By Georges A Jaber, VP, Wholesale & BD, Salam
Wholesale telecom has transformed over the last decade as connectivity requirements move from traditional voice to data services (including VoIP); and accelerated digital transformation increases the adoption of emerging technologies such as Cloud, IoT, and AI. Wholesale transformation has occurred on several fronts; including the movement from standard products to platform-based solutions; from traditional customers (ISPs, MVNOs, fixed telephony service providers etc.) to next generation customers (Hyperscalers, CDNs, Gaming platforms etc.); and from traditional inter-operator relationships (manual procedures) to next generation relationships (APIs, blockchain etc.).
In parallel with this structural transformation of wholesale telecom, the Saudi Arabia wholesale telecom ecosystem has undergone a rapid transformation in recent years due to several factors such as CST's regulatory initiatives and the growing interest of hyperscalers and content platforms in KSA. This is due to the rapid digital transformation in the Kingdom.
CST has ramped up its initiatives in the regulatory domain, particularly focusing on wholesale broadband access regulations. The company has released Fiber Bitstream Guidelines to establish an Open Access framework. This framework, including L2 Bit Stream Access, has received consensus among service providers and applies to both consumer and business segments. The Saudi regulator has also awarded two new MVNO licenses— one of which is ‘Salam Mobile’ to enhance mobile competition with new market entrants.
Digital players such as hyperscalers, CDN providers, and content platforms are also increasing their focus in Saudi Arabia: which is the largest economy of the region with rapid national transformation in line with the Vision 2030 targets. Digital transformation in the Kingdom across consumer, business, and government segments accelerates the adoption of emerging technologies such as Cloud, IoT, and AI; along with over-the-top (OTT) services such as social networking, video streaming, and unified communications and collaboration.
Digital players, both on a global and regional scale, providing technology solutions and services, are actively seeking to establish their edge nodes within the Kingdom. This strategic move aims to provide users with improved experiences through lower latency while adhering to data privacy policies and regulations. Consequently, telecom wholesalers in Saudi Arabia are witnessing a surge in key customers, including cloud providers, hyperscale platforms, CDN players, and gaming platforms, reflecting the growing importance of these services in the region.
The rising demand for capacity, especially from digital players, leads to heightened network utilization and the realization of economies of scale. This, coupled with infrastructure-based competition among network operators, contributes to a continuous decline in wholesale telecom prices—similar to the trends observed in Europe and the United States.
The future of the Saudi wholesale telecom ecosystem will be shaped primarily by the investment/partnership initiatives of digital players in the Kingdom and infrastructure investments (submarine cables, data centers, internet exchange platforms, last mile, transmission). This is in light of the policy and regulatory initiatives of MCIT and CST.
New submarine cables that are under construction (2Africa, Blue-Raman, IEX, Africa-1, SEA-ME-WE 6, Cinturion) are expected to bring an additional 1.1Pb/s international capacity to Saudi Arabia. In addition to submarine cables, the Kingdom's geostrategic location allows terrestrial connectivity between Saudi Arabia and its neighbors in GCC, as well as Egypt, Jordan, and Yemen. Network operators have been developing their infrastructure capabilities in border touchpoints for terrestrial connectivity and looking forward to being the transit/hub provider between the East and West. Saudi telcos are also exploring alternative terrestrial routes to Europe via Palestine or Iraq, as an alternative to the current Egypt route that carries most of the traffic.
Growing focus on carrier-neutral data centers and internet exchange platforms will be another fundamental factor that will shape the future of the Saudi wholesale telecom ecosystem. The number of participants, connected capacity, and peak traffic indicators are continuously growing at the Saudi Arabian Internet Exchange (SAIX) and the Jeddah Internet Exchange (JEDIX). Local interconnection and traffic exchanges between the ISPs/telcos, cloud providers, hyperscalers, CDNs, and gaming platforms will remain critical to ensure lower latency for end users and compliance with data privacy regulations.
In a nutshell, the Saudi wholesale telecom ecosystem should continue its positive transformation and become more competitive to enable the digitalization of the Kingdom effectively. The provision of high-quality infrastructure and capacity services, in a competitive environment, will act as a catalyst for the Kingdom’s digital transformation. MCIT and CST's role will be critical in a transparent and constructive collaboration with all industry stakeholders; including telcos, ISPs, data center providers, cloud providers, hyperscalers, CDNs, gaming platforms, and internet exchange platforms.
