New markets’ appetite stirs bandwidth demand

Tom Gara

• Last Updated: May 08. 2009 11:55PM UAE / May 8. 2009 7:55PM GMT

The fibre optic cable laying ship NIWA sits anchored off the coast of Fujairah last month. Reuters

A telecom and internet boom in emerging markets is driving rapid global growth in demand for international communications bandwidth, which increased by 68 per cent in 2008, a study says.

Demand from the Middle East, Africa, Asia and Latin America is fuelling the growth, which has continued unabated despite a global economic recession, according to Telegeography, a research firm.

The company’s 2008 Global Bandwidth Report, released yesterday, shows that the market has shifted from a glut of supply – a relic of the dotcom bubble at the beginning of the decade – to a scramble for new capacity. More new undersea cables will be activated this year than at any time in the last 10.

The Middle East’s largest telecommunications companies, including Etisalat, Egypt’s Orascom Telecom and Saudi Telecom, are contributing to the boom, laying new cable to connect with Europe, Africa and Asia.

A shortage of cables – just two connect the region to Europe – had led to two major internet breakdowns in the Middle East since the beginning of 2008.

Demand for international bandwidth grew by 75 per cent in the Middle East last year, the report said, a faster rate than the booming markets of Asia and Africa, and equalled only by Latin America.

Forty-one new undersea cables will be laid in the next three years. But installing submarine cables has become more cost effective than it was during the dotcom heyday, when a total of 31 new cables were laid at a cost of US$13.5 billion (Dh49.5 billion).

The cables being laid today, most of which will be installed by 2010, will cost just $3.5 billion, with almost a $1 billion of investment announced in the Middle East alone.

“While the number of cables being laid is impressive, this current batch of new cables won’t break the bank,” said Alan Mauldin, Telegeography’s research director. “Most of these new cables cover shorter distances and employ simpler designs than their predecessors, helping to keep costs in check.”

tgara@thenational.ae