Saudi Telecom Cuts Internet Tariffs by 70%

State-controlled Saudi Telecom Co (STC) has slashed internet tariffs by 70 percent in the hope of capturing half of the internet users in the Gulf Arab region's largest market as competition intensifies.

STC now has one million internet subscribers, Saeed Dhafer Al Qahtani, STC's executive director for sales and marketing, told Reuters late on Sunday. "We actually reach five million since the average Saudi household counts five members," he said.

The company hopes to capture 50 percent of internet users in the country of some 25 million, Qahtani said without setting a timeframe. "Even countries like (South) Korea can't exceed 70 percent penetration," he said.

STC, which has so far been competing only with two mobile phone operators Etihad Etisalat (Mobily) and Zain Saudi Arabia, is set to lose its fixed-line monopoly with the expected arrival of three fixed-line operators.

STC has been facing competition on the Internet only with Mobily, which provides broadband Internet services.

The new operators, led by US Verizon Communications Inc, Hong Kong's PCCW and Bahrain Telecommunications Co, have said they would deploy the latest Internet and multimedia technology, such as WiMax.

Internet will be crucial to the three new fixed-line operators in presenting strong enough incentives to STC's existing subscribers to switch to their networks.

"Competition will be good for the market ... We had a 40 percent mobile penetration (before competition came) now we are at 120 percent," Saud Al Duweish told reporters at a ceremony to mark the company reaching one million Internet subscribers.

STC has formed a joint-venture with a local publisher and a Malaysia-based media services provider to develop media content services and is also tapping the expertise of its foreign affiliates operating in more advanced markets such as Malaysia and Turkey.

"We will provide new services like television and others," Duweish said.