Digital Policy - STC€¦ · Once services are combined, the thinking suggests a clear investment...

Digital PolicyTHE ICT POLICY & DEVELOPMENT MAGAZINE

Telecom RegulationsRevision of Telecom policies and regulations to shift focus from competition to development

Telecom Operators

Huge challenges facing telecom companies impose radical changes in its operations

Promising Technology

New horizons for business through mCommerce

Governments and investors are coming together to achieve accelerated broadband rollouts

Public Private Partnership

ISSUE 4 | SEPTEMBER 2013

Smart MetersOpportunities and challenges in the Kingdom of Saudi Arabia

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Without a doubt, telecom networks are providing the foundation of information sharing across the globe, which in turn are rapidly becoming an indispensable component of the 21st century. It is therefore crucial that telecom policies and regulations should keep on supporting the development of these networks as it is proven to be an enabler of economic growth and also a proven key component of knowledge-based economies and societies. It also become necessary to review telecom policies and regulations to maintain an increased momentum for the integration of integration of Information and Communications Technologies (ICT) with other sectors of the economy.

In recent years, both developing and developed countries have invested significantly in broadband infrastructure and other supply-side policies and regulatory environment for ICT, ensuring that their citizens have high-speed access to the Internet and communications services.

However, broadband infrastructure by itself is not sufficient to create a vibrant ICT-based economy, although it is increasingly a necessary condition. Upgrading this infrastructure alone will not be effective unless citizens and businesses have access, motives and incentives to make use of it. Incentives for citizens to use the new technologies should be considered, because demand needs to grow alongside supply. One starting point for encouraging the use of ICT is through e-services including both e-government and e-commerce, particularly via mobiles, as a way of engaging the widest range of members of society in a practical way. For example, the success of m-money in developing economies, in addition to its significant contribution to GDP and Foreign Direct Investment has in fact become so well known that there is interest in the leading economies to add mobile transaction schemes to the existing

array of financial services already on offer. Mobile payments in developed economies supplement widely-used electronic payments and online banking services, which have enabled the growth of e-commerce.

On the other hand, collaborations between the public and private sectors should also be enabled through various means including industry forums, government and industry policy consultations, and frameworks for public–private partnerships (PPPs). In fact, the private sector is a vital source of investment, innovation and information, so governments need to consider the appropriate incentives and regulatory structures for investment in networks and technology. Developing an effective PPP model requires countries to provide incentives for less-attractive invest ments while enabling the private sector to target high-return investments. For example, government funding for broadband deployment in remote areas by the universal service projects are proven to be advantageous. Other alternatives may include government funding for the deployment of nation-wide high speed broadband infrastructure. To this end, government is encouraged to increase their spending and investment in ICT as it will result in improving Saudi Arabia’s performance on ICT adoption and subsequently deliver a substantial economic gains. As a matter of fact, consumer spending makes up 56% of total ICT spending in Saudi Arabia, compared to 23% in the US . Put another way, the majority of spending on ICT in Saudi Arabia is done by the consumer sector, which is the opposite case in leading ICT-driven economies. Malaysia, for example, derived 0.66 percentage points a year of economic growth because of increased ICT investment over the 2005- 2008 period .

Further, the fast emergence of new technologies, the increasing impact of Over-the-Top (OTT) players, the shift

towards all-IP services and Fixed Mobile Convergence (FMC) needs to be reflected on the regulatory approach in place. It is almost without controversy that the review of some regulatory rules are needed in order to further develop the ICT sector and allow new business models to evolve. The regulations should be wreviewed to neutralize the threat of OTT on incumbent operators through licensing of their activities or to allow the operators to turn this into opportunities through partnerships. On the other hand, regulations should also consider improving the wireline attractiveness to Saudi consumers and businesses by removing any obstacles on offering ubiquitous and affordable access to high-speed broadband over the most efficient technology. Moreover, converged services would enhanced consumer experience and allow them to enjoy the benefits and convenience of one-bill and one-stop-shop.

The challenge therefore is to develop new regulatory approaches that continue to promote investment activities and provide more flexibility for new business models to evolve, while maintaining and fostering competition. On the other hand, ICT regulation should also play more proactive role in facilitating new network services and applications. This could be attained through offering the appropriate incentives for both; the telecom operators to continue to expand their infrastructure and consumer to use new technologies, and through consolidation of PPP where the telecom operators like STC had a lot to offer given its strong track record in ICT capabilities and commitment to innovation and development. Therefore, I believe it is the right time to shift the regulatory attention from libralaization towards incentive and sector development based regulations.

1 ICT in Saudi Arabia: A Socio-Economic Impact Review, STC, October 2011.

2 Ibid.

ATTUNED POLICIES & REGULATIONS ARE PAVING THE WAY TOWARDS SIGNIFICANT BENEFITS TOECONOMIES AND SOCIETIES

Briefing Digital Policy

Eng. Abdul Aziz bin Abdullah AlSugair Managing Director of Saudi Telecom Group

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Briefing

ICT Policies and Regulations Managing Director, STC Group

Foresight

Delivering broadband through partnershiMr. Brahima Sanou Director, Telecommunication Development Bureau (ITU-D), ITU

The Future of Communications and Information Technology in the KingdomHis Excellency Dr. Gebreel Bin Hasan Al-Areeshi Member of Shura Council of Kingdom of Saudi Arabia Professor of Information Science - King Saud University

Mobile Matters: How the Mobile Industry Can Shape the Future of the Arab StatePeter Lyons Director of Public Policy, Africa & Middle East, GSMA

Retaining relevance and impact as regulator through better regulation in an internet driven ICT industry Sacha A. Dudler Advisor, STC

The Liberalization of the ICT Sector in KSA and Vision for the FutureHis Excellency Eng. Abdullah bin Abdulaziz Al-Darrab Governor of CITC of Kingdom of Saudi Arabia

Looking ahead

Prospects for Commerce in Saudi ArabiaChris Simiriotis Managing Partner, FANERA LTD

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ContentsDigital Policy

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Looking ahead

Smart meters: Opportunities and Challenges in the Kingdom of Saudi Arabia Dr. Essam Abdulaziz Al-Ammar

Advisor, Electricity and Co-generation regulatory Authority (ECRA)

Has Mobility Rendered Your IT Organizational Structure Bulent Teksoz Chief Security Strategist, Symantec

Regulatory matters

Fixed-Mobile Convergence: Bundling Elements for Operator and Customer Gain Suresh Subramanian Managing Director, ICC

Cloud Computing: It’s a matter of transparency and education Daniele Catteddu Managing Director EMEA, Cloud Security Alliance

Society

ICT Indicators for Smart Sectors Dr. Essam Eldin Mitwally General Advisor Technology & Regulatory Strategic Studies, STC

Engr. Ali Al Garni General Manager Regulatory Affairs, STC

Engr. Khaled Abed Al Twergi Director of Technical Regulatory Studies, STC

Last word

The Electronic Signature Dr. Mohammed bin Omar Alabdullatif, Vice President of Regulatory and Corporate Affairs

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The Middle East is at the forefront of one of the great infrastructure opportunities of our time: the deployment of broadband telecommunication networks for mass usage. It is also at the forefront of the development of policy possibilities - particularly for Public Private Partnerships (PPPs) - that can be shared elsewhere around the world to encourage broadband rollout as rapidly as possible.

Broadband will bring the best from human beings, and the best broadband will be one where approaches are shared. As Director of the Telecommunications Development Bureau (BDT) of the International Telecommunication Union (ITU), my own perspective is one that sees the best developments coming from best practice. Best practice, in turn, will often come from multi-stakeholder initiatives where all actors play an important role. Finally, best practice involving these different experiences will be there to be shared with others, fine-tuned, and then applied to new situations and challenges. In fact, we may see no alternative. We face many situations where public and private approaches by themselves probably cannot offer the successful outcomes we need if we are to fulfill the potential of broadband.

Is broadband a socio-economic driver?The answer is definitely YES. The ITU, aware that mass deployments frequently represent considerable investments, has been continually refining the case for broadband and encouraging governments to think seriously and creatively about the opportunities broadband represents. In 2010, the Broadband Commission for

Digital Development was created as a joint initiative between the ITU and UNESCO to examine the opportunities of broadband as a socio-economic driver. The Broadband Commission stimulated new lines of thinking from its origination. One relatively new justification for national broadband initiatives was an aspiration to materialize so-called trans-sectoral thinking. This approach would combine various separate ICT functionalities, evident across the public sector, such as health, education and, in some cases, power utilities and transportation, into a single national broadband infrastructure. Once services are combined, the thinking suggests a clear investment rationale for building the underlying network. Similar thinking applies to the creation of digital cities and smart communities. Our observation shows that such communities, especially when equipped with smart grids and other forms of digital services, will come into existence very soon. It has already been proven in developed markets that connected communities have higher GDP growth rates and improved capacity to mitigate employment issues.

In time, this may prove to be an ideal solution to broadband deployment, although it may need complex re-engineering of prevailing public-sector policies and procurement strategies. However, there are more immediate

justifications for broadband in both urban and rural areas as we can see from the many authoritative studies and reports, including many from the ITU, emerging over the last five years. Beginning in 2009, World Bank studies asserted direct and positive correlations between network deployment for fixed, mobile, and broadband services and economic growth. Since then, all the evidence has effectively pointed to telecommunication-stimulated economic development, although the degree of stimulation depends on a number of different factors, many of which are in-country.

The ITU itself has been actively studying various cases and characteristics of broadband-based economic development, to accurately gauge benefits across a range of situations and circumstances. In all cases that have been studied, we can now say that broadband deployment is indeed correlated with noticeable improvement in economic growth. Substantial contingent benefits are also often apparent. It has meant reduction in unemployment, or creation of an entirely new platform for the economy. For example, ITU studies report that Kenya, primarily as a result of a major improvement in international connectivity through a new submarine cable PPP, is planning major Business Process Outsourcing (BPO) initiatives,

Brahima SanouDirector, Telecommunication Development Bureau (ITU-D), International Telecommunication Union

DELIVERING BROADBANDTHROUGH PARTNERSHIP

ForesightDigital Policy

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supplying services such as online customer care and management. Likewise, analyses suggest Malaysia has probably seen a 1% increase in GDP solely due to the foreign investment attracted by the improved communications infrastructure and its major national broadband deployment.

Quite notably, both of these countries have national broadband strategies, having which provides a policy-level edge to these countries in their respective regions. Where Kenya aspires to become a middle-income industrialized nation by 2030, Malaysia has already observed a rise in its SME sector and ecommerce due to the availability of broadband internet technologies. These results are not isolated ones. In the Arab region, the per capita increase in GDP stimulated by broadband is estimated at between 0.18 and 0.21 percent. Interestingly, the Arab region is home to the world’s leading fiber market (the UAE), with a 72-percent FTTH penetration rate. Elsewhere, a similar story may be unfolding, and New Generation Networks (NGN) may well stretch the ultimate benefit further still. Independent studies on broadband deployment conducted for BT, the incumbent operator in the UK, have suggested continued economic uplift across all regions of the country, including rural locations, where super-fast broadband could be deployed.

The emergence of PPPPublic-private partnerships may reinforce broadband deployment to bring the above benefits. PPP essentially brings actors from private and public sectors together in some kind of financial and legal commitment. PPP is, of course, already well-established in other infrastructure-based sectors

including healthcare, construction and transport systems, to name a few; and many of the approaches developed in one sector are transferable to another. However, telecommunication PPP approaches remain generally more challenging, largely because the sector and its value-chain are extremely dynamic and technologically more

complex. As a result, PPP for the deployment of broadband in many initiatives is still largely at a developmental stage, but the PPP dynamic is there and is bound to grow.

In fact, PPP is not a new idea in telecommunications – there are many examples to be found in past PSTN deployments, especially in developing

countries. But what may make modern PPP approaches more attractive is greater flexibility and ingenuity in approach, with fewer restrictions than seen in past policies. In turn, such flexibility could permit outcomes that respond to new demands and markets, and accommodate new service growth of the type seen in aforementioned countries.

PPPs are now recognized extensively in the financing, operations, and construction of networks. Contemporary PPPs are ambitious in scope and many offer extensive population coverage in their respective franchise markets. Most recently, some 13 PPPs across the world that covered many different approaches, funding models and technologies were researched in an ITU study. Case studies represented Argentina, Dominican Republic, Kenya, Latvia, Lithuania, Malaysia, Mongolia, Pakistan, Paraguay, Qatar, Saudi Arabia, Singapore, and Slovakia. The studies themselves were chosen to be very different in scope and approach to display how broad PPP approaches could actually be put in practice.

Broadband PPPs have been used in

urban, suburban, and rural areas. Universal Service Fund (USF) projects, such as those observed in largely under-served areas of Pakistan, where, as a result, fiber-based connectivity has been brought to rural communities, are an example of such PPPs. Broadband PPPs have also been used to reduce bottlenecks and dramatically lower communication costs in international connectivity. Equally, it seems clearer now that even in developed countries, PPPs will have an important role in connecting under-served areas where public or private investment alone cannot deliver successful outcomes.

The key consideration of any given PPP, ultimately, is the investment model selected for realizing it. There is no single universal model available or practicable for all PPPs. Recent ITU studies have identified at least five types of PPP models now in operation:

• Local Community Model (where groups of end-users or similar communities organize an initiative

to build and/or operate a network, essentially by pooling their individual demand).

• Private Design-Build-Operate Model (where a private service provider is contracted by means of a government grant to deploy and operate a network although the public authority does not have further involvement in the running of the network).

• Public Outsourcing Model (where a private service provider is contracted and funded to build and run the network but the public authority retains ownership).

Foresight Digital Policy

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• Joint Venturing Model (where ownership of the network is split between the private sector and public sector but technical aspects are the responsibility of the private sector).

• Public Design-Build-Operate Model (where the public sector builds and manages network operations and supplies services to other operators and sometimes end-users).

These distinctions should be rather seen in the context of a matrix of possibilities that may allow approaches and models to overlap. Other possibilities and variations in this matrix would include concessions, IPO (Initial Public Offering), and privatization approaches. Essentially, however, with all these approaches available, we map the relative risks and ownership components for the public and private sector players involved against the required functional and operating scope for a given project. The World Bank reports a variety of PPP approaches in Africa that refined and, in some cases, combined these possibilities. They included co-operative vehicles that brought together various operators to build and operate a national backbone as a wholesale operator in Burundi, bulk capacity purchase vehicles (where the government is an anchor tenant and allows the aggregation of demand) in Rwanda and Malawi, and government equity vehicles building on co-operative approaches in Gambia, Guinea, Liberia, and other countries.

Other case studies, studied by EPEC and the European Commission for NGN broadband deployed in under-served regions, tend to suggest similar lines of PPP thinking and processes. Again, a variety of approaches were employed in the seven European case studies reviewed, although there seemed to be a preference for public outsourcing and joint venture projects.

What is the best PPP approach?We are at the beginning of a long journey that will result in sophisticated broadband deployment in many regions around the world. By common consent, commentators suggest it is too early to

say what the preferred approaches of PPP should be as best practices are still evolving. We can certainly say that this policy and process evolution remains an important requirement in this construct. ITU studies indicate a variety of PPP approaches around the world, although local community/bottom-up efforts have yet to spread beyond the USA and some parts of Europe, possibly because of the heavy reliance they place on the communities themselves in terms

of expertise and resources. Various PPPs may be deployed with specific tailoring to suit local conditions, but the successful ones are always associated with progressive and responsive policy environments.

Alongside this, creativity and adaptability are required, not merely in the way these programmes are configured, but also in the way they are perceived. For example, PPP may offer, in some sense, more than simply a financing strategy for a project. Rather, it could be seen as a method to correctly assign and allocate risk in economic development. In turn, this can be tailored to each particular market. In all cases, best practice also stems from the top. Governments are encouraged to remove barriers and bottlenecks in

policy terms. They are also encouraged to formulate a vision for broadband that communicates not only to stakeholders, but also creates awareness in society, at large. In some markets, for instance, such awareness now has an impact far beyond the project itself, as voters are increasingly assessing and judging the political process in terms of what new and beneficial telecommunication/ICT services it can deliver to them.

PPP needs consultationRegardless of the PPP approach employed, it is clear that effective PPP programmes place significant demand on communication between the parties in a PPP relationship. It is necessarily a long-term communication. The PPP may demand complex inter-relationships between various actors involved. Service providers, public sector agencies, equipment manufacturers, installers, civil society organizations, funding agencies, and users may all need to work together.

We have seen highly effective liaison of this kind in major Middle East projects. In the case of Saudi Arabia, for example, extensive consultation with other groups, including operators


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and government departments, aimed to maximize the efficiencies of the Universal Service Fund (USF) approaches employed, whilst in Qatar, consultation was aimed at planning for existing infrastructure reuse possibilities as well as expanding the role of FTTH. Other best practice approaches include retaining independent experts to evaluate bids and the selection processes. It is also important that PPP employs an appropriate technology mix whilst seeking to avoid near-obsolescent technologies that could prove to be expensive to maintain and reduce the potential for future service innovation.

Alongside this, a good PPP practice also aims to reduce barriers to adoption by the eventual service users. Here, countries such as Argentina, Colombia, Malaysia and Uruguay amongst many examples, have deployed major programmes to supply netbooks to students nationwide alongside free or heavily-subsidized digital literacy programmes to encourage service take-up. In the case of Argentina, the netbook supply programme was targeted at 3 million netbooks, of which 1.9 million had already been supplied by mid-2012. Qatar has also instituted digital literacy programmes and free facilities to low-income households. Nevertheless, there are probably more opportunities to develop demand-side initiatives than have so far been explored in most PPP programmes.

A recent report from the ITU suggests that demand-side measures

do indeed need to catch up with broadband deployment aspirations. As telecommunication community, we have naturally focused on network deployment and availability as the priority concern. Nevertheless, so-called “broadband demand gaps” continue to exist. In these areas, potential customers do not take the available services even where the facilities are fully deployed. The gaps are evident, even in many developed countries. In Germany and Italy, estimates on the difference between broadband availability and actual subscription levels suggest gaps as high as 40 per-cents. The USA and the UK see comparable gaps of 31 per-cents and 32 per-cents, respectively. These figures suggest that energetic demand-side measures may be needed to exploit broadband, fully. There are various ways in which this could happen. Lessons from advanced broadband adopters such as the Republic of Korea suggest that policymaking should be prepared to link broadband deployment to wider industrial objectives and possibly institute industrial policy of a more overarching nature that could take account of the new connectivity. In this emerging broadband world, value comes from human interconnectedness; broadband links producers with users, and applications with functionalities.

Possibilities, policies and peopleIn all of this, no one doubts the ability of the broadband technology itself to

deliver on its promises. Arguably, what is now needed is policymaking that takes account of the many stakeholders that could potentially be part of the picture. Sharing expertise will be especially important in realizing public-private partnerships in the future, but so will be transforming policies, which should ideally evolve towards satisfactorily fulfilling mutually-defined goals rather than be imposed as some sort of general templates. At the same time, it is always advisable to develop policy and governance frameworks that monitor expenditures and commitments, so that outcomes achieved are consistent with the expectations of all stakeholders. As observed and quantified in a recent regional study by the SAMENA Telecommunications Council, conducted on 25 markets of the South Asia – Middle East – North Africa region, most countries are in the process of defining effective ICT policies. The study reveals that in the majority of the cases where the policies do exist, they observably lack well established mechanisms to monitor expenditures and commitments, and tools and means to monitor progress. Project risk profiles are important to develop so that risks can be quantified and minimized.

After policies come people, because the human element will remain key. As we have seen, PPP is not a new approach: partnership, after all, is actually an extension of very basic, and very old, social and economic interaction between people and organizations. But we need to apply these old approaches to new product and service contexts and to enable people to use them while preserving the people centric usage and creativity.

The ITU Development Sector, through its expertise, consultations, studies and forums like the Global Symposium for Regulators and the Connect the World Summit series, is committed to supplying the resources to enable best practice to be shared worldwide – and to ensure that the promise of a broadband future is delivered everywhere and for everyone.


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“The continuity of change is the only thing that does not change.” The sector to which this statement applies the most is the telecommunications sector, where operators in this sector worldwide, are always engaged in a fierce competitive battle. They face a mixture which combines consumers coveting each new thing, new competitors, and a dramatic increase in demand for mobile services, which drives this sector in constant change. It is not surprising that 76% of the CEOs of telecommunication operators worldwide see that radical change -- or transformation -- will be the factor with most impact on their companies in the next five years. This relentless change is attributed to the desire of the new generation of consumers for instant access to information at anytime and anywhere.

The number of mobile devices in the world today is 6 billion, and it is expected to reach 50 billion connected to the Internet in 2020. The market for the applications used on these devices incredibly increases day after day. The number of applications that were downloaded in 2012 was 45 billion, and it is expected to reach 300 billion in 2016, according to the expectations of the famous consulting and research organization, Gartner. The properties and services supported by these applications are increasing in successive innovations

to cope with the growing requirements of the holders of mobile devices, which have become like small computers the size of the palm of the hand. Each new innovation provides either a new type or updated specifications and more diverse uses. People are avid for them. They replace their mobile devices with the newer types year after year, and their use of them on a larger scale in their daily lives increases. Now, they are looking forward to using them equally in their work, since these devices have surpassed the stage of entertainment and games and now extend to meet the needs of businessmen. They have allowed them to go beyond the existing restrictions and limitations in the technology of personal computers and the Internet.

The momentum associated with the ‘Internet of things’ is mounting now, but the real boom - which is closer than imagined – will be when millions of people, services and devices will be

networked through the Internet, and when thousands of devices will be able to speak about themselves through smart tags and we will receive their communications on mobiles. In this evolving digital landscape, we see all kinds of services -- which link lifestyles, health status, and daily business, transportation and so on -- all engaged in collective intelligence network with huge capabilities.

As a result, it is expected that the demand for IT services will increase up to 26 times what it is now by 2015. This will result in tremendous pressure on the infrastructure of the operating companies, which will require huge investments to keep up with this radical change.

The Kingdom is not far from this. Subscriptions to mobile services reached 31.5 million by the end of 2011. Mobile phone penetration rate per hundred of the population during this

THE FUTURE OF COMMUNICATIONS AND INFORMATION TECHNOLOGYIN THE KINGDOM


His Excellency Dr. Gebreel Bin Hasan Al-AreeshiMember of Shura Council of Kingdom of Saudi ArabiaProfessor of Information Science - King Saud University

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period rose to more than 188%, compared with 113% in 2007, which reflects the spread of this service and the developments in mobile communications in the Kingdom during the past few years. If we take into account the increased demand for information services as a result of this steady growth, we realize that the infrastructure of operating networks in the Kingdom will also be under great pressure.

So what will the operating companies in the Kingdom do about this scene?

The direct answer to this question is that it should undergo significant changes in order to be able to provide its services in a faster, smarter and more efficient manner. Gradual change is no longer a suitable option for these companies in the new digital environment. Radical change is what is needed, and there are multiple approaches to this change:

- Building a new generation of more intelligent networks.

- Increasing the efficiency of the current networks by relying on the givens of communication and information technologies and on the cloud computing model.

- Providing smarter services to generate new sources of income and more quickly. This can be done by increasing dependence on the information base of the operating company which includes customer information, customer behavior and uses. Advanced analyses of this information should be made in a way that would enable companies to achieve competitive advantages and make proactive decisions. This is based on indexing customer patterns and identifying opportunities and risks with

a high degree of accuracy, which helps in offering customized services, which vary from one client to another. It also helps in preparing sound selling offers which are timely and at the right price, and through the most convenient selling channel.

- Offering packages of services of interest to certain segments such as banking, health care, government, and so on.

- Making a radical change in operations so as to achieve excellence in business and services.

The extent of focusing on any of these plans depends on the strategies of each operator. It also varies depending on the strategy of the legislative instrument in the Kingdom – represented by the Consultative Assembly of Saudi Arabia (Shura Council) - which can affect the policies of the operating companies, as well as by state plans that affect the telecommunications and information technology sector and is affected by it.

If we look to the legislative instrument it is assumed to exist - as it has always been - to achieve a balance between the operating companies, on the one hand, and citizens on the other. It enacts laws that keep pace with development, control society’s progress, remove administrative barriers, encourage national companies, and achieve a balance between the three pillars of the telecommunications sector represented

in the state, operating companies and citizens.

It has not been absent from the scene in the telecommunications and information technology sector. It has developed a system for transfer and indigenization to encourage producers of technology to transfer and indigenize it in the Kingdom. At the same time, it has worked to prevent the monopoly of technology, suspending its spread, or putting restrictions on research and development work as a result of its acquisition, to ensure that the transfer and indigenization of technology brings real benefit to the community. It has also put in place a legal system for the protection of personal data which preserves the privacy of citizens, and guarantees protection from the risks involved in collecting, storing and processing information in the environment of new technical means.

The strategy of the Shura Council in the next stage is based on monitoring the achievement of the set strategies and plans, such as the National Plan for Communications and Information Technology, the National Policy for Science and Technology, the e-Government Program (Yesser), the National Plan for the Transition to an Information Society, and the National Frequency Plan, and others.

Within the framework of this strategy, the Council also monitors government agencies to ensure they are familiar


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with recent developments in the Kingdom and around the world in the fields of communications and information technology, as well as to ensure they follow-up the impact of these developments on the on-going implementation of plans and programs, so that they are adjusted as required to keep up with developments in this area.

In the same context, the Council proposes the necessary recommendations for the expansion in services and electronic transactions in all government agencies, making them available to the private sector and individuals, and raising their efficiency to cope with the level of these services in developed countries. It also supports the infrastructures necessary for the transition to electronic transactions in the Kingdom, making use of recent developments in the field of telecommunications and IT information. Moreover, it supports raising the efficiency of the staff of government agencies and focuses on the training and qualification of employees and the selection of qualified talents, providing them with appropriate facilities. In addition it encourages the private sector to invest in projects of transportation, communications and information technology.

As for the state, it is making strenuous

efforts to keep pace with the era of the knowledge economy. Higher education comes to the forefront of these efforts, which is reflected in the proportion of government spending on higher education during the past five years. It rose from about 17 billion riyals in 2008 to 46 billion riyals in 2012, i.e. an average increase of 35% annually. In addition, the percentage of expenditure on higher education out of the total public expenditure increased from 4.5% to 8.1%, and the proportion of spending on it out of total spending on education also increased from about 21% to 35.7% in the same period -- a trend to be continued during the coming period.

The futuristic vision of the state telecommunications and information technology sector is based on “the transition to an information society and digital economy in order to increase productivity and provide telecommunications and information technology services for all segments of society in all parts of the country as well as to build a strong industry in this sector to become one of its main sources of income.” To this end, ongoing support from senior leadership is provided at all levels. In the restructuring of institutions efforts are exerted to provide procedures and government regulations appropriate to the information society. This is

in addition to providing a suitable environment to attract domestic and foreign investment, as well as providing an environment offering good services, e.g. mail and transportation services, logistics support services, and the development of the methods of teaching, learning and curriculum.

This vision also includes “enabling the different segments of society in all parts of the country to deal with the communications and information technology effectively and smoothly in order to bridge the digital divide.” In this context, the Ministry of Communications is implementing projects aimed at raising awareness of the importance of ICT among individuals. These projects provide an appropriate training to teach the basic skills of using computers in rural and low-income areas, where there are no training institutes and centers.

With regard to the Internet, it is sufficient to point out the spread of broadband usage to indicate the accelerating move towards building an information society. The number of broadband subscriptions reached 13.28 million subscribers at the end of 2011, a growth rate of nearly 300% in one year. Moreover, the percentage of broadband deployment in mobiles is nearly 33% of the population.

In summary, operating companies, all over the world, and in the Kingdom, face enormous challenges which impose radical changes in the work of these companies.

A company which is able to continually change to keep pace with developments in technology and the increased demand for services; one that offers exclusive unique services not available from competitors, and which succeeds in providing non-stop personalized proposals throughout the year; one that improves customer service techniques and reduces the cost of basic services; one which can transform free communications programs, which operators consider a threat to them, into an investment opportunity by making service bouquets depend on them; this company is the one which is undoubtedly capable of facing the challenges of the near future, and which will always move to the better.

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The astonishing advance of mobile in the Arab States is not only transforming access to information and services, but is also acting as a fundamental driver of economic growth. Over the last ten years, total mobile connections in the Arab States have increased at an average annual rate of 32 per cent, from 19 million in 2002 to 391 million in 2012. In 2011 alone, the mobile industry contributed US$54 billion to the economies of the Arab States and created, directly and indirectly, an additional 1.2 million full-time jobs.

To put the economic impact of those numbers into perspective, it helps to compare mobile’s contribution to that of the region’s chief economic driver,

oil. In real terms, the combined oil revenues in 2011 of the 11 members of the Organisation of Arab Petroleum Exporting Countries (OAPEC) stood at US$479 billion. Directly, revenues from mobile operators would be approximately 11 per cent of revenue generated by the oil industry, but like oil, mobile also provides a significant indirect economic contribution, in terms of jobs, new skills and workplace innovation.

What’s certain is that the availability of mobile networks creates great opportunities for new business and services within the region. In 2011, the mobile industry was responsible for driving a further US$78 billion of

GDP for the Arab States’ economies. When taken alongside the mobile operators’ revenues, that equates to approximately 5.5 per cent of total GDP. GSMA projections indicate that the mobile industry in the Arab States will generate US$108 billion in additional GDP per year by 2025, helping to create an additional 5.9 million full-time jobs - important numbers when you consider that for an oil-producing nation, economic diversity is the key to long-term growth and stability.

The need to look beyond oil is even more pressing in those Arab States with high youth unemployment. The latest World Bank report shows that the unemployment rate among young

Peter Lyons Director of Public Policy, Middle East and Africa, GSMA

MOBILE MATTERS: HOW THE MOBILE INDUSTRY CAN SHAPE THE FUTURE OF THEARAB STATES


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people in the Middle East and North Africa is the highest in the world and warns of ‘high levels of vulnerability’, particularly in Egypt, Syria and Tunisia, if governments do not take urgent steps towards greater economic inclusivity.

For the Arab States, the mobile industry could indeed help provide the answer. However, the sufficient allocation of spectrum - the ‘lifeblood’ of mobile communications, which enables you to make a call, download data or connect to a remote device via your handset - must first be a priority. With such a vital economic role to play, one might be forgiven for thinking that the region’s long-term strategy already provided sufficient radio frequencies for mobile. However, across the Arab States, mobile spectrum levels are currently insufficient to accommodate fast-increasing data demand and are, in fact, considerably lower than those in other developed economies.

Since the mobile industry has demonstrated, time and again, its capacity to generate tangible and manifold economic and social benefits, surely it is now time for national regulators to release sufficient, appropriate spectrum to help realise its full potential.

Governments should leverage spectrum that is currently not being used to its full extent, such as the sub-1GHz bands, to ensure that the mobile industry can continue to meet demand for broadband internet access. If all countries across the region allocate this spectrum for mobile broadband in a way that is coordinated with the rest of the world, the Arab States will then be able to provide the additional broadband access their people and industry require while also reducing the cost of mobile services and devices as they benefit from mass production and international economies of scale.

At a user level, mobile broadband has the ability to provide access to services that enhance people’s lives, including innovative teaching methods and cutting-edge ways of monitoring individuals’ health. At a macro level, mobile already contributes to national economies via massive investment in network infrastructure and the direct employment of hundreds of thousands of people. Mobile also contributes significantly to public finances through paid taxation, licence and regulatory fees.

Governments need to take a longer-term view and instead of focusing on

quick-win gains with minimum returns, such as the high consumer and mobile operator taxes that are currently imposed by some countries and high spectrum reserve prices. Instead, they should adopt global best practices that maximise the advancement of mobile technology and generate long-term private sector investment to foster greater opportunity for future generations.

The current shortfall of the right kind of mobile spectrum puts the Arab States in a precarious position, potentially hindering socio-economic advancement as well as the region’s ability to demonstrate ICT leadership to the rest of the world. It is the responsibility of regulators and governments to allocate additional mobile spectrum quickly, efficiently and through transparent and fair processes. This will secure the future of mobile in the Arab States and maybe even allow us to start to compare the impact of mobile communications in the region with that of oil.


16 Issue 4

RETAINING RELEVANCE AND IMPACT AS REGULATOR THROUGH BETTER REGULATION IN AN INTERNETDRIVEN ICT INDUSTRY

MARKET EVOLUTION RENDERS EXISTINGREGULATION OBSOLETE

From a consumer perspective, the ICT industry in collaboration with the government in the Kingdom of Saudi Arabia has clearly delivered so far, thus rightfully deserving being deemed one of the most dynamic ICT countries globally in recent years as per ITU’s recent research 1 :

The Saudi mobile market continues to be the most competitive in the MENA region as well as technologically very advanced with all 3 operators already rolling out aggressively 4G networks and engaging in a fierce voice on-net flat rates and a mobile broadband price war raging with prices among the lowest globally.

Also the wireline market thanks to STC alone with exceeding 2.5 Mn fixed broadband subscribers and more than 50% of all households in Saudi Arabia connected to fast internet increasingly based on fiber, KSA has caught up with its global peers. Factoring in mobile broadband being currently perceived not only as complement but a valid substitute to DSL-based wireline broadband, tough competitive pressure is felt in the wireline market, requiring offering innovative flat rate voice offers and high-speed internet at very low cost to keep wireline internet attractive and minimize fixed mobile substitution.2

1 As per ITU ICT development index IDI 2012, KSA has had the 2nd most absolute change in IDI only beaten by Bahrain out of 155 countries, and previously having even being the leader globally

2 LTE with its low latency and high speed and capacity appeals for many subscribers thus the ongoing trend globally for subscribers to abandon wireline broadband subscription in favor of a ubiquitous mobile broadband


Sacha A. Dudler Advisor, STC

Change in IDI Value (Absolute)

IDI rank 2011

CountryIDI value change

40 Bahrain 0.66

47 Saudi Arabia 0.62

49 Kazakhstan 0.61

68 Azerbaijan 0.57

60 Brazil 0.54

46 Belarus 0.54

24 Estonia 0.49

73 Georgia 0.45

71 Costa Rica 0.45

117 Ghana 0.43

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Evidently, this success has been fueled by a very curious and tech-savvy young population who is eager to embrace technology to communicate and share and overcome traditional cultural boundaries. Meeting their needs for telecom operators to heavily invest in upgrading capacity, reach and innovate. Recent research shows that KSA society willingness to share digitally is globally clearly the highest,3 and thus superlative is KSA social media consumption with for youtube being top and twitter seeing highest take-up and facebook spread across one fourth of society.4

Albeit, while clearly a success story from a consumer perspective, the ICT liberalization has left the local ICT industry itself in a rather fragile position with two very strong telecom operators and others either financially near or at distress levels5 or already exited.6 The mobile sector that is already deemed most competitive in the MENA region will see competition further intensifying through the introduction of up to 3 MVNOs,7 probably stretching financials further for already weak players. And the wireline industry is struggling to attract investors and talent given very limited success so far of new competitors to grab market share and make profits – notably 5 years after the market was fully liberalized. Thanks to STC and to some extent Mobily who both continue investing on a broader scale into high-speed wireline broadband infrastructure, availability of affordable broadband is ensured for the time being for a vast majority of the society. But increased difficulties to receive deployment permits and

other administrative burdens and costs and hefty competition from 4G mobile broadband eroding attractiveness for FTTx deployment, the business cases for FTTx outside metro areas is eroding. Also, traditional regulatory remedies to balance the market such as price control, dominance and access to legacy bottleneck infrastructure clearly have lost their effectiveness with price wars raging through promotions and many market players not investing. A substantial time lag between market and CITC publishing consolidated information about the ICT market does not help to catch up fast enough with trends, develop and assess newly proposed regulations. Obviously, without substantial changes to the regulatory framework and new market impulses, the fragility of the industry won’t change and further consolidation may happen8 before new players emerge and become relevant by capturing substantial market share.9

3 Over 60% of Saudis have responded to share ‘everything or most things online’ compared to 24% world average and only 15% in the US

4 For a good recent overview on social media in KSA see thesocialclinic, http://www.thesocialclinic.com/the-state-of-social-media-in-saudi-arabia-2012-2/

5 Zain KSA recently was granted a deferment until at least 2021 to pay overdue royalties to the government – without it Zain KSA may have defaulted

6 Investors protested recently against the decree to liquidate SITC, one of 3 companies that were selected to compete against STC in the voice wireline business but failed to meet licensing requirements

7 CITC is yet to select the MVNOs and given high penetration rates and increasing market saturation, impact and success of MVNOs is uncertain

8 Mobily is said to be interested in acquiring a stake in Atheeb that is financially struggling but owns the right to offer fixed voice services that Mobily is interested in securing for its customers

9 Potentially a successful MVNO may be tempted – or forced given market dynamics – to offer fixed mobile convergent services and thus securing the necessary access to wireline infrastructure through a wholesale agreement or even investing itself into fixed infrastructure, thus inducing further competition in the wireline


18 Issue 4

Obviously, given the challenges still much has to be done to achieve KSA’s vision of an information society and a knowledge based economy in Saudi Arabia with a sustainable, sound, diverse and innovative ICT industry that serves as a hub beyond its national boarders. With its latest and comprehensive 5 year National ICT Plan NICTP being finalized,10 much is lined up towards achieving its KSA ICT vision, and the KSA industry already is fully committed and supportive and looking forward to execute and maintain the dialogue with the government to further amend and enhance the plan on a rolling basis. Key components of a future ready regulatory regime may still need to be including efficient data protection, privacy, cultural and ethical compliance and dominance and access to bottleneck infrastructure and services as well as incentivizing further investments into infrastructure and innovation towards a sustainable and sound competition landscape within an internet driven ICT landscape that brings global competition to KSA.

But Saudi Arabia is not alone in its challenge - in the ever fast evolving ICT landscape, all governments are struggling to staying on top of market evolution and developments. While many sector regulators today are still busy with issuing and administering sector specific licenses, global over-the-top OTT players are reaching out to customers – consumers and businesses alike – and offer a wide range of rich multimedia internet services including video streaming messaging11 and voice over IP, albeit often outside of regulations and the reach of governments.

To ensure regulatory inclusion, sector regulators are increasingly prohibiting and blocking certain services12 and/or rescinding the commercial basis for OTT players by preventing financial transactions. However, there is little benefit for the consumers by just blocking services, and given only few countries so far are pressuring OTT into some sort of dialogue and collaboration, and new OTT players with even more disruptive business models emerge every day, fighting OTT through blocking and preventing access seems more of a lost battle. Regulators may be better advised endorsing OTT and incentivizing investors to invest into the domestic

10 For the latest draft, see http://www.mcit.gov.sa/arabic/NICTP/2ndFiveYearPlan/ in Arabic only

11 According to Informa, OTT messaging has overtaken SMS with the total volume of messages sent over OTT messengers and many mobile operators including STC are seeing SMS volumes dramatically decline year on year

12 In cases where OTT players do not meet licensing requirements, commercial VoIP services are being blocked by the regulator with KSA following suit with blocking access to Viber, an OTT VoIP service that is for quite some time already blocked in the UAE after having asked unsuccessfully for access so far

13 Google, Apple, Amazon, facebook and other well established OTT players are becoming subject of extensive tax scrutiny to ensure also they contribute to governments services enabling the economy they operate in

ICT industry, thus making typically rather strict regulation that prevents unlicensed telecom services more flexible with continuous monitoring of developments and focusing on well-established OTT players instead, after having them allowed to grow from concept to relevance.13 Else, regulators risk becoming irrelevant and obsolete and the market just moves on without effective guidance towards a country’s ICT vision and aspirations.


OTT Surpasses SMS

BI Intelligence45.0

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

41.0

4.4

16.2

19.5

2011

Source: Informa, April 2013

2012 2013

SMS OTT

Billi

ons

Of M

essa

ges

Per D

ay

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14 Ofcom UK and OfCom Switzerland both are typical examples of converged telecom/media regulators and BundesNetzAgentur BNetzA, the German regulator oversees not only telecom infrastructure but also other public infrastructure including electricity, gas, post and railways.

Given continuous evolution and market dynamics, a simple reform of the regulatory framework once in a while won’t do, and constant amendments to the laws and regulations are needed. Regulators across the globe are introducing systems to continuously enhancing and improving the regulatory regime. Still, often steps taken do not show a coherent and comprehensive perspective on the changes necessary to align with the aspired ICT vision. With ICT converging with adjacent markets and industries, sector regulators are confronted with limitations that can only be overcome by cross-sectorial collaboration between the different horizontal and vertical sector regulators, thus the emergence of converged regulators overseeing universally ICT in a broader, converged sense.14

To manage constant changes and improvements in any regulatory environment, a more structured approach has been discussed among policy makers and regulators that often is referred to better regulation .

The aspiration of better regulation is to reinforce the constructive dialogue

between horizontal and sector regulators as well as with market players and other stakeholders and have a system in place that continuously reviews and evaluates existing regulation, simplifies and develops new regulations and assesses impact with an analysis weighing the appropriate depth, scope and resources with expected outcome of better regulation .

Key guiding principles include ensuring fair and competitive market place, effective protection of the public, the environment and the welfare of citizens and doing this in ways that maximize public policy benefits whilst minimizing costs of regulation on an economy. Better regulation institutionalizes a system containing a range of initiatives to consolidate, codify and simplify existing legislation and improve the quality of new legislation by better evaluating its likely economic, social and environmental impacts.

Main components are 1) an integrated impact assessment of existing and newly proposed regulation while 2) continuously driving a simplification of regulations and obviously 3) conducting on a frequent basis evaluation of existing towards better regulation:


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1) Integrated impact assessment is designed to help in structuring and developing policies. It identifies and assesses the problem at stake and the objectives pursued. It helps to identify the main options for achieving the objectives and analyses their likely impacts in the economic, environmental and social fields. It outlines advantages and disadvantages of each option and examines possible synergies and trade-offs. It consists of a set of logical steps to help structure the preparation of proposals. By testing the need for intervention and by examining the potential impacts of a range of policy options, it should lead to improvements and simplification of the regulatory environment. Important is to pursue an integrated and inter-institutional common approach to impact assessment through a balanced appraisal including a wide-ranging consultation with stakeholders - of all impacts and proportionate analysis – depth, scope, resources - to the expected nature of the proposal and its likely impacts. The impact assessment system aims to improve the quality and transparency of proposals and to identify balanced solutions consistent with policy objectives through a coherent analysis of potential impacts, consideration of various policy choices (e.g. to use alternative instruments to ‘control and command’ regulation or non-intervention), consultation of stakeholders, and enhanced transparency

2) Simplification of regulations is a process to continuously screen the existing stock of legislation and is geared to stimulate innovation and reduce administrative burden stemming

from regulatory requirements as well as to move towards more flexible regulatory approaches and to bring about a change in the regulatory culture by using instruments such as repeal (to remove legal acts that are unnecessary, irrelevant or obsolete), codification (reduces the volume of legislation, makes it more readable and legally secure), recasting (simultaneously amends and codifies the legal acts in question), co-regulation (including standardization across sectors).

3) Evaluation of existing towards better regulation gives a judgment of interventions according to their results and impacts in relation to the needs they aim to satisfy and the resources mobilized. Evaluation can be carried out in a prospective (ex-ante evaluation) as well as a retrospective (ex-post evaluation) perspective, or in a combination of both. Evaluation generates relevant information that is essential for planning, designing and implementing policies. Evaluation tries to answer questions such as:

a. Do objectives correspond to the needs and problems? (Relevance)

b. Do they achieve the objectives? (Effectiveness)

c. Can objectives be achieved at reasonable costs? (Efficiency/cost-effectiveness)

Evaluation is a means also to show added value of policy makers and regulators to citizens. Evaluation should not only focus on expenditure programs – what was spent and results in return - but it is also important to

15 Better regulation is a generic name for the approach to improve regulations as part of a system that institutionalizes improvement efforts as part of a process. Smart regulation is another synonym for improving regulations, however better regulation is aiming at a more integrated, cross-institutional and formalized approach

16 There is evidence that better regulation can boost productivity and employment significantly, thus contributing to growth and jobs, e.g. see OECD expert study on ‘Measuring Regulatory Performance - THE ECONOMIC IMPACT OF REGULATORY POLICY: A LITERATURE REVIEW OF QUANTITATIVE EVIDENCE, 2012

continuously conduct more strategic evaluations of legislation and other non-spending activities across different policy areas which have substantial impacts on citizens, businesses and the environment. Clearly, regulations in the ICT space typically don’t occur substantial cost on the government side but more so on the industry and citizens, thus requiring a comprehensive review on regulatory burdens and associated costs and effectiveness, both ex-ante as well as ex-post.

With the ICT landscape expected to help transform the Saudi society into its aspired knowledge based economy and information society, continuous effort is needed to embrace change and adapt the regulatory environment to cater for further innovation to serve its citizens better. The digital space is expanding fast, touching upon KSA citizens’ lives anytime and anywhere. As a government and regulator, trying to keep up with the pace of development, and thus constantly reviewing and evaluating the current regulatory regime through an institutionalized better regulation system will not only minimize regulatory uncertainty but also improve substantially the quality of regulation. Given rapidly changing dynamics and market needs, ICT policy makers and regulators have the duty to adapt fast but also have the opportunity to become a role model towards better regulation for other institutions and become the leader of a broader dialogue among institutions and key stakeholders on how to structure the system and process to improve regulatory regimes to serve citizens better.


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22 Issue 4


Since the early development of the Telecommunications and Information Technology sector in the Kingdom, the sector has been of much concern to the Saudi government – may Allah support it – in its wish to realize the welfare of the citizens, ameliorate their condition, and deploy the facilities of the sector to advantage. The government also intends that the quality services of the Telecommunications and Information Technology industries reach each individual in all corners of our cherished nation.

Based on these kinds of initiatives, the Communications and Information Technology Commission, by virtue of the responsibilities it has been entrusted with, has continued to develop the Telecommunications and Information Technology sector and to provide Saudi society, in all its sectors, with the whole range of modern services. Attention has been given to measuring the progress towards realizing the futuristic vision of communications and information technology in the Kingdom, to the follow up with the switch to an information society, to monitoring international developments, to forming futuristic plans in this area, and accordingly to working on the introduction of new technologies and efficient services, and achieving real competition in the markets for telecommunications services and information technology.

This sector has acquired special importance, first due to the generous and continuous support that it receives from the government of the Custodian

of the Two Holy Mosques - may God protect him - and because it was the first programme in the privatization programme in Saudi Arabia and one of the fastest growing sectors. This is in addition to its contribution to achieving the quantum leaps which led to raising the efficiency of the national economy and to its prosperity through the liberalization of service markets and the opening of the door to competition. Part of the sector’s importance is also due to the significant impact it has on the performance of the different sectors of the state – both the productive and the service-offering – the catalytic role it has in productivity, and its being a key factor in the march towards a knowledge economy and a knowledge society.

In pursuing the liberalization of the sector, the Kingdom of Saudi Arabia has adopted an objective, gradual, expansionary approach, which can be seen in the sector’s passing through a number of stages on its way to the liberalization of the market and the opening of the door to competition.

The first phase began with the conversion of the governmental body offering telecommunications services in 1998 to a company managed on a commercial basis, the Saudi Telecom Company (STC). This was followed by a stage of organizing and restructuring the telecommunications sector and setting the rules, regulations and procedures it needed. This began with the issuance of the communication law and its executive regulations,

followed by the establishment of the Communications and Information Technology Commission in 2001. The next stage was the partial privatization, as 30% of the shares of STC were sold in the beginning of 2003 through an initial public offering (IPO). After this came the stage of liberalizing the market and opening the door to competition with the issuing of new licenses to provide communication services via the small dishes known as VSAT and Data Communications Services.

This was followed by the opening of the door to competition in the provision of mobile telecommunication services. The second license for the Mobily company was issued in 2004. The third license for the Saudi Mobile Telecommunications Co. (Zain) was issued in 2008. The second license was issued to the Etihad Atheeb Telecom company to provide immobile telecommunications services and commercially launch its services in the second quarter of 2009.

By the end of the last decade, the market had reached a new stage characterized by handling developments. As a result of the preceding liberalizing stages a new challenge has emerged, namely how to maintain competition and to promote it among workers in the market while focusing, at the same time, on protecting the rights of subscribers in the light of the diversity of options before them. The Commission responded to these emerging factors by endorsing a new administrative structure which introduced new sectors focused more on competition, and on subscribers and their protection.

LIBERALIZATION OF THE TELECOMMUNICATIONS AND INFORMATION TECHNOLOGY SECTOR IN THE KINGDOM AND VISION FOR THE FUTURE His Excellency Eng. Abdullah bin Abdulaziz Al-DarrabGovernor of the Communications and Information Technology Commission of Kingdom of Saudi Arabia

23 Issue 4


In order to achieve the vision of expanding retail and wholesale sales in the market for mobile telecommunications services, and in order to enhance competitiveness by introducing innovative services, and furthermore in order to provide alternatives for users of mobile telecommunications services and reduce their prices, a few months ago, the Commission introduced applications to acquire the Mobile Virtual Network Operator (MVNO) licence. Three operators qualified for its first stage, and they are to move afterwards to its next stage based on the documents for applying to obtain the licences.

In terms of infrastructure, great developments have come about. Operators have invested huge amounts of money in the Kingdom in order to provide high quality services related to voice, data, and image transmission. The services of the second and third generations (2G & 3G) have covered 99% of the populated areas in the Kingdom. In addition, the three operators of mobile telecommunications services have begun running the LTE services and implementing the WiMAX services for their clients in all cities. Moreover, a fiber optic network, which is the largest in the Middle East (more than 120 thousand kilometers in the Kingdom), was established. Its applications are increasing with the increase in broadband services.

This infrastructure has led, in turn, to an increase in proliferation and use. The increasing use of data networks as well as the use of smart phones by segments of the different age groups to gain access to the Internet has become quite obvious. This has led to a rise in the number of users, whether through the data SIM cards or through subscriptions in Internet bouquets and broadband services via voice chips.

Statistics are the best indicators for extrapolating and recognizing the reality of the infrastructure in the Kingdom. The number of Internet users in the Kingdom by the end of the first quarter of 2013 reached about 16.2 million, and the percentage has increased at a high rate over the past years, from 5% in 2001 to about 55% by the end of the first quarter of 2013. The total

subscriptions to broadband services via mobile networks reached 14.59 million, thus making the penetration of broadband services across mobile networks at the population level about 49.6%. As for broadband services via fixed-line telecommunications networks – including Digital Subscriber Lines (DSL ), and fixed wireless connections (WiMax), in addition to optical fiber and other wire lines – the number of subscriptions reached about 2.69 million by the end of the first quarter of 2013, i.e. with a penetration rate of 42.9% across residential places.

To continue with the introduction of communications and information technology into the Kingdom, it should be noted that the Kingdom never missed obtaining advanced levels in many of the rankings of the international institutions concerned with telecommunications and information technology. Among the most important achievements in this regard was the indication in the World Report of Communications and Information Technology (2012), issued by the World Economic Forum and the INSEAD organization, that the Kingdom had achieved the 34th rank on the global index of Network Readiness -- advancing from the 38th rank in the previous year. It also achieved the 17th rank on the sub-index of the political and regulatory environment, advancing from the 32nd rank in the previous year. These figures are incentives for maintaining the continuous progress which the telecommunications and information technology sector in the Kingdom is achieving.

Finally, without a doubt, the Commission still needs to do much in the future to maintain the gains, and to achieve new advances and achievements that will guarantee for the telecommunications and information technology sector a high position in the rankings of leading sectors globally. The Commission now pays great attention to enhancing future trends while focusing on several factors. The most important of these are promoting competition in the market for mobile and fixed-line

telecommunications and broadband services, completing the implementation of the National Frequency Plan, spreading the service in all parts of the Kingdom through the Universal Service Fund project, and endorsing a strategic deployment of broadband services and next-generation networks (fiber-optic networks and wireless networks). Other goals include seeking to further reduce prices, deploy services, increase options for the users and protect them, improve quality, and finally to stimulate the growth of Internet use and applications. Most notably, these initiatives include increasing the use of Arabic on the Internet (in domain names, content and applications), and the development of e-commerce uses, and the accomplishment of governmental transactions electronically (Internet and telephone.) The Commission will also continue to promote minimal regulatory intervention with the maturity of the market and competition, as well as continue to regulate the provision of telecommunications services via the Internet Protocol (VoIP), and regulate the resale of telecommunications services, in addition to continuing to conduct campaigns to raise awareness and education about everything to do with the uses of ICT in the Kingdom.

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PROSPECTS FOR COMMERCEIN SAUDI ARABIA

A. Introduction

The hype surrounding mCommerce is at an all- time high. This is mainly spurred by a multitude of parties vying for a position in this lucrative ecosystem. The ability to manage a disparate range of applications; marketing, sales, payment, loyalty, store location, among others, throughone device is perhaps the main distinguishing feature of this technology, which is expected to change the retail sector substantially in the next few years. Yet, while there is no doubt about the future of mCommerce as a viable transactional channel, the path to a universal business model is still unclear. The lack of interoperability is exacerbated by the launch of many initiatives by MNOs, retail chains, national and international payment schemes, banks, mobile manufacturers, and solution providers. In this paper, we shed light on mCommerce as an emerging technology, the underlying ecosystem, its importance to a country’s retail economy, , and the practical business model(s) when introduced into an already progressive infrastructure.

B. What is Mobile Commerce?

The definition of mCommerce is still evolving on a par with the technology it represents. For the purposes of this paper, we will simply define mobile commerce as the use of a mobile device by consumers to acquire a variety of retailing information, pay for goods and services at merchant locations and manage loyalty and other programs offered by businesses through a mobile communication network. In fact mCommerce, is an extended version of mobile payments.

To understand mCommerce, it is important to chart the evolution of this technology

in terms of customer experience as illustrated in Figure (1):

The previous figure demonstrates the evolution of transactions from a customer experience perspective at retail locations. It is evident that as technology and shopping consumer buying patterns changed, so did consumer behavior. With an ever increasing young population and smarter mobiles, shoppers today enjoy far more options and flexibility than ever before. However, and in contrast to traditional transactional interaction, mCommerce has not yet achieved the level of standardization, regulatory governance and interoperability currently enjoyed by the card-based and eCommerce ecosystems. The delay in these aspects has led to many disparate initiatives that have added complexity and delayed the emergence of a plausible infrastructure. However, perhaps the most unique feature of mCommerce is its ability to deliver a shopping cycle that starts before, during, and after the goods or services are delivered.

Looking aheadDigital Policy

Chris Simiriotis Managing Partner, FANERA LTD

25 Issue 4

C. mCommerce Ecosystem The mCommerce ecosystem(see Figure 2), unlike that of a card scheme or eCommerce infrastructure is much more diverse and complex; the main reasons for this are:

• A banking industry that is adamant at holding customer funds ( perhaps rightly so) and exercising due diligence in audit, security, and compliance that has served it fairly well in the past decades;

• Mobile network operators trying to expand beyond their traditional role into more lucrative businesses such as payments, the realm of well-established and entrenched players;

• Regulatory bodies, in many countries, that are very hesitant to allow deposits and fund transfers outside the banking system;

• Third parties such as providers or payment gateways, mobile solutions, and TSMs( Trusted Service Manager ) that are exploring the best possible combinations between banks, MNOs, and national/international payment structures.

Looking ahead Digital Policy

mCommerceEcosystem

26 Issue 4

Banking

Brokerage

MoneyTransfer

Insurance

MassTransit/Ticketing

Coupons

Loyalty

AdvertisingAirtime

Security

Stored Value

Gift Cards

Parking

Students

PaymentWallet

Payment CardP2P

Bill Payment

D. Services Figure (2) illustrates that here could be up to 8 parties involved to process an mCommerce transaction compared to 4-5 for a card payment or 2-3 for an online payment. So why is mCommerce still gaining popularity and support? Perhaps the main reason is the diversity of services that can be offered through one device; Figure (3) illustrates some of these services:

Figure 3

E. TechnologyThe underlying technology has been evolving as well through:

• Wap;

• Mobile Sites;

• SMS;

• USSD

• Mobile Apps.;


• NFC

The UI layer is built using several mobile client technologies depending on the operating system and the application interface supported by the handset. These include:

• JAVA ME;

• Windows Mobile OS7;

• Android;

• Iso7;

27 Issue 4

• SMS

• WAP;

• Mobile HTTP client

Noteworthy is the fact that mCommerce is in reality is being used extensively as purchases from otherwise online shopping sites are being made using the mobile. However, this is closer to online shopping than mCommerce where many of the transactions occur at physical locations.

Perhaps the most publicized aspect of mobile commerce is in the area of Contactless Payment s or NFC (Near Field Communication). This technology has gained considerable attention with venues that process micro payments in mass, and others where faster customer throughput generates additional sales and therefor revenues.The advent of mobile commerce created technical


challenges particular in customer data protection and security. With payment cards being emulated in the mobile’ secure element, it became necessary to manage the security aspects of the transactions in two ways:

• Device Security : Managing and protecting the application, card, and customer data in the device;

• Transport Security: Protecting the various paths in the transaction through security protocols.

The above measures have long been used in the traditional card-based ecosystems with standards such as PCI DSS and EMV among others that are well documented, standardized, regulated by local and international bodies as well as owners of various payment schemes. The picture is very different in the mobile arena where efforts are still being made to produce

operational and security standards. But even if these efforts are productive, this does not guarantee acceptance by all parties. Development in this area is more local and regional than international and this will limit the extension of most mCommerce services across borders.

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F. Business ModelsMost adaptations of mCommerce have manifested themselves through three main hosting scenarios:

• Carrier billing;

• Card billing ( Financial Institution);

• Payment gateway service provider;

Applications that support the above two directions have led to the development of several options that are changing both the customer and merchant’s experience as illustrated by the following figure:

The main challenge in progressing mCommerce in any country is the difficulty in formulating a viable business case. Not only because of doubts over critical mass, but also from the two contending yet complementary parties; MNOs and Banks. The main challenges have risen from the fact that each party has competencies in one or more areas but both share customers and wish to retain funding. Several initiatives were launched with varying degrees of success; these included a

combination of stakeholders.

The most successful ecosystem to date is a collaborative government led consortiums that assemble banks, carriers, payment schemes, TSM, and solution providers under one roof. This


model, followed in many Asian countries such as Japan, S, Korea and Singapore, is producing mass adoption and transaction volumes that far surpass other business models.

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G. The case for Saudi ArabiaThe potential of mCommerce in the Saudi economy can be gauged through several indicators:

Many of the factors that have underlined the adoption of mobile commerce in several countries do not apply to Saudi Arabia which is a high income economy; with a developed banking and financial infrastructure, wide communication coverage notwithstanding remote areas, one the highest mobile penetration rates in the world, and recent government initiatives for financial inclusion that will raise the banked population to as high as 78% of the population particularly with the opening of banks accounts for the Hafiz and WPS programs. The country also scored 37.5 in MasterCard’s Mobile Payments Readiness Index1 compared to an international index average of 33.2.

It is therefore apparent that the consideration of mCommerce as an alternative to the unavailability of a banking infrastructure or the existence of a large unbanked population does not hold true in Saudi Arabia’s case. Furthermore launching mobile commerce by MNOs as an alternative to banking as in the case of mPESA in Kenya is not feasible in this case. The drivers form mCommerce in KSA are therefore based on operational efficiency, cost management, customer

and merchant service and regulatory/fiscal policies such as control of cash in circulation.

mCommerce is most likely to impact the retail sector in Saudi Arabia where more than 85% of purchases are still

concluded in cash. There is therefore common ground between all concerned parties in the Saudi economy to collaborate in reducing dependency on cash which costs the Saudi economy

close to SAR 5bn annually.2

Adding an additional mPayments will further enhance migration to electronic payments leading to several positive outcomes including:

• Lower cash handling costs;

• Reduction in the gray economy;

• Higher financial inclusion;

• Higher consumption;

• Growth in GDP

With mCommerce as an additional electronic payment instrument, customers will not be inhibited by access to cash and merchants will benefit from faster inventory turnover and lower labor costs. An increase in electronic payments is expected to lead to an estimated 0.532% in consumption3 and will therefore lead to an estimated cumulative growth of 4.7% to GDP.

Taking the above into consideration, it is suggested that the mCommerce strategy for Saudi Arabia be based on a collaborative model as follows:

1 MasterCard 2 BCG 1998 3 Moody’s 2013

2012 ( Est.)

% Population aged between 15 - 39 47%

Retail market size USD76-78Bn

Disposable Income per capita SAR 76,788

Internet penetration 47.5%

eCommerce Spend USD 800Mn

Mobile penetration 195%

Mobile subscribers 56.6 million

Smartphones 33 MILLION

Source: IMF, AL Jazira Capital, ICT, Gulf Basev


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32 Issue 4

INTRODUCTION

The electricity industry of the Kingdom of Saudi Arabia (“KSA”) is facing a series of important challenges that reflect the underlying impressive growth of the national economy and the peculiar characteristics of the energy sector, strongly linked to the wide availability of the oil natural resource. Such challenges, highly interconnected, relate to the impressive consumption and peak demand growth (+5% steady growth expected), the consequent need for additional power capacity (+70 GW by 2032), the improvable level of network losses (now equal to 10%) and of quality of supply. In order to face these challenges, several stakeholders within the electricity sectors of Kingdom have already identified and/or launched, within the scope of their role, a portfolio of initiatives aimed at developing alternative energy sources,

nuclear and renewables, promoting energy efficiency within end-users and implementing Smart Grids and Smart Meters network solutions.

The Electricity Co-Generation Regulatory Authority (“ECRA”) established a study to investigate the prospective technologies, business case and detailed proposals for roll-out of Smart Metering in the Kingdom as well as integration with the first steps of the country’s Smart Grids initiatives. During the kick-off workshop of the study stakeholder’s survey was conducted, with special focus on the new technologies and to the forthcoming possible changes. The results of the survey reported that in general 78% of the audience from industries and universities are aware of initiatives, technologies, barriers and opportunities on Smart Grids and Smart Metering development. Also, 54% were aware of Demand Side Management,

44% on Smart Grids and Smart Metering KSA initiatives, 80% on Smart Grids and Smart Metering technologies, 87% on Energy efficiency and Renewable Sources of Energy, 85% on Barriers to Smart Grids and Smart Metering development in KSA, 78% of participants were aware of potential communication media and 31% considered the “GPRS” technology as the most suitable. Thus,

it is evident from the survey that there is a clear need to increase the degree of awareness in Demand Side Management and spread the results of the SM / SG initiatives conducted in the KSA. Moreover, it is concluded that the one of the biggest barriers in implementation of Smart Metering and Smart Grid technologies are telecommunications and cost-benefit. However, the awareness and acceptability among the consumers are key issues for the development of Smart Metering and Smart Grid technologies.

This article will focus on the opportunities and upcoming challenges for the Kingdom in materializing the concept of Smart Metering in the Kingdom of Saudi Arabia. In section II, it discusses the opportunities of Smart Metering in the Kingdom. The next section discusses the importance of Smart Meter architecture and its appropriate selection for the kingdom. This section also discusses the available communication technologies in Smart Metering and presents the available communication protocols being used by the existing Smart meters. It also discusses the major challenges in consumer engagement and government commitment. The final section concludes the article.

Essam A. Al-Ammar, PhD Advisor at Electricity and Co-generation Regulatory Authority (ECRA), KSA

SMART METERS: OPPORTUNITIES AND CHALLENGES IN THEKINGDOM OF SAUDI ARABIA


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communications to:

• deliver real-time information;

• enable the near instantaneous balance of supply and demand at the device level.

Therefore, the Smart Grid creates the opportunity to handle energy as an active service, instead of a traditional commodity, through multiple applications at both grid- and customer-side.

A smart meter is usually an electrical meter that records consumption of electric energy in intervals of an hour or less and communicates that information at least daily back to the utility for monitoring and billing purposes. With the introduction of Advance Metering Infrastructure (AMI) technology, two-way communication between the smart meter and the control centre, as well as between the smart meter and customer loads would be facilitated for many applications, including demand response, dynamic pricing, system monitoring and the mitigations of greenhouse gas emissions.

Thus, the upcoming challenges in the implementation of smart meters for the Kingdom of Saudi Arabia include:

• Smart Metering systems architecture

• ommunications technology options

• Standards and Protocols

• Customers Involvement and Government Commitment


OPPORTUNITIESThe strategy roadmap needs to include the proper portfolio of SM measures which should consider future and expected local energy challenges and opportunities. A business case evaluation of smart grid and smart meter opportunities demonstrates quantified benefits generally divided into direct and indirect:

Direct benefits, that can be achieved by the utility or energy service provider under the current market structure:

➢ Resources involved in meter reading and meter management activities are reduced by the cost currently incurred for the labour force to read meters as well as the cost related to connection and disconnection, due to personnel no longer visiting client locations. Finally, restoration costs will be reduced due to a reduction of time needed to identify location of a failure, with an impact on resources.

➢ Smart metering can help accurately measure the energy, identifying consumers and consumption now experiencing commercial losses resulting in decrease of non-technical losses or volume of energy that is delivered to final customers, but not invoiced.

➢ Smart Metering will also bring opportunity for revenue increase for electricity suppliers due to the fact the information on real electricity consumption is more precise against traditional meters and generate more precise billing.

Indirect benefits, that can be generated for the whole electricity system and are enabled by Smart Metering installations, due to peak demand shaving connected to the development of different consumption patterns against today, with lower consumption in peak hours pushed by higher tariffs in peak hours versus off peak hours, and consequent re-alignment of the new delivery of oil-based power capacity, in line with reduced need to be covered. Such benefits can be distinguished in the following:

➢ Lower costs (including both capital expenditures and operating costs) reflecting the avoided construction and operations of new power capacity needed to cover peak demand, under the business as usual scenario.

➢ Lower costs (including both capital expenditures and operating costs) reflecting the avoided construction and operations of extensions of the electrical grids needed to connect new power capacity built up to cover peak demand, under the business as usual scenario.

➢ Benefits in lowering the emissions of GHG (CO2), assuming the implementation of a commercialized carbon credit scheme.

CHALLENGES Smart Grids and Smart Metering refer to an integrated portfolio of network technical solutions aimed at modernizing the electricity delivery system, making it able to monitor, protect and automatically optimize the operation of its interconnected elements. Such elements are spread across the whole electricity value chain and include the central and distributed generator, the high-voltage network and distribution system, the industrial users and building automation systems, and the end-use consumers including their appliances and other household devices.

The Smart Grid is characterized by a two-way flow of electricity and information to create an automated, widely distributed energy delivery network. It incorporates into the grid the benefits of distributed computing and

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1) Smart Metering Systems ArchitectureThe smart meter is the focal point of a “Smart Metering Architecture” and is as an electricity meter with embedded computing and networking capabilities. It combines electronic metering with a programmable communication terminal that can interface with multiple networks and devices. Fig. 1 shows the typical building block of Smart Metering architecture.

Figure 1 the typical building blocks of Smart Metering architecture.

Smart Metering systems are typically categorized in to three different architectures namely AMR (Automated Meter Reading), AMM (Advanced Metering Management), and AMI (Advanced Metering Infrastructure). Fig. 2 shows the snapshot of all architectures in brief.

With respect to Smart Metering specifically, AMR and AMM are solutions already in place globally, while AMI is not yet implemented due to consumer and industry un-maturity on related new services. Even if Smart Meter specifications are generally prepared for some remote control or Home Automation, these are not widely implemented in consumer homes. The general architecture of smart metering systems consists of three blocks: Software Applications layer, Communication Network layer, and Smart Meters (physical layer).

Figure 2 Smart Metering development status


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2) Communications Technology OptionsAll communication technologies have their own benefits and limitations. For this reason a Smart Meter system will generally use several of these technolo-gies to cover the range of requirements for an entire grid network. The options

for establishing a suitable communica-tion network are usually divided into two categories:

➢ Wired: such as fibre optic (FTTX) and power line carrier (PLC) / Broadband over power line (BPL), DSL (telephone line)

Table 1 Advantages and disadvantages of the Communication means

➢ Wireless: such as Wi-Fi / WiMAX, Radio Frequency (RF), GSM / GPRS, satellite.

Table 1 shows the advantages and disad-vantages of different available com-munication technologies which are used in smart meter architectures and with their respective recommendations.

As anticipated, there are several communication technologies in place for both Smart Grids and Smart


Metering applications. The dominant EU technology for Smart Meters in the short term is likely to be power line carrier

(PLC) with an expected penetration of 80% to 95%.

Technology Advantages Disadvantages Recommendation

Power Line • No need of dedicated • Low rate of communication • Use in Urban Area Carrier (PLC) infrastructure • Aggregating data from a Number • Frequency band needs to be of Meters before the data is sent reserved by Communication via the Data Collector Regulatory Authority • Reliability of communication due to introduction of better filtering • Susceptible to some noise methods and frequency multiplexing methods • PLC chip sets modem is integrated within Meters at very low cost • Pilot installations in KSA • Usually is used for the ‘’last mile’’ connection Fiber Optical • Interference-free solution • Very high costs solution because • Option for the backhaul Connection of dedicated cabling, unless infrastructure • High capacity and high speed sharing fiber with other services network (i.e. for distribution automation or other smart grid applications)

Mobile • No need of dedicated • High cost of data transfer but • Use in the rural areas (GSM/GPRS/ infrastructure tariffs could be negotiated where the PLC is not 3G) • Widely available economic solution • Interoperability assured (i.e. few customers) • Implemented quickly • Already proven in pilot installations in KSA

VHF & UHF • These technologies typically use • High costs due to repeater • Not recommended Radio unlicensed band at low R.F Power stations and infrastructure for KSA Frequency Usually is used in countries where (if not already installed) there is a long range or sparse • Susceptible to noise network (e.g. U.S) • Sensitive to obstacles

Wi-Fi / • Could be shared with other • High costs if infrastructure is • Option for the urban WiMAX services (e.g. Internet not installed area connection, etc…) • WiMAX is not yet developed in KSA • Interoperability assured • Communication is affected by interferences • Network security

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3) Standards and ProtocolsSelection of proper standards and protocols has been an important focus of implementation in Smart Metering. Many meter associations, particularly in the European market, have adopted the DLSM/COSEM protocol and the OBIS (Object Identification System) for the higher levels of the communication stacks and application level. However, the DLSM/COSEM objects are almost the same (apart from the objects dedicated to the physical layers that hopefully will be unified), with differentiation of intermediate levels which are necessary to adapt the lower levels (medium dependent) from the higher levels. The use of IPv4, UDP/TCP with GPRS, LAN and Wi-Fi (which are fully standardized) can be considered as stable, ensuring meters of different Manufacturers using these media to be interoperable, if they adopt the same DLSM/COSEM data modem and same OBIS codes.

On other hand, the IEC 62056 suite of standards includes some mature standards and some which are under the evaluation/approval process after having been proposed by different

associations and Manufacturers. Currently the following PLC techniques are under consideration, but not all are yet integrated in the IEC62056 suite:

• PLC S-FSK, defined

• PLC OFDM, type 1 (also known as PRIME)

• PLC OFDM, type 2 (also known as G3)

• PLC PSK, SMITP (also known as Meters and More).

Moreover, IEC 62056 also offers comprehensive security structures, for Access, Authentication and Encryption. Thus, given the wide acceptance on the meter market of the DLMS/COSEM/OBIS standards (particularly for the PLC communication option) and previous experience of pilot projects in Kingdom of Saudi Arabia, the IEC 62056 is recommended.

4) Customers Involvement and Government CommitmentOne of the main drivers and challenges in the implementation of the Smart

Meters is the engagement of customers in all classes: residential, commercial, government and industrial. They are all important players in the analysis and their participation is essential. Since the cost-benefit relies on this participation in Demand Side Management and because of their actions, the entire system and overall customers will be beneficiaries. It must be clear for all stakeholders, and especially for the customers, that the government of KSA supports the program to improve the efficiency of the energy sector, and one of the tools chosen and promoted are the Smart Meters. In that sense, the benefits derived from this analysis should be well publicized to all stakeholders and the customer will effectively participate in the energy market (active actor) when incentives and savings perceived are significant (compared to monthly expenses). On the other hand, where tariffs continue to be non-reflective of costs, benefits in demand response and energy reduction are less likely to be realized. Because of this, the development of tariffs is a key issue and requires further study and effective policy which is indeed a challenge for policy makers.

Smart Grids and Smart Meters represent important and necessary solutions to address the growing peak demand and need for power generation capacity, as well as quality and continuity of service in KSA. From the experiences from other Countries, in order to promote and drive a development pattern for such solutions that is structured, integrated with other connected initiatives


and profitable, it is key to have an underlying System Strategy that leverages current initiatives in place and encompasses all relevant aspects for a successful and massive deployment. Considering specific characteristics of KSA electricity industry, and related challenges, the Smart Grids and Smart Meters Strategy for KSA can be structured under the following three main areas i.e. Renewable Energy which

enable the achievement of Renewable Energy targets and the deployment of such technologies throughout the grid. Secondly, T&D Networks: improve network reliability, quality of service and efficiency and finally Customers: provide additional services to customers, elicit energy saving actions, and achieve energy efficiency targets.

ACKNOWLEDGMENT

The author would like to thank ECRA staff as well as CESI, and AT Kearney

Consultants for their assistance and help to provide the necessary

CONCLUSION

information. The article is based on a study solely owned by ECRA.

37 Issue 4

HAS MOBILITY RENDERED YOUR IT ORGANIZATIONAL STRUCTURE OUT OF DATE?

To say that mobility is affecting the way enterprises do business is similar to suggesting the planets revolve around the sun. These are not unproven theories, they are undisputed facts. However, while the modern model of the solar system was established long ago, the effects of enterprise mobility on business practices have only much more recently become overwhelmingly apparent.

From interacting with customers to improving employee productivity, mobility – in particular, the use of smart mobile devices such as smartphones and tablets – has proven its mettle as an effective business tool. In fact, a Symantec survey found that many companies are going all in on mobility, with 59 percent of respondents reporting that they are now making their line of business applications available on mobile devices. An even more impressive 71 percent of businesses are looking at implementing a customized corporate “app store” just for mobile applications.

However, for all the benefits of mobility there are clear and present challenges associated with the technology as well. In the same survey, nearly half of

the organizations that responded – 48 percent – said they see enterprise mobility as “somewhat to extremely challenging.” As a consequence, mobility in general is requiring significant effort to manage. Indeed, an average of 31 percent of IT staffs at the organizations surveyed are involved in some way with mobility.

All this begs the question – why are companies finding mobility to be so challenging? There are numerous point answers to this question. These include dealing with employee demand to use personal devices for work and the need to support a fractured market, made up of many operating systems and device manufacturers. However, all these lead back to one overarching reason companies are struggling with mobility: most enterprises are trying to implement mobility while otherwise leaving their IT organizational structure unchanged.

In other words, companies are trying to fit the management and security of enterprise mobility into their existing

IT organizational chart. This traditional structure has been well suited to managing PCs and laptops for the past 20 years, but just as Galileo’s now famous telescope rendered the notion of a geocentric solar system – or one in which the earth is at the center of the solar system – archaic, so too has enterprise mobility rendered the traditional IT organizational infrastructure inadequate.

To better understand why this is the case, consider the segments that make up a typical traditional enterprise IT organization:

It all begins with a chief information officer. Under the CIO are a number of teams such as network operations, desktop or endpoint operations and application development and deployment. Working in parallel to the CIO is the chief information security officer. Under the CISO, the endpoint security team develops policies and puts technology in place to effectively secure the company’s information.


Bulent Teksoz Chief Security Strategist, Symantec

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So, where does enterprise mobility fall? Regardless of whether we are talking about company-owned or personally-owned devices, the answer, unfortunately, is into the gaps between these groups. The very nature of modern mobile technology causes it to span across the traditional IT boundaries.

For example, the desktop or endpoint operations team must be involved with managing mobility because, after all, at the end of the day we are talking about endpoints. However, mobile devices rely on a high degree of connectivity to the network and the cloud, much more so than traditional endpoints. Thus, the network operations should have a say as well. At the same time, mobile devices are nothing without the apps that make them so productive. So, the application development and deployment team is also in the mix. And we cannot forget that the endpoint security team must be involved to enforce mobility-related security and compliance policies.

In reality, what is happening in most organizations is that no single group is being given charge over mobility, because each plays a part in the mobile environment in some way or another. Even when one of the above teams is given responsibility to oversee mobility, that particular group typically has vastly different priorities than the others that must also be involved. The result is a lack of efficiency and cohesiveness when it comes to enterprise mobility. Or, in other words, the result is nearly half of companies finding mobility to be “somewhat to extremely challenging” as the survey discussed above concluded.

So, what is the solution? The companies that are most successful at implementing mobility have adapted

their overall IT organizational structure to meet the demands of mobility, not the other way around. This begins with a chief mobility officer who operates side by side with the CIO and CISO, or alternatively a director of enterprise mobility who reports directly to the CIO. Either way, under this individual is an enterprise mobility group with the sole mandate to implement, manage and secure mobile technology.

Such an enterprise mobility group oversees all aspects of the mobile environment, from the devices to the apps to the connectivity. This team also enforces CISO-developed policies. There are a few recommendations for developing and operating such a group that are nearly universally applicable. These include:

• Think strategically when building the organizational model. An ad-hoc enterprise mobility team is not the answer and will only result in partial success. To be highly effective, enterprise mobility groups need to be organized strategically. An organizational model for the team should include details on how to resource the group and the specific mandate or charter they will operate under. In addition, it should also cover the particulars on how they should approach the challenge of overseeing the company’s mobile initiatives. This includes the technology and tools – such as mobile device management and mobile application management – they should use, how to segment the user base and identify the needs of each segment, how to implement scalable solutions, how to plan for centralized management and how to phase in integration with existing technology and networks.

• Involve line of business decision makers. To make an enterprise mobility team successful, business stakeholders must be given direct access to the group’s leadership. Doing so will ensure that the policies and strategies the team develops and implements are in line with what those that have feet on the ground actually need. Many companies struggle to achieve the full return on investment possible through mobility because they do not have a clear understanding of what they are trying to accomplish

when it comes to mobility.

• Make improving the user experience a primary goal. Enterprise mobility is a complex topic, but it all boils down to one thing: user productivity. Thus, the user experience must be a focus of the enterprise mobility group. Every facet of the mobile user experience must be accounted for, from on-boarding to app delivery to access and data manipulation. It’s all about helping users work smarter and making personal and business activities coexist as seamlessly as possible. Related to this is defining and measuring a new mobile service-level agreement that the team will be held to. It should include users’ ability to access to data and apps quickly, the use of a wide variety of platforms and the capability to access data from anywhere.

• Keep the lines of communication open. One of the worst things that can happen once an enterprise mobility group is created is to allow the team to operate in a vacuum. As previously discussed, mobility crosses over the various divisions within a traditional IT infrastructure. As such, it is imperative that the enterprise mobility group maintains a close working relationship with the rest of IT. It will be difficult for them to effectively do their job if they do not.

It is important to realize that many companies are exploring how they can best take advantage of and streamline mobility. The companies that figure out quickly the benefits of creating a dedicated team to manage enterprise mobility will have a significant advantage over those that do not. In addition, it is important to note that regardless of how far down the path of enabling mobility a company is, it cannot be guaranteed that employees are not already using mobile devices for business. By establishing a team to oversee this use, companies can make sure it happens on their terms.

In short, one doesn’t need to be a scientist to see the impact enterprise mobility can have on day-to-day business operations. Creating a dedicated enterprise mobility group is the next step in maximizing these benefits.


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IntroductionOver the past decade, boundaries between fixed-line and mobile telecommunications services have become increasingly blurred. Many established operators already have interests in both fixed-line and mobile networks, others are looking to exploit some of the commercial and operational advantages which they see inherent in a converged fixed-mobile market, whilst an increasing number of consumers are also becoming attracted by converged service offers.

This article will look at some of the potential benefits arising from fixed-mobile convergence, from the perspective of network operators and service providers on one hand and from that of consumers on the other. It will also look at practical developments across different geographical markets, examine some of the problems encountered and regulatory issues involved, and suggest some measures which telecom regulators can consider to help assure the successful introduction of fixed-mobile bundles.

Combined Fixed-Mobile Offerings: Bundling or Convergence?Strictly speaking, the term ‘Fixed-Mobile Convergence’ (FMC) describes a particular integrated solution whereby users of certain mobile services can access voice telephony and other services through the fixed-line network in addition to the mobile one. By offering seamless connectivity between fixed and mobile networks, an FMC solution promises to allow users to access voice, data or video products through one common, integrated channel, regardless of their physical location or the terminal device which they are using. To date, however, a combination of technological limitations

FIXED-MOBILE CONVERGENCE: BUNDLING ELEMENTS FOR OPERATOR AND CUSTOMER GAIN

and market trends has meant that many of these true FMC offerings have been directed mainly at business users.

At a wider level, fixed and mobile services are being offered together within unified product packages, often as part of a multiplay offering combining voice, data, video and perhaps other services. This may be more fairly described as ‘Fixed-Mobile Bundling’, and can already be seen in operation across a number of important global markets. A number of driving factors behind the development and roll-out of bundled fixed-mobile services may be discerned, notably:

• Convergence of service models driven by user demand and habits (especially those relating to continuous connectivity or ’always-on’ trends);

• The number of service providers already having both fixed and mobile interests;

• The need for fixed-only or mobile-only providers to partner with suppliers of complementary services if they are to provide competitive integrated offerings;

• Markets where DSL technologies

continue to constitute the main means of Internet access necessitating the maintenance of fixed-line home services even where mobile has become the default choice for voice communication;

• Regulatory liberalisation and the adoption of updated regulatory models allowing operators to be active in more than one product or service sector.

Given the preponderance of fixed-mobile bundling as the means by which most converged service offerings have so far been implemented, this article will concentrate on the development of bundled solutions. As consumer demand for a range of complementary services within one single package grows and new enabling technologies become ever more widely established, however, then truly-integrated fixed-mobile service platforms offering seamless connectivity will undoubtedly come into common availability and use.

Benefits for OperatorsFixed-mobile bundling can be attractive to operators from a number of different perspectives, both in terms of safeguarding revenues and in reducing ongoing costs.

Regulatory mattersDigital Policy

Suresh Subramanian Managing Director, ICC

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Of primary significance to most will be the value of a bundled fixed-mobile retail product in maintaining and enhancing competitive advantage. For fixed-line operators, the ability to offer mobile voice (and, increasingly, broadband) services are key if they are to respond to the ongoing trend towards mobile substitution. Similarly, existing mobile operators can increase their ability to compete where the need for mobility may not be a key operational or marketing requirement, such as the provision of home broadband, TV and gaming, especially where these applications have high bandwidth requirements. For both fixed and mobile operators, fixed-mobile bundling offers greater possibilities for a competitive response against cable network operators offering voice and data products via mechanisms such as VoIP and OTT, these cablecos already having led the charge towards bundled multiplay offerings of voice, data and video in many European and other markets, often with little or no regulatory control. Greater access to services can be exploited to increase sales opportunities (e.g. by cross-selling), leverage the value of common branding and sales mechanisms, and to provide an important means of market differentiation from competitors unable to offer a converged product. Last but

not least, an operator with a bundled fixed-mobile product is likely to enjoy an increased breadth of viable strategies against non-converged players, so maximising its ability to establish and retain competitive advantage, even in adverse conditions.

From the viewpoint of reduced costs and increased efficiency, fixed-mobile bundling also offers a range of key benefits. Having a high proportion of customers actively participating in more than one chargeable service should allow efficient operators to maximise their ARPUs, as well as permitting the spreading of non usage-based costs (e.g. administration, billing, customer acquisition and support) across a wider range of revenue streams. There are also indications that a well-structured and sensibly-priced bundled product can aid significantly in reducing customer churn – a particular concern for cellcos in particular - by increasing customer satisfaction and removing incentives for migration in the form of additional competitive service offerings not available from the present provider. In addition, satisfied customers are less likely to leave a provider from whom they take multiple services than one supplying a single service only, especially if that stand-alone product is seen as not being essential.

From an operational perspective, there are numerous ways in which operators can exploit convergence of fixed and mobile network assets to reduce costs, such as being able to use lower cost fixed-line backhaul or WiFi connections as a substitute for cellular traffic, maximising the use of existing infrastructure investments to service products across multiple sectors and revenue streams (including the elimination of redundant service elements), and maximising the use of existing radio spectrum entitlements in similar fashion.

Benefits for ConsumersFixed-mobile bundling also predicts a number of tangible benefits for consumers. Most obvious of these is the increase in competition resulting from the effective multiplication of offerings as established providers roll-out services complementary to their own existing products. This creates potential for customer benefits in terms of increased choice between different providers for a given type and level of service.

Such competition is also likely to help drive down (or at least keep down) retail price levels and encourage the development of further

Regulatory matters Digital Policy

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complementary services as providers seek to differentiate themselves from their competitors and maximise the potential revenue value of each customer. Over the longer term, this should be supported by reductions in service costs resulting from the greater efficiency inherent in a converged network.

Where consumers are able to purchase a range of complementary services from one single provider, benefits accrue in terms of simplified account operation, billing and other aspects of the user/operator interface. Functions such as automated call answering, forwarding and voicemail services can be harmonised or even shared between fixed-line and mobile service modes, whilst integration of the operating platforms themselves (i.e. a true FMC solution) offers further gains in terms of a truly seamless service.

There are also important ramifications for increased service availability in geographical territories where fixed-line penetration is poor. By being able to partner with a mobile operator (or MVNO), fixed-line providers can gain ready access to spectrum resources which can be used to support the economic roll-out of fixed-mobile solutions to underserved territories.

Problems and DrawbacksPerhaps the biggest concern associated with fixed-mobile bundling is its potential impact on the competitive landscape, it being possible that permitting an existing large player to establish a presence in another sector could be anti-competitive or endanger market stability. Specific concerns may relate to issues of undue market dominance by a converged operator, cross-subsidised or predatory pricing (retail or wholesale) leading to margin squeeze on competitive players, and to what extent other service providers will actually be capable of replicating the offer under competitive terms, especially if resource assets such as network capacity or suitable spectrum are scarce or unavailable.

In some markets, high mobile

termination rates are thought to have acted as a brake on the development of fixed-mobile bundling via partnerships by effectively disadvantaging fixed-line operators wishing to buy mobile calltime. Some jurisdictions have sought to minimise this imbalance by reducing MTRs (France) or even de-regulating fixed-mobile interconnection charges altogether (Hong Kong) in an attempt to encourage cross-platform competition.

Neither are regulatory systems always supportive of fixed-mobile bundling. In addition to justifiable concerns over market power and competition, established regulatory models may not be particularly well-attuned to new operational and business models. Service-specific licensing regimes devised with traditional market boundaries in mind may burden converged operators with the need to obtain multiple authorisations, or even disadvantage certain players if licence conditions and obligations between fixed-line and mobile platforms are not comparable. Where there is no clear regulatory approach to bundled products or converged operations, uncertainty over possible future treatment may discourage investment in these areas.

Fixed-Mobile Bundles: Some Real-Life Examples Cypriot cellco MTN Cyprus offers a triple-play bundle consisting of fixed-line voice, fixed-line broadband and mobile voice service. For a monthly charge from US$56 depending on service level, the MTN Unlimited package gives unlimited fixed-line calls to local networks, unlimited on-net mobile calls and fixed-line Internet access. In France, Orange’s Open quadruple-play service covers Internet access, IPTV, IP telephony and a range of options for mobile telephony, with subscription charges from US$52 per month. Rival cellco SFR has its own quad-play offer (Internet, mobile voice within France, fixed-line voice and HDTV) for a similar sum, whilst Bouygues Telecom subscribers can couple its triple-play Bbox service (Internet, IPTV and fixed-line calls) with

a selection of complementary mobile tariffs.

In October 2012, Spain’s Telefonica launched its quad-play Fusion package offering combined fixed line, mobile, Internet and TV, with monthly charges starting at US$65. By the end of January 2013, Telefonica claimed that some 1.5 million users had subscribed to the new offer, some 600,000 of these switching from providers of competitive mobile services, and boosted loyalty within the existing customer base. Another Spanish operator, Jazztel, has launched its own converged offer covering broadband, fixed-line and mobile, with a basic monthly fixed-rate charge of US$33 and an option to upgrade mobile call entitlements for an additional fee.

In Germany, both Deutsche Telekom and Vodafone have integrated fixed and mobile operations to aid cross-selling of services across the existing customer base, though actual product lines are not always bundled. Cableco Unitymedia has a range of multiplay offers covering fixed-line voice, Internet access and IPTV, to which a mobile option can be added, with basic subscription charges of US$43-59 per month. In the UK, Virgin Media uses a similar tactic of offering an add-on mobile element to its fixed-line, broadband and cable TV offerings, with monthly subscription charges for a triple-play-plus-mobile service starting from around US$50. Swedish cableco Comhem has effectively added mobile to its established triple-play service with a smartphone app that permits fixed-line services to be integrated with mobile, allowing customers to answer fixed-line calls when away from home, even if they are outside the country. In Singapore, Singtel’s mioPlan tariff allows subscribers to customise and bundle fixed-line, mobile and broadband services for one fixed fee; prices vary dependent upon broadband speeds, download limits and bundled mobile minutes, starting at around US$50 per month. In the United States, AT&T’s U-verse Triple Pack bundles fixed-line voice and Internet access with a mobile telephony service for US$89 per month.

With incumbent operators in many countries having both fixed and mobile


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arms, the concept of one operator offering both types of service is becoming more and more common. In Europe, the use of competition-based regulatory models and simplified licensing has tended to permit the launch of converged services with only limited regulatory intervention. In some other markets, more restrictive licensing terms are not always conducive to such developments, but progressive regulators are working to rectify this. In Malawi, the regulatory authority has created a new system of technology-neutral licensing to allow operators to provide both fixed and mobile services, the first dual licence being granted in 2011.

What Role Should Telecom Regulators Play to Enable the Provision of Fixed-Mobile Bundles?There are several steps which regulators can take to help encourage the development of fixed-mobile bundles without imperilling competitive status.

Perhaps most important of all is the need to ensure that regulatory structures, mechanisms and outlook are attuned to present market conditions and technologies. Regulators should review licensing and ownership rules with a view to removing unnecessary barriers to cross-platform activities and to encourage investment in converged services. Simplified licensing and authorisation regimes that are service- and technology-neutral reduce regulatory overhead and are sufficiently flexible to allow operators to offer multiple services whilst retaining necessary control over the nature and delivery of these services.

Symmetry and equality of regulation is also vital; from a regulatory viewpoint, there should be no greater barrier to a fixed-line operator wishing to offer a bundled mobile service than to a comparable cellco wishing to offer fixed-line services. Regulators need to ensure that limitations and obligations (e.g. tariff caps, universal service obligations) are distributed fairly

across all operators - whether fixed-line, mobile, or converged - relative to size and market power. In this regard, competition-based regulatory models such as those used in the European Union where obligations and curbs on operators are linked to Significant Market Power in each individual relevant market are worthy of consideration. Similarly, regulated costs and charges (such as termination rates) need to be determined so as not to confer artificial advantages on either side within a converged services partnership.

Whilst, strictly speaking, the concept of fixed-mobile bundling addresses only service provision and not that of content, it would be unrealistic to pretend that many bundled or converged service models will not consist of triple or even quadruple-play offerings including elements such as Internet access, IP or cable TV, and interactive gaming. For this reason, regulators need to pay close attention to optimising the regulation of content access and delivery to make multiplay services commercially attractive.

ConclusionsThe telecommunications marketplace in the Kingdom of Saudi Arabia is an increasingly sophisticated ecosystem, with more demanding and better-informed consumers, technologically advanced networks and systems being deployed by all the licensed operators, and an aggressive regulatory agenda. This creates an optimal environment to realise the benefits of FMC, both in terms of technology convergence and bundled offerings. With the future of an all IP network not far away, this is the right time to embrace FMC trends.

Consumers will be looking for converged offerings that will provide a seamless experience in the home, on the road, while at hotspots, and at work. This convergence must encapsulate content and quality of service, pricing and user experience. Mobile, fixed, and broadband operators must all provide the right service packaging to attract and retain customers. Finally, the policy makers must set the proper regulatory framework to facilitate thi s promise.


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Cloud computing is becoming a mature business model and many companies and governments around the globe are implementing strategies to embrace cloud services. Examples of National and Regional efforts can be found in USA, Europe, Japan, China, Singapore, Taiwan, Thailand and many others. In the private sector there is growing adoption of cloud services by large banks, manufacturers, healthcare organizations and other large corporations and small and medium businesses.

Despite the simplicity of the idea of ICT services offered as utility, on demand and pay-as-you-go, the cloud computing model is based on a complex chain of interactions between multiple parties which operate in different countries and legal jurisdictions. The complexity and opacity that sometimes characterize this cloud “supply-chain” have generated some barriers to faster adoption of cloud computing. Among the most important of these barriers are

CLOUD COMPUTING: IT’S A MATTER OF TRANSPARENCY AND EDUCATION Daniele Catteddu,Managing Director EMEA, Cloud Security Alliance

• The lack of clarity around the definition and attribution of responsibilities and liabilities, the difficulties

• Achieving accountability across the cloud supply chain, the incoherent global (and even sometimes regional and national) legal framework and compliance regimes

• The lack of transparency of some service providers or brokers, particulary around security and risk management

• The difficulties in performing internal and external due diligence

• Lack of clarity in Service Level Agreements

• Lack of interoperability.

• Lack of awareness and expertise.

A key underlying theme in all these is the need for assurance and trust between cloud providers and customers.

But barriers can be removed and the main objective governments, cloud service providers and cloud customers should be working towards is increase the level of trust in the market.

To this end, the definition of security control and certification frameworks, SLAs, standardised contractual terms, and the use of continuous monitoring are key means to provide more transparency and

control to the cloud customer. The European Commission strategy for cloud computing, for instance, is based on three main pillars:

1) The identification of suitable standards and certification schemes,

2) The definition of model terms for service level agreements and contractual terms and conditions

3) Definition of common requirements in public sector organization and use of public procurement as a market and quality stimulus.

Similar approaches are currently being adopted in the US and the APAC region. Cloud providers are striving to become more transparent, especially when it comes to security and privacy. The Cloud Security Alliance (CSA) STAR, a voluntary registry where cloud providers can publish the results of a self assessment against the CSA best practices, is a clear example of cloud providers’ willingness to maintain the trusted relationship they have with existing customers and to provide assurance to potential new ones that their service will be sufficiently secure. Assurance is provided by telling customers which are the security controls and measures in place to manage risks to their infrastructures, services and data.

The objective is put the customer in a position to compare competing offerings against their requirements, to make informed decisions when choosing the service they need and to be able verify, during the service delivery phase, if reality matches what was promised.

These are certainly steps in the right direction and point to the creation of a market where security is a market


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differentiator, where transparency is the general rule and obscurity the exception. Cloud solution providers have business incentives to be transparent, to share information with regulators, enforcement authorities and current and potential users about their security practices, about the security incident that might occur, etc. The most obvious business incentive is based on the simple logic that the customer are more likely to buy services only from those providers which provide enough information to effectively manage their risks. In this respect, the example of an incident management process is very illustrative, in fact a cloud customer necessarily needs information and co-operation from the cloud provider to be able to manage an incident properly.

Policy makers, as we noted earlier, are playing their part by introducing a number of “soft” policy measures, as well as new binding rules on transparency and accountability. We have also noted the proactive approach of some cloud solution providers who are voluntarily sharing relevant information with the general public. What is still missing, perhaps surprisingly, is a more active role of customers.

CSA’s recent survey of the cloud market, conducted jointly with ISACA1, showed up a clear division between enthusiastic early adopters and cloud-sceptics. Between these extremes, a substantial body of potential users are still undecided about whether to

trust the cloud or are even un-aware of cloud computing, its benefits and its risks. Therefore one of the biggest opportunities that we, as members of the ICT and cloud community must seize, is to educate potential users on the business value of cloud services. At the same time we must promote awareness of potential risks, and how to address them when procuring cloud services – a key point here being the responsibility which the customer

holds for performing due-diligence and maintaining compliance when migrating to cloud services. Beyond initial procurement and due-diligence, it is important to stress the fundamental importance of ensuring clear commitments through Service Level Agreements and continuous monitoring of their fulfilment.

Cloud Security Alliance is a not-for-profit organization focusing on best practices, standards and education in cloud

computing security. CSA’s activities include awareness and educational campaigns, conferences, seminars, summer schools, webinars, educational papers, guidelines for companies and government, and finally training and professional certification through CCSK: Certificate of Cloud Security Knowledge, the only professional certification related to security knowledge of cloud computing (CCSK).. We see this as a means to raise the bar in security best practice and the quality of cloud services from a security perspective by filling the gaps in transparency, understanding and skillsets across the market. This is particularly important in the Middle East areas, where surveys and analysis show that, despite a growing interest in cloud computing, there is still low level of adoption and a significant awareness gap, which needs to be filled with advanced cloud-knowledge.

1 https://cloudsecurityalliance.org/csa-news/cloud-maturity-study-reveals-top-issues/


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The use of Information and Communication Technology (ICT) in order to achieve the National Strategic Goals is no longer an incremental option; it is becoming fundamental for governments to have a National ICT Strategic Plan, and to have an ICT Strategic Plan for each of the different sectors of the Nation. ICT Indicators should be integral part of any ICT strategic plan, and should relate to the different phases of strategy execution, in addition to the outcomes. ICT Indicators measure the effectiveness of achieving the Smart Sectors National strategic goals, help improving critical success factors and identify issues that require policy incentives or interventions. Devising Sectors’ ICT indicators, therefore, has been gaining importance and is becoming subject of study by several institutions.

It is now almost half a century since the engagement and marriage of Telecommunication and Computers1. Such a marriage has continued giving birth to many innovative systems and services for advancement, prosperity and promotion of nations, as well as

ICT INDICATORS FOR SMART SECTORSDr. Essam Eldin Mitwally, General Advisor Technology & Regulatory Strategic Studies, STCEngr. Ali Al Garni, General Manager of Regulatory Affairs, STCEngr. Khaled Abed Al Twergi, Director of Technical Regulatory Studies, STC

pleasing people and improving the quality of their lives. This marriage is now well known as Information and Communication Technology (ICT). With the fast evolving technologies, their consequential applications and the change of their usage perception, such ICT usage in different sectors has been

termed with different overlapping notions over the past two decades. Figure-1, illustrates such technology evolution along with the ICT usage notions in healthcare as an example.

Fig-1 Evolution of Technology and ICT Usage Notions (e.g. in Health)

1 Telecommunications and the Computer”, James Martin, Prentice-Hall, Inc., 1968.

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In the 1970’s and 1980’s, Healthcare for example, like other sectors, made use of ICT to automate processes and facilitate some forms of automatic and remote control functionalities. e-Health (or electronic health), emerged in the 1990s denoting the provision of medical services through the Internet. Today, the World Health Organization (WHO) generalizes the term eHealth to mean the cost-effective and secure use of Information Communication Technology (ICT) in support of health and health-related fields. mHealth, part of eHealth, uses mobile communication, including mobile computing and medical sensor technologies for healthcare. The term u-Health (or ubiquitous health) is used specifically by South Korea and Japan to denote m-Health with additional functionalities focusing more on sensor technologies, RFID (Radio Frequency Identification) and Location Based Services that facilitates applications having more interactions with and control of devices.

More recently, the term “Smart” or sHealth is used due to the widespread use of smartphones, ultra-fast broadband, IOT (Internet of Things), Big Data analytics and Cloud Computing. There is no common definition yet of “Smart Sector”, but we define it here as to signify the use of ICT including

some or all of the above mentioned technologies, leveraging “Empowered Individuals”, Knowledge and Decision Support systems, as well as sensor and actuator systems for continuous monitoring and control. Smart systems facilitate predictions of incidences to deal with, preventions of faulty situations and timely decisions to achieve efficiencies and effective directions.

For at least the past two decades, the use of ICT has been recognized as an important lever to achieve the National Strategic goals in almost all countries of the world. For example, WHO considered the best approach to implement e-Health at a national level is to have a framework of policies expressed in an eHealth national strategic plan2. ICT Indicators should be integral part of any ICT strategic plan, and should relate to the different phases of strategy execution, in addition to the outcomes.

Indicators are commonly used for comparing countries3, and as prove of evidence of the importance and significance of ICT. Many efforts have been undertaken to develop ICT Indicators by several UN organizations and International Institutions, but with more consideration of the impact of ICT

on the national economy and the society, and less emphasis on per Sector indicators. The focus of this article is on indicators for “Smart Sectors” which helps policymakers monitoring progress in achieving the national strategic goals, and to identify critical success factors for improvements, as well as issues requiring actions, priority and/or resources. In particular, we present a canonical framework for devising ICT indicators to be applied for the different Smart Sectors of the nation. This “Canonical” framework is derived from the latest update of the well structured Network Readiness Index (NRI) developed by World Economic Forum (WEF) and Euro Institute of Business Admin (INSEAD), 20134, as well as the mature work of the World Health Organization (WHO) and the International Telecommunication Union (ITU)5.

Merits of IndicatorsIndicators are needed in order to monitor and control important aspects of resources and organizations, and need to be reliably measured on an ongoing basis, in order to help devising proper policies for improvements leading to National objectives. Criteria for the appropriate Indicators are depicted in table-1

Criteria Description

Linked to objectives Indicators should provide information that can be linked to and support the monitoring and evaluation of the topic it measures.

Quantifiable Indicators should be concrete, as opposed to conceptual, and should be measurable and easily expressed in relevant units of measurement

Observable The indicator should be derived from measurement data already exiting

Reliable The data used for the indicators should not be arbitrarily derived and should reflect accurate, verifiable information as much as possible

Controllable Indicators should measure the results or effects of delivering the Sector action plan, and could be selected also to reflect the potential impact of activities that fall outside the scope of the plan (i.e. an indicator could point to the necessary action that need to be taken for improvement)

Ongoing and comparable Indicators should provide information that is comparable and relevant across periods, rather than being ‘one time’ indicators of progress

Table-1 Criteria for Selecting Indicators2 “Building Foundations for eHealth,” Report of the WHO Global Observatory for eHealth, 2006. 3 “A Look at the UN e-Government Survey-2012”, E. Mitwally, Digital Policy Magazine Issu3, Dec. 2012. 4 “The Global Information Technology Report (GITR) 2013”, World Economic Forum/INSEAD 5 “National eHealth Strategy Toolkit”, WHO/ITU, 2012

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POTENTIAL INTERNATIONAL ACTIVITIES TO DEVELOP ICT INDICATORS

6 “Measuring the WSIS Targets, a Statistical Framework”, ITU/Partnership, 2011

1) PARTNERSHIP ICT CORE INDICATORS OF WSIS

Fig-2 Partnership ICT Core Indicators

United Nations defined 8 “Millennium Development Goals” (MDG) to improve life of mankind over the earth planet by the year 2015. Target #8F of the MDG states that “In cooperation with the private sector, make available the benefits of new technologies, especially information and communications”. ITU is responsible to monitor this target through 3 indicators: fixed telephone lines, mobile subscriptions and Internet users.

Further, together with UNESCO, and UNCTAD, ITU organized the World Summit on the Information Society (WSIS) to establish a clear vision for building an inclusive global information

society6. The WSIS provides a platform for world leaders to shape strategies that will harness the power of ICTs more effectively. The WSIS identified 10 Targets and 11 Action Lines serving as global references for improving connectivity and universal, ubiquitous, equitable, non-discriminatory and affordable access to, and use of, ICTs. WSIS initiated the “Partnership on Measuring ICT for Development” in order to define ICT Core Indicators to be used for measuring the 10 WSIS

targets. The Partnership is formed by 12 international organizations (ITU, UNESCO, UNCTAD, UNDESA, OECD, ECA, ECLAC, ESCAP, ESCWA, UIS, UNEP/SBC, Eurostat, World Bank). They developed 54 indicators in 7 groups as shown in Fig-2. The Partnership ICT Core Indicators represent a standard that can well be used for comparison between countries and can also be used by other more complex indicator systems, such as the one we presented for the smart sectors.


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Fig-3 The Networked Readiness Index NRI structure

NRI is a complex Index jointly developed by WEF & INSEAD to compare 142 countries regarding ICT Developments & Impacts4. It is published annually and denoted “The Global Information Technology Report” (GITR). The NRI formed by 4 Sub-Indexes, split into 10 “Pillars” including altogether 53 indicators as shown in Fig-3. The 53 indicators cover the different aspects of ICT. It is worth noting that “Impacts” Sub-index with its two pillars (Economic and Social) is added to the GITR report only in 2012. It captures broader economic & social impacts accruing from ICT. Measuring impacts of ICT is still in its infancy. Therefore this sub-index is regarded by WEF/INSEAD as a work in progress. This comlex index is considered very useful as it spans all phases of strategy execution, in addition to measures of the impacts.

2) THE NETWORK READINESS INDEX (NRI) BY WEF/INSEAD


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Fig-4 Indicators in the Usage Pillars of NRI

Fig-5 Indicators in the Usage Pillars of NRI

As an example, fig-4 depicts the indicators included in the Usage Pillar.

Digitization is defined as the mass adoption of connected digital technologies and ICT applications by consumers, enterprises, and governments7. Such technologies include: Broadband connectivity, wireless mobility, cloud computing, e-services, social media, sensors, …... Irrespective of the definition, which

Listing of the 23 Indicators of the Digitization Index is depicted in fig-5.

7 “Digitization and Prosperity”, Bahjat El-Darwiche, et al., Strategy & Business Magazine, Booze & Co., Autumn 2012


resembles our initial illustration in fig-1, depicting the evolution of terminology with technology, Booze has developed the Digitization Index which is a composite index formed by 23 Indicators grouped in 6 pillars (or attributes): ubiquity (the level of access to digital services and applications), affordability (pricing), reliability (the

quality of connection), speed (the rate of data throughput), usability (the ease with which people can get online and use applications available there), and skill (the ability of users to incorporate digital services into their lives and businesses).

3) THE DIGITIZATION INDEX OF BOOZE & CO

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Fig-7 Smart Sector ICT Indicators Development Process

The ICT Indicators in the “WHO/ITU toolkit for development of National

4) ITU/WHO INDICATORS IN TOOLKIT FOR NATIONAL EHEALTH STRATEGY

According to this process, the ICT Critical Success Factors of the concerned Sector are grouped into four consequential Pillars: the ICT Wishful Outcomes, the ICT Ultimate Adoption, the ICT Optimal Infrastructure/Readiness and the ICT Ideal Environment. Special attention is

Fig-6 Results Based Management

In line with principles of the NRI which covers the whole spectrum of ICT indicators from environments to impacts, and with the guidelines of ITU/WHO toolkit, which is part of a strategic


given to the devising of indicators for the Outcomes and the Outputs in such a way as to relate them to the concerned stakeholders. Fig-8 depicts the general structure of the Index according to the proposed framework, while fig-9 is a sample of Output/Adoption indicators of some Smart Sector. It is worthwhile

mentioning that many of the indicators of the proposed model can be obtained from the Partnership Core Indicators, specially those of the Environment and ICT Readiness sub-indexes. Also, it is possible to map other Indexes, such as “Digitization” or eGovernment as part of the complete picture.

planning approach focusing mainly on Outcomes and Outputs, the process depicted in fig-7 is followed to derive a framework for development ICT indicators for different Smart Sec-

tors, spanning all ICT success factors, with more focus on Outcomes and Outputs that are closely linked to the National Strategies and Policies.

eHealth Strategy” focuses on Outputs and Outcomes5. It adopts the “Results-

based management” strategy used by the United Nations as depicted in fig-6.

5) A PROPOSED CANONICAL MODEL FOR SMART SECTOR ICT INDICATORS

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Fig-8 Structure of the Smart Sector ICT Index

Fig-9 Adoption/Output Indicators of Smart Sector-x

CONCLUSIONThe significance of ICT is widely recognized as an important source of efficiency gain for the economy and the society, and it is attracting the atten-tion of people and governments to make the best use out of it. This requires the inclusion of ICT indicators which reflect the critical success factors to be moni-


tored as integral part of the strategic planning process. Potential ICT indica-tor systems developed by International Organizations and Institutions were pre-sented. Those systems serve the wide scope the ICT for different purposes such as prove of evidence, comparing countries, identifying areas requiring intervention, and devising policies for improvement. Further, we presented a proposed framework for developing

“Smart Sector” ICT indicators, derived from the well structured NRI and the mature work of WHO/ITU, which make an effective linkage among Smart Sec-tor ICT strategy, policies and operations, leading to successful sectors ICT strat-egy development and execution.

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Last wordDigital Policy

THE ELECTRONIC SIGNATUREDr. Mohammed bin Omar Alabdullatif, Vice President of Regulatory and Corporate Affairs

In the light of the enormous and rapid development in the use of digital technology and communication technology in international and local online transactions, which represents a large share of domestic and international trade, electronic signature has become a crucial element in this field. This technology has begun to be used in many countries of the world like the United States, England, Germany and other European countries. It has also been applied in some Arab countries, such as Jordan and Tunisia.

An electronic signature is known as “what is placed on an electronic document (electronic chip) and takes the form of letters, numbers, symbols, signs, etc., and it has a distinct and unique character which makes it possible to identify the signee and sets him apart from others.” In other words, it is defined as a small digital file (digital certificate) issued by one of the specialized and independent bodies and recognized by the government just like the notary public. In this file is stored your name and other important information such as the serial number, expiry date of the certificate and its source. When delivered to you, it includes two keys (a public key and a private key). The private key is considered your electronic signature which distinguishes you from everyone else. As for the public key, it is published in the directory and is available to the general public.

Put simply, the electronic signature is a digital certificate containing an electronic fingerprint of the signee placed on a document confirming its origin and the identity of the signee. This certificate is obtained from one of the known bodies which are internationally recognized in return for certain fees. The official documents provided by the signature seeker are reviewed, and then the certificate is issued.

The Saudi lawmaker defined the electronic signature as “electronic data included in an electronic transaction, or

added to it, or logically associated with it which are used to prove the identity of the signee, his approval of the electronic transaction, and the discovery of any amendment to this transaction after it has been signed.”

The electronic signature depends on an encryption system which is based on a private key and a public key. The private key is an electronic tool characteristic of its owner, and it is created by a particular mathematical operation. It is used in the placement of an electronic signature on electronic documents. It is kept on a secured smart card, and like the fingerprint it is not repeated for any other person. As for the public key, it

is available for everyone (publicized), but it is special to the person himself. It is issued by the company which issues the electronic signature and is used to verify the identity of the signee on an electronic document and make sure of the soundness and intactness of the content of the original electronic document. For greater security, a secret pin code is placed on the chip so that no one can use it in case of loss or theft.

The difference between a normal signature and an electronic signature is that a normal signature is a sort of drawing done by a person, i.e. it is an art and not a science; hence, it can be easily forged. As for an electronic signature, it is a science not an art, and hence hard to forge.

An electronic (digital) signature is created by a computer program specialized for this purpose, and the person signs his message just as he would have physically signed it.

The merit of an electronic signature lies in the legal authentication it gives to any document issued on the Internet,

and which is recognized by the judiciary. Thus, it helps to tighten control on electronic trade by requiring the existence of contracts and documents to complete the transaction. This facilitates the process of determining the parties to a transaction and its value, and also facilitates the process of tax accounting, the preservation of the rights of contracting parties and the detection of violations.

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Last word Digital Policy

The Need for and the Importance of Electronic SignatureAs is known to all, the problem of security and privacy on the Internet occupies much of the attention of officials, and is also an issue of concern for many people, causing a kind of lack of confidence in this network. Therefore, the technology of the electronic signature was resorted to to raise the levels of security and privacy of the network users. This is realized through the ability of this technology to maintain the confidentiality of the information or the message sent and the inability of anyone else to see, modify or distort the message. Moreover, the personality and identity of the sender and recipient can be determined electronically, and the credibility of these characters can be verified, thus making it possible to discover any impostor or manipulator. For example, if you are a merchant or businessman in Saudi Arabia and you want to make a deal with a fellow in America or Japan, and you are waiting for him to send you sensitive and important information by e-mail to make a decision about something, how can you know or be sure that this message has been actually sent from that person specifically? How can you ensure that this information is the same as the original information and that it has not been tampered with by someone else on the network? How can you ensure the confidentiality of such information and that none of your competitors has had access to it? The only solution for all this is the use of an electronic signature.

The Position of the Saudi Law on Electronic SignatureThe Saudi legislature has acknowledged dealings with the electronic signature, and it has been recognized in dealings inside and outside the Kingdom. It has even devoted several articles to the electronic trading system in its law and executive regulations. The Saudi legislature also gave the electronic signature all lawful effects and binding authenticity whose validity and enforceability may not be denied, provided the electronic signature has

been issued according to the conditions laid down by law.

The legislature also stressed the acceptance of the electronic signature as evidence if its electronic record meets the requirements of the provisions of Article VIII of the system of electronic trading. The legislature also accepted it as a presumption of evidence even if its record did not meet the requirements referred to. Generally, the Saudi legislature has considered the electronic signature in all cases to be significant evidence in transactions unless shown otherwise.

Facts about the Electronic SignatureContrary to what some people think, the electronic signature is not nothing but a digital photocopy of your signature by hand. Had this been the case, it would have been possible for any person to photocopy any signature and claim to be its owner. The electronic signature is in fact a digital certificate issued by one of the independent bodies which distinguishes each user. It can be used to send any document, commercial contract, commitment, or attestation, and it is considered legal in U.S. law now. It will soon be so in several other countries. Documents and commercial contracts appended with electronic signatures do not need to be authenticated by a notary or any other party since it was originally issued by a recognized body.

The Most Important Applications of Electronic Signature- E-business transactions: This includes every transaction of a commercial nature in the areas of dealings, such as sales; contracts; other legal, commercial dealings; imports and exports; agreements; bookings of airline tickets and hotels; and banking transactions of all kinds, which are made in the form electronic documents signed with an electronic signature.

- Electronic civil transactions: This covers any electronic transaction which is considered so by both parties

involved, or one of them, and which goes beyond the concept of commercial transactions.

- E-government: This covers governmental administrative transactions and citizen services in general, including the various permits, the services provided by the Customs, Excise, and Civil Status Authority, as well as the petitions presented to governmental bodies.

Concerns Raised by the Electronic SignatureThere are also some concerns raised by the electronic signature. These are related to the safety of citizens’ data, which may be vulnerable to espionage and penetration by the awarding body of the certificate itself, or the exposure of such information to an external penetration process by competitors of some companies. The electronic signature is not a “pencil stroke.” Rather, it is symbols calculated by a computer program which uses a secret key exclusive to the owner of the signature. Hence, if someone manages to steal someone’s secret key, he will able to steal the identity of the owner of that key.

There is also the potential of spreading viruses via e-mail, which harms the correspondence of governmental organizations, or exposes governmental information to a full external tapping process under the so-called automatic screening of electronic correspondence within the main network center. An example of this is what happens in the United States, where a report can be prepared about the information contained in governmental correspondence of any state which puts its personal and governmental information network on the Internet.

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