BSA Ahmad Bin Hezeem & Associates

Staying Connected in KSA

Staying Connected in KSA

December, 2014
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A review of the legal and regulatory framework governing the licensing and importation of telecoms equipment in Saudi Arabia.

The telecommunications sector is a vital component of any economy and has gained further significance in this digital era where commercial and financial transactions of all sorts rely primarily on effective and efficient telecommunications networks, infrastructure and equipment.

The Kingdom of Saudi Arabia has realised the potential of having a robust and effective telecommunications sector. Indeed, in its attempt to modernise and boost its economy, the Kingdom has made significant investments in this strategic sector through building and deploying a large network that covers most of its territory and has attempted to adequately regulate the use and importation of telecoms equipment in order to maximise the quality and efficiency of any relevant equipment imported into the Kingdom with a view to be used as part of its telecommunications’ networks and infrastructure.

In this article we sum up the legal and regulatory framework governing the licensing and importation of telecoms equipment. This framework is made up of provisions to be found primarily in the Saudi Telecommunications’ Bylaw enacted by virtue of Ministerial Decree No. (11) dated 17/5/1423 H (corresponding to 27/7/2002 G) (the “Bylaw”) and the Procedure for Approving and Importing Telecommunications and IT Equipment enacted by virtue of Council of Ministers’ decree No. (100) dated 8/8/1415 H (corresponding to 10/1/1995 G).

The Saudi Communication and Information Technology Commission (“CITC”) is the regulatory authority in charge of administering and implementing both the Bylaw and the Procedure as far as they relate to the approval and importation of telecoms’ equipment into the Kingdom.

I. Rules Governing the Approval of Telecoms Equipment

The basic requirement is that any person wanting to manufacture or otherwise deal with telecoms equipment must be licensed to do so and the relevant equipment must be approved by the CITC.

As far as licensing is concerned, the key provision is section 88.2 of the Bylaw which provides that “No person shall manufacture, import, distribute, lease, offer for sale or sell telecommunications’ equipment unless it has been type approved or it complies with technical standards that have been approved by the Commission (i.e. CITC).”

This requirement is further confirmed by Section 90.1 of the Bylaw which stipulates that “the Commission shall prescribe the procedures and
requirements applicable to equipment licenses.”

II. General Principles Governing Type Approval

The type approval procedure is dealt with in sections 91.1 et sequitur of the Bylaw and by the Procedure.

These provisions require any person wishing to manufacture or otherwise deal with telecoms equipment in the Kingdom, to apply to the CITC for type approval which is to be performed in accordance with technical standards published by the CITC .

Measurements and tests for compliance with the technical standards issued by the CITC are performed at the applicant’s cost, at a laboratory or testing facility approved by the CITC or at a laboratory or testing facility in another country that has been approved by the CITC. It is worth noting in this regard that the CITC recognises both domestic and foreign organisations for the purposes of testing and type approval (Sections 91.3 and 92.1 of the Bylaw).

Furthermore, the CITC is given the power to enter into mutual recognition agreements with authorities in other countries to provide for mutual recognition of type approvals conducted in another country (Section 92.2 of the Bylaw).

III. Practical Steps for Obtaining Type Approval

The Procedure lists the practical steps that any applicant must follow in order to get approval for telecoms equipment, it being noted that the steps
differ if the approval is sought for the first time or for previously approved equipment.

IV. Approval sought for the first time

If the applicant seeks approval of telecoms equipment for the first time, he must provide the following information in writing to the CITC:

a. Description of the product including its brand name and model number;

b. Detailed technical information and catalogues including public network interface characteristics. Wireless devices must include the output power, type and gain of the antenna, frequency and bandwidth, built-in encryption schemes, and any other information requested by the CITC in a
timely manner;

c. Identification of the CITC technical specifications published on the CITC website, to which the equipment conforms;

d. Certification from the manufacturer that the equipment in question conforms to the CITC specifications;

e. A formal report outlining the details and results of the equipment testing;

f. If applicable, a statement identifying the names and addresses of any independent laboratories where the products were tested, along with the dates the tests were conducted.

Following a review of the application by the CITC, the latter may require the applicant to provide a sample of the equipment for testing.

V. Previously approved telecoms equipment

In order to obtain approval for previously approved telecoms equipment, the applicant must provide the CITC in writing with the following information:

a. Formal documentary evidence that the equipment has been approved by the CITC during the last two years.

b. If such documentation is not available, the procedure outlined in (1) above must be followed.

VI. Rules Governing The Importation of Telecoms Equipment

The conditions governing the importation of telecoms equipment into the Kingdom can be found in the Procedure. Some of these conditions relate
to the type of entity that can undertake the importation while other requirements apply to the importation process and the release of equipment at Saudi customs.

VII. Persons allowed to undertake importation and trade of telecoms equipment

A preliminary remark is in order. Although Annex1 to the Procedure seems to apply exclusively to Saudi nationals and companies engaged or willing to engage in the importation and trade of telecoms equipment (through reference to the concept of “national establishment”) , we do believe that the requirements set out in Annex 1 would likewise apply to foreign companies for the simple reason that these activities are not mentioned in the so-called “Negative List” published and often updated by the Saudi Supreme Economic Council, with regards to activities that are off-limits to foreign investors.

The following conditions apply to any person engaged in the importation and trade of telecoms equipment:

a. The person or entity willing to engage in those activities should have them explicitly stated in their commercial registration certificate (and investment license as far as foreign investors are concerned).

However, in order to be able to import wireless equipment or any equipment that connects to the public telecommunications network, the person/
entity must seek the prior approval of the CITC and satisfy the following conditions:

a. The manager of the entity must be a qualified Saudi engineer or technologist in the field of electronics;

b. The entity must have a means to document and register the equipment imported as well as the flow and consumption rate of the equipment;

c. The entity may not undertake activities other than the importation and trade of telecoms equipment;

d. The entity must not use spare parts to assemble complete units unless it has received permission to do so from the CITC;

e. The maintenance of the equipment should not result in the modification of their technical specifications as defined in the license.

f. The entity must obtain approval of the CITC before importing any equipment to ensure compliance with the technical specifications and with the frequencies allocated by the CITC. The entity must commit to the following:

» accept responsibility for any harm, injury or loss attributed to the possession or use of the equipment;

» accept responsibility for discontinuing importation and sale, and for replacing all equipment already on the market, in case of defects in the equipment resulting in unacceptable performance;

» inform the CITC of any desired modifications to the approved equipment before importation in order to obtain its approval;

» provide all necessary information to buyers regarding the procedures that must be followed to use the devices and equipment.

VIII. Importation process and customs’ release procedures

The following are the major steps to be followed in order for the importer of telecoms equipment, to allow their entry into the Saudi market:

The importer must submit a request in writing to the CITC containing the following documents and information:

a. Copy of the equipment approval, bill of lading and packing list.

b. For wireless devices that use licensed spectrum, the importer must supply proof that a valid license to use the spectrum has been obtained for these devices.

c. For devices used to provide services licensed by the CITC, the importer must supply proof that a valid license to provide the services have been obtained.

d. If the equipment being imported is part of a project pertaining to a government department, the importer shall supply a letter from the concerned department clarifying its ownership of the equipment, its nature, and the use to which it will be put.

e. Indication of the port of entry where Saudi customs are holding the shipment.

It is worth noting that the CITC has the power to take samples of the equipment held at the customs in order to conduct tests or conduct on-site inspection at the customs’ premises. Following confirmation of the conformity of the equipment to the technical specifications, and the receipt of any applicable fees, a customs’ release letter would be issued.

Despite the many uncertainties that still surround the type approval process (implementing regulations and procedures are still yet to be issued and published on the CITC’s website) and the persons and entities that are allowed to import and trade in telecoms equipment into the Kingdom, we believe the current legislative and regulatory framework adequately addresses the licensing and importation of telecoms equipment by allowing the Saudi government to properly control the manufacture, use and sale of the relevant equipment and ensuring that this equipment meets the technical standards and specifications set by the regulator in reliance upon best international practices in the telecoms industry.

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Published: December 2014
Publication: The Oath 
Title: Staying Connected in KSA
Sector: Telecommunications
Authors: Cyrille Naffah

 

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