities. Saudi operators are unlikely to implement the fiber infrastructure outside of major urban and industrial areas, as economic activity is usually highly concentrated in these areas. Connecting to remote areas using fixed broadband technologies such as DSL or fiber is very expensive and have a very low return on investment (ROI). However, technologies such as HSPA and LTE can serve as a relatively cost-effective option of deploying high-speed broadband services in smaller towns throughout the country.
The use of a dense network in the 2.6 GHz band will not be cheap, especially if it is distributed throughout the country. But the strategy to use LTE in densely populated urban areas and HSPA at lower frequencies in the smaller towns and villages has a much greater chance of success. This type of strategy will also better than the backhaul point of view, it will be much easier to connect to the core of LTE network traffic in urban areas. We believe that this strategy will be replicated by other operators in the Middle East, and drive the number of LTE applications.
Despite the introduction of its network at the same time, all three operators have different attitudes, motivation and strategic partners for their implementation. Zain is working with Motorola, Ericsson and Huawei to offer LTE services in major cities of Riyadh, Jeddah, Dammam. Zain’s plan to expand coverage to all major cities in Saudi Arabia by the end of 2012. Mobili is working with Samsung and Huawei deploy their networks. Mobily’s rollout strategy is the opposite of Zain’s, with the operator initially focusing on smaller cities before expanding its services to Riyadh, Jeddah, and Dammam at a later date. STC has partnered with Huawei and NSN, and its services will initially be available in Riyadh and Dammam. The operator plans to expand its coverage to a further 400 locations during its initial launch phase.
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