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Sun 4 Jul 2004 04:00 AM

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Oman seeks role as bandwidth hub

Oman is aiming to grab a pivotal role in the Middle East’s IP connectivity market following a deal between national telco, Omantel, and global bandwidth provider, FLAG Telecom.

|~|flagceo1.gif|~|Patrick Gallagher, chief executive officer, FLAG Telecom.|~|Oman is aiming to grab a pivotal role in the Middle East’s IP connectivity market following a deal between national telco, Omantel, and global bandwidth provider, FLAG Telecom.

Omantel is planning to provide a dual landing station for FLAG’s Falcon network, a terabit/s 15,000km undersea cable which will connect several emerging telecoms markets between Egypt and Hong Kong.

The landing points will interconnect Falcon with a loop coming off the main stretch of the cable to link it to countries in the Gulf.

A 15-year capacity agreement signed by the two firms in Qatar last month will also see Omantel leasing international bandwidth provided by the Falcon network, and re-selling direct connectivity to other service providers.

“Oman is now positioned to be a regional hub for the advanced broadband communications services to be carried by Falcon,” says Patrick Gallagher, chief executive officer, FLAG Telecom.

Through the deal, both Omantel and FLAG are aiming to capitalise on latent demand for international bandwidth, both in the Middle East and elsewhere.

Falcon, expected to cost around US$300 million and be in service in early 2005, is aimed squarely at under-served markets where uptake of telecoms services is expected to grow rapidly over the next few years.

Other than Oman, Middle Eastern countries with the potential to directly access the Falcon network include Bahrain, Kuwait, Qatar, Iraq and Iran.

FLAG claims to have received expressions of interest from these five countries and says that most are in “advanced discussions” with regards to participating in the project.

The Gulf States currently use around 3Gbits/s of international capacity, but are expected to need up to ten times that amount within a decade from now, according to analyst house, Ovum.

“The telecoms sector in the Middle East is liberalising and this will create a boom in transactions and traffic. Also, several countries have plans to introduce broadband, including Omantel,” adds Engineer Mohammed Bin Ali Al Wohaibi, executive president, Omantel.

Analysts also predict dramatic increases in demand for capacity from other areas that Falcon will target, such as India and China.

“Falcon is a strategic investment to meet the future demand of customers seeking to reach India, the Gulf, the wider Middle East region and South East Asia,” says Gallagher. “It is an investment made with a medium to long term view,” he adds.

It remains to be seen, however, if the increase in supply from the Falcon network will create a more competitive environment that would reduce the region’s high international bandwidth rates.

These are seen as a major hindrance to internet uptake.

FLAG and its rival, Sea-Me-We, continue to hold a virtual duopoly in the Middle East’s bandwidth supply via submarine cables.

Additionally, Omantel has denied that the move is designed to allow it to take on other operators that are providing hubs for international capacity, such as Etisalat, which supplies bandwidth through its Internet Exchange (EMIX).

“We are not looking at this as a threat to other operators’ offerings,” says Al Wohaibi. “We can compliment each other. We will provide diversity to existing services,” he adds.

Etisalat, which has a landing point for FLAG’s existing Eur-Asia network, has not yet agreed to connect to Falcon.

The UAE is also one of fourteen countries which will be linked by the rival, upcoming Sea-Me-We 4 submarine system.

But analysts say there is ample pent-up demand for new hubs and capacity, considering projected increases in demand.

Service providers’ also need more than one source of supply in case of unforeseen downtime.

“ISPs need back-up through redundant routes, so even if they are with EMIX, they still need an alternative,” says Mohsen Malaki, programme manager, communications, IDC CEMA.||**||

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