Telecommunications law rings the changes

23 August 2002

The new telecommunications by-laws, issued by the Saudi Communications Commission (SCC) in July, provide one of the most comprehensive structures for deregulation in emerging markets, Riyadh lawyers say. Stretching to 15 chapters, the by-laws cover everything from licensing and anti-trust regulations to approved standards for telecommunications equipment. However, implementing such wide-reaching reforms will prove a stiff challenge for SCC (MEED 2:8:02).

'This is a very impressive document in both the scope of service it provides for and the quality of licensing procedure,' says a senior partner at a US law firm in Riyadh. 'But the devil will be in the detail. Unfortunately, there is little skilled manpower in the kingdom to weigh the competitive issues that are dealt with in much of the document, which makes decisions difficult to implement quickly. However, this is an excellent step forward.'

The by-laws provide the structure of the proposed deregulated market as envisaged by SCC. One key issue - the relationship between the incumbent network backbone operator, Saudi Telecom, and new network operators - will be partly defined by Chapter 5, in which Saudi Telecom is required to apply similar tariffs to competitors as to its own strategic business units. Under the by-laws, SCC will also be able to impose a tariff cap to protect the end-user from exploitation by companies with a dominant market position and adjudicate in cases of dispute between service providers.

With the publication of the by-laws, one of the final impediments to deregulation has been removed. SCC will now spend the coming months preparing to introduce competition to the telecommunications market by tendering new licences to operate telecommunications networks in the kingdom. A GSM licence, the largest of those on offer, is expected to be launched in 2003. However, a political decision has still to be made regarding the participation of foreign companies in the sector.

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