ARTICLE
Interview with Abdul Majeed M. El Shawa, CEO, Bayanat Al-Oula
By Basharat Hashai, Market Analyst - Asia
Contact the author at Basharat@maravedis-bwa.com
Maravedis: To start with, can you please provide me with a brief overview of Bayanat Al-Oula?
Bayanat provides WiMAX and fiber services in Saudi Arabia. We have a license for fiber optic communication. The fiber optic project is around US$250 million. We have a national backbone of 12,000 km. We sell a national type of backhauling.
Bayanat can offer an international leased line between let us say Saudi Arabia and Europe. We have an international gateway and can offer VoIP over own network.
Bayanat has activities outside Saudi Arabia as well. Currently we are starting operations in “Republic” of Georgia. We also have operations in Algiers.
Maravedis: Brief me a bit about how and when you got interested in WiMAX.
We received a DSP (data service provider) license back in February 2005. From our beginning back in 2005, the DSL infrastructure in Saudi Arabia was very limited and almost nonexistent. So, we got interested in new emerging technology like WiMAX. It was a fixed version of WiMAX at that point in time.
Maravedis: So, what type of services do you offer over your WiMAX network in Saudi Arabia?
Currently we offer HSI (High Speed Internet) only over our WiMAX network. Our official announcement is that we can offer WiMAX services in the range of 256 kbps up to 2 Mbps. But 5 Mbps is also available.
Are you interested in providing any other services over your WiMAX network?
We are interested in getting involved in video conferencing space. We do not want to provide video conferencing services ourselves, but video conferencing providers can come and use our platform.
Maravedis: Can you please share with us your BWA/WiMAX spectrum details?
In March 2005, immediately after we got our license, we applied for the spectrum. We were awarded 30 MHz TDD at 2.5 GHz, 28 MHz FDD at 3.5 GHz, and 24 MHz at 10.5 GHz.
Maravedis: How much did you pay for the license?
We paid 120 million Riyal (approximately US$30 million) for the license. It is a nationwide license.
Maravedis: Is there an expiry date for the license set by the regulator?
The license will expire in February 2030.
Maravedis: Any major recent change related to the spectrum allocation announced by the telecom regulator in Saudi Arabia?
The major change that happened recently is that the spectrum allocation is now based on auction. At our time in 2005, there was no auction.
Maravedis: What is your current WiMAX subscriber base and what growth are you expecting in the coming years?
We have about 1,000 enterprise customers. Bayanat started residential services in October 2007 using Samsung gear. The residential subscriber number as of December 2007 is 1,000.
Maravedis: So the current split between enterprise and residential subscribers is 50:50. What is your expectation about the split in the coming years?
Initially when we started, our major focus was large corporations—mainly banks. But now it is shifting to consumer. The current subscriber split is 50:50 and we expect the split to tilt towards the residential market. For the residential segment, we are expecting to reach 200,000 to 300,000 subscribers by the end of year 2008. Our current project is capable of taking us all the way to 400,000 to 500,000 subscribers.
Maravedis: What is the ARPU like for your enterprise and residential WiMAX market and which segment is bringing you the maximum revenue at present?
The enterprise ARPU is bit difficult to pinpoint because of a very big variation. One customer could pay US$50,000 to US$100,000 per month. Another one may pay US$1,000 to US$2,000. The residential ARPU is about US$150. The revenue coming from enterprise segment is much higher than the revenue coming from residential segment.
Maravedis: Should we assume an enterprise ARPU in the range of US$12,000 to US$18,000?
Yes, that is a good estimate.
Maravedis: How many cities have you covered with WiMAX services so far in Saudi Arabia?
We have covered 9 cities so far, for the residential as well as the enterprise market. This includes Riyadh and Jeddah. More than 80% of the population resides in these 9 cities. There is still a lot of work to be done in these 9 cities.
Maravedis: What is your major WiMAX investment so far and what kind of investments are you currently making in WiMAX?
Around Q4 2006, we signed an agreement with Samsung to deploy 400 base stations based on the 802.16e-2005 standard. The value of the contract including CPEs and other services is US$100 million. The number of CPEs in the contract is 200,000. The CPEs will be deployed gradually. It is like—as we sell, we buy. For this network, we have invested about US$50 million in actual rooftop sites and backhauling between them. We have invested another US$50 million for our back-office facilities in data centers—POPs, software, and the BSS/OSS.
We are currently expanding our network with 400 Samsung base stations, and very soon we will start a very serious marketing campaign as well.
Maravedis: How many Samsung base stations and CPEs have been deployed so far?
We have 130 Samsung base stations already deployed. The Samsung gear is 802.16e-2005 based. The commercial WiMAX services using Samsung gear started back in October 2007. We have deployed around 1000 CPEs from Samsung so far. The Samsung equipment project is to be completed by 2008.
Maravedis: Brief me about your other CPE and base station vendors?
We started in 2005 with a proprietary system from Wi-LAN. We have 8 Wi-LAN base stations deployed and working, and we have hundreds of corporate customers live on Wi-LAN networks. To be specific, we have 300 Wi-LAN CPEs deployed. We have deployed around 22 base stations from Siemens. Siemens has now stopped building fixed WiMAX equipment after merging with Nokia. Siemens is promoting 802.16e-2005. We have deployed 700 CPEs from Siemens.
Maravedis: You also run a 10.5 GHz network, can you please let us know the name of the supplier for this network?
Ogier Electronics, a UK based company.
Maravedis: Your WiMAX billing vendor?
We are using PORTAL billing system (from Oracle)
Maravedis: And your backhaul and NMS (Network Management System) vendor?
Nera Networks (a Norwegian company) and DragonWave supply us with backhaul. Network management is handled mainly in-house. Each system is also managed by vendors like Nera and Samsung.
Maravedis: You have actually opted for the Best of the Breed. I mean different vendors for different equipment. Was that the best thing to do?
Yes. We have now an ongoing project to actually integrate all these systems into one unified layer. We should be able to finish by March 2008.
Maravedis: One final question before we wrap up, how do you see the future of WiMAX in Saudi Arabia?
WiMAX is quite visible in Saudi Arabia. Saudi did not really enjoy strong availability of broadband until end of 2007. We were really bullish about WiMAX in Saudi Arabia. But certification delays are not doing any good for us. If we do not have a real and clear direction from the forum this year about the the proper certification, I think the chance for WiMAX will dwindle. The operators will be forced to look at the alternatives. There is also a major threat for WiMAX coming from DSL technology.
The DSL infrastructure is improving very rapidly for the incumbent, Saudi Telecom Corporation (STC). The HSDPA services are being heavily marketed in Saudi Arabia by Mobily and STC. This year WiMAX has a good chance to proliferate in Saudi Arabia. If we lose this chance, I think the future will be very uncertain for WiMAX in Saudi Arabia. I am talking about—more than US$300 million riding on WiMAX. If the forum and industry do not stabilize this standard and really make it commercially ready, 2009 will be the year when operators from Saudi Arabia give up on WiMAX
For more information you can contact the author. Basharat@maravedis-bwa.com
