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3G boosts Middle Eastern long-distance networks

United Arab Emirates: Thursday, April 14 - 2011 @ 11:14

This demand has primarily been driven by the increased uptake of 3G and broadband services, and the needs of the enterprise segment in the Persian Gulf. To cater to this demand, several submarine and terrestrial links are being deployed to increase capacity across the region.

Richard Hurst, Ovum senior analyst, said: “Fiber capacity in the MENA region will quadruple between 2010 and 2015. We expect that service providers will increase their focus on terrestrial cables as they look to improve redundancy and access to alternative international gateways.”

Satellite services will retain their foothold in the market, but will focus on remote areas and offering a wider range of services to customers. Satellite providers will need to increase their capacity through additional transponders, but will be forced to lower their prices.

Ovum forecasts that an oversupply of capacity in the MENA region will lead to the increased commoditization of bandwidth, meaning that operators will need to balance traffic volumes and pricing to ease pressures on their margins. Operators will struggle to sustain their revenues unless they form partnerships with players further up the value chain. This will allow them to serve new market segments such as content providers or broadcasters. The primary concern for these operators will be that they may begin to compete with some of their customers, which may shut them out of some markets.

“As the commoditization of bandwidth is fast approaching, service providers in the region must act to consolidate their revenues through the introduction of products aimed at new market segments.” said Hurst.

Despite the ongoing rollout of additional capacity, Ovum expects that there will continue to be investment opportunities as the MENA region forms part of the critical east–west route between Asia and Europe. The close proximity of the international gateways of Europe to North Africa may also create demand for north–south links to carry traffic from Africa to Europe.

The increasing uptake of 3G and mobile data services in the MENA region is the major driver of the increased demand for international capacity. The number of 3G subscribers in the region has risen from 3.7 million in 2007 to 29.2 million in 2010, and Ovum expects that this will increase to 137 million by 2015. This growth will further drive capacity demands in the region.

In the Gulf States, capacity demand is being driven by the enterprise segment, which is looking towards software-as-a-service and cloud computing solutions to create greater efficiencies that will enable companies to compete on a global scale.

Fixed broadband markets in the MENA region will also drive demand for international capacity, as will high-bandwidth services such as video, IPTV, and other rich media as the region embraces the Internet as a source of information and entertainment.

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Thursday, April 14- 2011 @ 11:14 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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