Public Policies Generating ITC Opportunities

1
Public Policies Generating ITC
Opportunities
Communications and Information Technology
Commission Saudi Arabia Casablanca, February
2006
2
Table of Content

• Sector Reform
• Regulation Framework
• Liberalization of The Saudi ICT Market
• ICT Market In Saudi Arabia
• Enhancing Regulatory Frame work ICT Policies
• National ICT plan
• ICT Initiatives

3
Population Economy of KSA

• 23 Million
• GDP Trillion 1.15 SR 306.7 Billion USD
• GDP Growth 2005 Real 8.9
• GDP Growth 2005 Nominal 22.2
• Red Hot stock Market (10 Billion USD trading
  volumes per day)

4
Sector Reform

• Establishment of Saudi Telecom Company (STC) in
  1998 and CITC in 2001.
• STC has developed the ICT infrastructure.
• The legal framework has been established.
• Private sector and foreign investment
  participation
• are the focus.

5
Regulation Framework
Telecommunications Act
Telecommunications Ordinance
Telecommunications Bylaw
The adoption of this legislation has opened the
telecommunications market for competition, and
has laid the legal framework for the
development of a competitive
telecommunications sector.
6
Communications and Information Technology
Commission (CITC)
June 2001
Establishment of the Communications and
Information Technology Commission
An autonomous entity that enjoys financial and
administrative independence.
Responsibilities Include

• Creating enabling environment that is pro
  competition.
• Protecting public interest.
• Securing the right to access public network at
  affordable prices.
• Fulfilling its mission with transparency and
  fairness.
• Encouraging investment in information technology
  services .
• Developing a national information technology plan
  .
• Implementing both e-Government and e-Commerce
  initiatives and encouraging technology usage.

7
Liberalization of The Saudi ICT Market

• CITC has opened the doors for increased business
  opportunities for local and foreign investment
  in
• Mobile services
• Fixed line services
• Data Services
• Internet services
• Other services and advanced technologies

8
ICT Market In Saudi Arabia
Mobile market growth has been tremendous

• Sizeable and fast growing subscriber market
• Potential for high penetration levels
• (2006, 14 Million Subscribers, Penetration 70)
• Attractive demographics
• Stable macroeconomic environment

9
ICT Market In Saudi Arabia(Continued)

• Internet services commenced in Saudi Arabia in
  1998.
• Today, the number of internet users close to 3
  million approximately representing a penetration
  rate of about 13.
• The ISP market is fully competitive, 30 ISPs are
  currently operating kingdom-wide
• Further growth in penetration of internet
  services is expected due to several initiatives
  that are under way

10
The Saudi ICT market is estimated at 2.20
billion in 2005
Saudi Arabia as of global market
0.19
Hardware
0.12
Software
0.13
IT services
Compared to Saudi GDP, which is 0.7 of the
worlds total, Saudi Arabia ICT sector is below
its potential size
Spending 1.78 billion
Source Digital Planet 2003, IDC (2003)
Source IDC (2003)
This section will focuses on the IT sector,
digital content development, and unregulated
value added communication services. Regulated
communication services will be covered in a
separate section
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Enhancing Regulatory Frame Work

• Telecom Act has been enhanced to include IT and
  services and development mandate
• E-Transactions Law has completed its review cycle
  and about to be issued
• Computer Crime Law is under review
• Anti SPAM directives under review

12
The National IT Plan
Selected Targets in the 5-year plan
Vision

• The transformation within two decades into an
  information society and the attainment of a
  digital economy so as to increase productivity
  and provide IT services for all sections of
  society in all parts of the country and to build
  a solid information industry that becomes a major
  source of income

• Local IT industry 5 billion SR
• IT sector will employ 2 of the labor force
• Establishment of 1 Tech Free Zone, 2 technology
  parks, 6 incubators
• Automation of 50 of government procedures
• Construction of 10 national databases
• 5 of university students will specialize in IT
  majors, and graduates will reach 3750 annually
• 30 of educational curricula will be interactive

2002 Launch 2004 Draft plan is
published 2006 What is next?
Components

• Urgent initiatives
• Long-term vision
• 5-year plan

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Opportunities In The IT Services Sub-sectors
Market size 2003 ( million)
Market size 2008 ( million)
IT services sub-segment
CAGR Growth
Business opportunities
208
295
7

• SME market
• Subcontracting from large IT service providers
• Niche expertise

Hardware software support deployment
50
105
16

• Government training
• End customer driven training

IT training and education
205
307
11

• Increased subcontracting by large service
  providers

System integration

• 42

• 91

16

• Lack of qualified IT staff will push large
  companies and government to outsource

Outsourcing total
83
141
11

• CRM and ERP applications for SME

Customization
Source IDC (2003)
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Strengths and Weaknesses of Saudi ICT Industry
Components
ICT segment
Strengths
Limitations
Business opportunities

• High market growth
• Home PC plan
• Hydrocarbons industrial base. May require
  customized hardware

• Lack of large anchor industries
• Relatively high production cost
• Limited innovation

• PC assembly
• Niche applications (military, etc)
• Customized computer hardware

Hardware

• High market growth

• Limited and expensive skilled labor pool
• Limited innovation

• E-Government
• Hydrocarbons industry specific applications

Software

• High market growth
• Well established, well staffed, and
  internationally affiliated players

• Limited labor pool

• Opportunities in public and private sectors,
  large and small corporations
• Subcontracting

IT Services

• Large and growing retail market
• Major government initiatives in e-learning
• Saudi advantage in religious and Arabic

• Relatively low PC and DSL penetration

• E-learning
• E-entertainment
• Mobile value added services

Digital Content
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Current IT Initiatives
Grass Root Initiatives Through PPP

• Saudi Home Computing Initiative (SaHCI)
• Sold 10,000 PCs in 3 months
• PCMS office MSW Internet training _at_ 26.6
  USD/month
• E-Government Initiative
• SMB automation initiative
• DSL for 2 years, server, desk top PC, 2 Laptops,
  training, WLAN, Emails, Printer, web presence
  400 USD/month

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E-government initiatives will be worth around 5
billion, and will be an opportunity to develop
locally some e-government platforms
2
Saudi IT Opportunities
Opportunities for Saudi IT companies
Current phase
GCC Country
Budget ( million)
E-gov Global Readiness rank

• Large contracts to leading IT service providers
• Subcontracting by leading vendors to smaller IT
  service providers
• Development of customized solution by smaller IT
  companies to some Saudi government agencies
• IT training for public sector employees (both
  large and small players)
• Outsourcing of some government functions to both
  small and large players)

Phase I
Saudi Arabia
5000
105
Phase II
UAE
1000
38
Phase II
Kuwait
450
90
Phase I
Oman
250
98
Phase III
Qatar
200
77
Phase III
Bahrain
150
46
Source Madar Research (2004))
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Current IT Initiatives
Grass Root Initiatives

• Saudi CERT Security Initiative
• Smart Cities Initiative
• Riyadh transformation into a digital city
• B2B exchanges

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Current IT Initiatives
Leading to New opportunities Requiring Industry
development efforts to push Innovation,
Entrepreneurship and Growth Therefore -

• Three Technology Parks are under way
• Three VC funds established (300,200, 5o Million
  USD) Alll private
• The new vision for the City of the future King
  Abdullah Economic City

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Providing Arabic content is one of the best
opportunities for existing and new Saudi companies
2
Internet Content in Saudi Arabia
Preferred Language on the Internet
The unmet need 76 of those who prefer Arabic
content think that there is limited Arabic
content on the internet
stating
What is missing in Arabic content ?
52
Entertainment
39
Educational
34
International news
34
Religious content
30
Local news
19
Sports
Arabic websites 1.2 of total
Source Arab Advisors / Connexus Survey of 1037
individuals, 2005
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and in e-learning
2
E-Learning Opportunities
E-Learning in Saudi Arabia(US million)
Business Opportunities for Saudi Companies
Non Comprehensive

• Out of the box content customized arabized to
  KSA
• Representation of international e-learning
  publishing houses with limited customization of
  content
• Locally developed e-learning content
• Children
• Adults for continuous education
• Professional education and certification
• Religious
• Content developed to educational institutions and
  government
• Converting official educational curricula (GCC
  common curricula)
• Development of a complementary e-learning
  curricula for existing educational institution
• Religious university and degrees
• Delivery of content
• Online universities that may be affiliated
  internationally or regionally.
• Services
• Common services offered to schools
• Certification services

CAGR 32
Global market (2003) 20 billion
Source Madar Research (2003)
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To sum up, many business opportunities present
themselves in the Saudi ICT sector
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Summary of Opportunities
Business
Investment size
Business
Investment size
Hardware and software support deployment
Medium
Entertainment content development
Medium
IT training education
Small to Medium
Entertainment service delivery over the web or
mobile
Small to medium
System integrators
Small to medium
E-learning content
Medium
E-learning services
Medium
Outsourced government and large local company
functions
Small to medium
E-learning service delivery platforms
Medium
Omra and Hajj e-travel services
Medium
Investment Size Legend

• Small Less than 1 million
• Medium 1-10 million
• Large More than 10 million

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National ICT Scene. (Future)
Fixed Line Penetration ? Cellular
Penetration ? Internet Penetration ? PC
penetration ? E-applications ? Prices
? E-Readiness Improving Broadband Expandin
g Universal Service Coming Now
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Conclusion
It is essential for developing economies that the
Governments Plays an important role as a
Regulator, Facilitator, and Partner To the
Private sector to realize growth In Significant
ways
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Thank you

• Dr. Ahmed A. Sindi
• asindi_at_citc.gov.sa
• Dr. Suliman Mirdad
• smirdad_at_citc.gov.sa