Dubai Internet City links up with UK telecoms provider

DUBAI’S authorities have teamed up with UK-based communications group, FLAG Telecom in a bid to boost the emirate’s overseas telecoms links, Arabian Business has learned.

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By  Richard Agnew Published  July 3, 2005

DUBAI’S authorities have teamed up with UK-based communications group, FLAG Telecom in a bid to boost the emirate’s overseas telecoms links, Arabian Business has learned. The move, seen as strong evidence of the emirate’s involvement in the UAE’s upcoming second telecoms operator, will involve Dubai Internet City [DIC] connecting to what will be one of the world’s largest submarine cable systems. Its communications arm, DIC Telecoms, has already recruited contractors to build a multi-million dollar facility in Jebel Ali that will link to the Falcon system, a high-speed submarine network FLAG plans to launch later this year. The network will then be used to route phone calls and internet traffic between DIC Telecom’s customers and the rest of the world. The move, according to analysts, will support plans being drawn up by DIC to exploit liberalisation in the UAE and expand its telecoms business. The group currently provides internet and phone connections to customers in Dubai’s free zones and Emaar’s property developments, but is not yet allowed to offer services elsewhere in the UAE. At the moment, it uses national operator, Etisalat to provide it with international capacity. Analysts said that the scale of the investment needed to build a landing station indicates that DIC is planning to expand its domestic network, as the move wouldn’t make business sense if the group continued to serve its current number of customers. “Getting a landing station is a huge commitment,” said Mohsen Malaki, a senior telecoms analyst at IDC CEMA. “It essentially means they [DIC Telecoms] have the right to provide international call services and that they are an operator for international traffic,” he added. The completion of Falcon is expected to have sizeable benefits for the region’s telecoms companies, which have been forced to pay high prices for access to satellite or submarine links to the rest of the world. The Gulf is currently connected to only two major international submarine cables, leaving it short of back-up when either network has been knocked out — for example, by the earthquake that hit Algeria in 2003. According to FLAG, which is owned by Indian conglomerate, Reliance, Falcon will be ‘self-healing’ and provide countries that connect to it with more reliable links and greater capacity. The main Falcon system will stretch between Egypt and Hong Kong, but a ring will loop off into the Gulf in order to ease access for GCC countries. Telecoms providers in Kuwait, Qatar, Oman, Yemen and Saudi Arabia have already signed agreements with FLAG to connect to the cable. However, Etisalat would seem to have opted to increase its own international capacity solely through SEA-ME-WE 4, another high-speed submarine system set to be launched later this year. Although FLAG and SEA-ME-WE will continue to have a duopoly in the market, analysts expect the additional capacity to have a knock-on effect on the pricing of international calls and internet access for consumers. “The upcoming increase in wholesale international bandwidth will have a major impact on affordability of services in the region,” said telecoms consultant Paul Budde in a recent report. “SEA-ME-WE 4 and the FLAG Falcon cable, both set to go live in late-2005, have landing stations in a number of Middle East countries. The sudden influx of wholesale international bandwidth should lead to a drop in wholesale prices and result in cheaper prices for end-user services,” he added. The finer details of the agreement between DIC Telecoms and FLAG are unclear, although the London-based group normally signs 15 year contracts with telecoms operators. Officials at DIC Telecoms, Etisalat and FLAG declined to comment.

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