Saudi Telecom CEO’s Vision For The Future
With half of the population under 25 years old, Saudi Arabia’s economic transformation from an oil based economy to knowledge based, could double its GDP, create 6 million jobs, and raise Saudi household income by 60 percent, according to a new report by the McKinsey Global Institute. Digitization will boost the Kingdom of Saudi Arabia’s potential $4 trillion non-oil economic investment needed through 2030 and technology will be a key to transforming all of Saudi Arabia’s verticals.
During ArabNet Riyadh, Dr. Khalid Al Biyari, C.E.O. of Saudi Telecom Company (STC), elucidated how STC is one of the Kingdom’s major players in driving this very robust expansion, and discussed the opportunities that have been created for the telecom sector as a result of the digital revolution highlighting, “What we see is an increase in flexibility within the industry. The current global size of telecom is $4 trillion, which can increase to $32 trillion.”
Infrastructure: Exponential Adoption Across The Board
Saudi Arabia has the world's highest Twitter and YouTube use per capita. People are already connected, and into social media. The growth rate of data consumption in Saudi Arabia is one of the highest in the world, whether in mobile or fixed networks and this demand requires pumping massive investments. Also, since a great number of industries are digitizing, the impact on telecom companies requires increasing their range of provided services, which means adapting to new specialties such as mobile business applications and unified communications (UC) - the integration of real-time, enterprise, and communication services.
This growth in demand for data will be accelerated by machine to machine connectivity. All connected devices such as cars, wearables, tablets, and phones will be supported by data and real-time analytics. “STC will continue encouraging the government and enterprises to step into the digital circle of connectivity, because for the next five years, we will move from connecting billions of devices to connecting hundreds of billions of devices,” added Biyari.
Any digital economy needs the proper infrastructure to grow, and STC has focused to invest in three main areas:
1- Mobile infrastructure: STC continues to invest in mobile networks to increase connectivity. After it successfully reached speeds of 4G, and 4.5G, the countdown is currently on for 5G, that will be available around 2020-2021.
2- Fixed infrastructure: In a country the size of Saudi Arabia, investments in fixed fiber optic networks are on the rise connecting cities with one another as well as connecting businesses and residents within every city. And given the need to be connected with the world, there are large investments in existing international gateways and submarine cables that connects Saudi Arabia to the East and West. STC is one of the biggest investors in the region, if not the biggest, in terms of submarine cables, for gaining from the international movement. As recent as April 2016, the company inaugurated a 20,000 km long cable tethered from Singapore to France, making 20 pit stops in 19 countries.
3- Data centers: In addition to large investments in data centers all around Saudi Arabia, STC, being the incumbent landline operator of Saudi Arabia, now has a plan to transform the switchers it operates in every Saudi city into data centers. “This will serve our networks, and can be used by our customers. In 2015, SAR 8 billion in new capital investments were added to SAR 7-8 billion in the field of operational maintenance and support for the existing network,” said Biyari.
The New Telco Opportunity
The digital revolution will increasingly impact all sectors, changing the way users deal with their services in their daily lives. Biyari presented a glimpse of the level of progress underway in Saudi vital sectors.
In finance, for instance, there will be changes to various services from mobile payments to digital wallets. Telecom service providers can offer specially-designed products for the ‘unbanked’ (voluntary and involuntary non-users of financial services) to benefit from financial services.
Logistics and transport is another widely-impacted sector, with abundant examples: Web-based GPS fleet tracking and management software, cloud-based dispatching software for taxi, private hire and fleet; as well as other wireless solutions for freight transportation and logistics.
The winds of digital change are reaching the shores of the energy sector, with little resistance left in the tank. Utility companies will be most heavily impacted through efficient, energy-measuring smart grids and data-gathering smart metering.
With regards to the media sector, one notable example is the shrinking number of people watching television sets. “There is an obvious, massive conversion between media and telecom. The conversion operations between the two sectors are clearer now with the availability of digital media. This exerts pressure on telecom networks because of the large bandwidth that videos require, while noting that this can be positively exploited,” said Biyari.
In education, there is a flood of ideas and projects by startups, schools, and maker spaces, all revolving around coming up with ways to convert content into digital form, in coordination with educational ministries. They will need telecom to provide large distribution networks that can deliver, as Biyari puts it, “state-of-the-art services.” He says that in healthcare, the discussion is ongoing among industry and government organizations regarding the future within this digital environment, and how the industry can adapt its services for citizens.
ICT: Threat or Opportunity?
This digital economy can constitute a threat to telecom companies – traditional services, such as voice and SMS, are being replaced by VoIP and instant messaging digital applications. Biyari remains positive with the change in landscape and sees opportunities in the integration of telecom with the “sizable and welcoming” Information and Communications Technology (ICT) sector. He sees “an exponential adoption” of managed and cloud services across sectors, driven by cutting costs. This is exemplified in reducing skill-set investments such as IT teams and reducing the cost of ownership from 30% to 50%. This, in turn, would increase flexibility, adaptability and scalability in business operations.
Cloud computing services are technology enablers that allow consumers and enterprises, across sectors, to start building applications over the network. STC has adopted such enablers, designing its own open-technology cloud marketplace in 2014, further diversifying technology partners and platforms, and allowing more room for innovation. Also for application enablement purpose, it is building advanced IoT and machine-to-machine platforms for all sectors.
“IoT and machine-to-machine are large and profitable sectors. Despite the gigantic investment, I think it’s the right path for country and company. The uptake in the market is massive and STC is supplying the demand,” stressed Biyari.
Investing In The Future
Fostering an ecosystem of innovation requires benefiting from brain power, and STC steered 3-4 years ago in that direction. It’s contributed with the $50 million STC Ventures, to find areas for investments. Biyari presents Careem – whose growth persists in the private car booking services industry – as a success story after STC provided an initial funding of $1.7 million. It also launched InspireU, an accelerator providing companies with solid grounds to grow.
For Biyari, it is necessary to have a regulatory environment that does not just focus on competitiveness, but also encourages investment, from initial infrastructure phase to the implementation stage. “Our priority is to be enablers to the state’s adopted strategy with regards to digitizing the nation. And moving forward, every step we take is along that path. In our adopted strategy, the country’s vision is our vision,” said Biyari.
Biyari made it clear that whether investing in cloud, infrastructure, cables, or any typical telecom focus, STC will not put its business perspective ahead of its “duty” to citizens, residents, as well as government and business sectors. Digitizing practices, processes, and systems will clearly impact the lives of Saudis.