OXFORD, United Kingdom-A seasonal increase in demand caused by an influx of visitors is a familiar phenomenon to many cellular network operators. But the increased demand is rarely overwhelming and usually is spread out in both time and space. Not so in Saudi Arabia. Every year during the Hajj, the annual Muslim pilgrimage to Mecca, two million pilgrims are all moving at the same time within a limited area.
“Meeting GSM (Global System for Mobile communications) demand during the Hajj is a challenge every year,” said Dr. Zeyad Al-Otaibi, director general of the mobile and rural telecom department at the Saudi Telecom Co. The public GSM network in Saudi Arabia already is beyond the saturation point with more than 600,000 subscribers-a penetration level of 4 percent-and there is a total of just 2 million fixed main subscriber lines in the whole country.
Accommodating an extra 2 million potential GSM customers all in the same place at the same time is a daunting task.
“We increased the number of cell sites from four in Hajj ’96 to 32 in Hajj ’98,” reported Al-Otaibi. “And (we) will increase to 42 for Hajj ’99.”
Implementation of the country’s GSM network now is entering its third phase with an emphasis on increasing capacity and coverage. Roadside emergency phones based on GSM technology are planned, and fax/data services will be launched by the end of 1998, according to Al-Otaibi. Prepaid services will be introduced in the first half of 1999, followed by voice mail and short message services (SMS).
This rather unusual deployment pattern of GSM features and functionality is quite common throughout the Gulf region. Capacity, coverage and roaming agreements are the first priority, as with GSM networks everywhere. But in the Gulf, the emphasis then seems to be more on fax and data services rather than voice mail and SMS. Prepaid services are not yet widely available in the Gulf region.
Frustrated voice-mail vendors believe these priorities are a consequence of the monopoly status of GSM network operators in the Gulf, which results in an engineering rather than a marketing focus for network deployment and operations.
But that could be about to change. A wave of privatizations is hitting the region, and there is talk of second licenses in some countries.
It was Saudi Arabia that took the first step toward privatization with the formation of the Saudi Telecom Co. in May 1998, following a royal decree to privatize the activities and assets of Saudi Telecom. A flotation is planned for the first quarter of 2000.
Private finance is essential for the development of telecommunications in the Middle East, argued David Green, investment manager for Communications Development Corp. in Dubai, United Arab Emirates. “Although parts of this region are very wealthy, the fact is that there is just not enough capital in the region to build the communications systems required.”
More than 50 percent of the US$9 billion required in the region over the next five years will have to come from the private sector, believes Green. “Outside capital yields benefits beyond the money itself,” he said. “In addition to the funds, recipients get new ideas. One of these ideas is marketing-a significant driver of growth in the wireless world.”
Some Middle Eastern countries outside the Gulf do have competitive environments. Jordan, Lebanon and Turkey all had two GSM networks right from the start. In the Gulf region, Kuwait is the only country to have awarded a second GSM license.
Oman could be next. Privatization of the General Telecommunication Organization (GTO), the PTT of the Sultanate of Oman, is under active consideration, and there are rumors of a second GSM license.
Projects on the drawing board for the current GSM network include prepaid, voice mail and an SMS center,” noted Mohammed Al Kindy of the GTO’s strategic planning department.
The government of Qatar plans to sell a 40-percent stake in Qatar Public Telecommunications Corp. (Q-Tel), expecting to raise more than US$800 million. Abdul-Aziz Fakhroo, manager-GSM engineering at Q-Tel, said other future projects include an intelligent network-based prepaid service and SMS with voice mail service.
In the United Arab Emirates, Etisalat already has 450,000 GSM subscribers, a penetration rate of 17 percent.
“Our future expansion plans aim to double this penetration figure to 1 million subscribers by the year 2000,” said Ali Amiri, manager of operations at Etisalat and chairman of the Arab Interest Group of the GSM MoU. Etisalat recently launched its Speak Easy prepaid service, and an SMS service is imminent. Fifteen percent of subscribers already are using Enhanced Full Rate, and dual-band 900 MHz systems are being planned.
Bahrain is the exception to the voice-mail vacuum in the Gulf.
“We supply voice mail with SMS notification for every one of our 93,000 subscribers,” said Essam Zainal, manager of mobile services at Batelco. Like Etisalat, Batelco also is planning a dual-band network and is launching its prepaid service in the first quarter of this year.
The ability to roam throughout the Middle East and Gulf was one of the key drivers behind the selection of the GSM standard for the region. But few prepaid services currently support roaming and so may not be as attractive to operators in the Middle East as in other parts of the world.
However, Egypt’s second GSM operator MisrFone launched its service at the end of November 1998 with a prepaid package, the first operator in the world to do so. MisrFone is aiming for more than 200,000 subscribers to its Click GSM prepaid package by the end of 1999.
