Reconnecting the Region

Many telecoms operators in the Middle East and North Africa were caught napping by the Algerian earthquake in May. By cutting the main internet links to the US and Europe, the disaster exposed a lack of planning and alternative routes. Now, a new wave of investment in international bandwidth is expected by operators as they seek to prevent the same situation from happening again.

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By  Richard Agnew Published  June 30, 2003

Introduction|~||~||~|The devastating Algerian earthquake in mid-May sent shockwaves through the telecoms industry in the Middle East and North Africa, as telcos’ international internet connections were cut and internet service providers (ISPs) realised their lack of alternative routes.

The disaster severed the Mediterranean stretch of the high-capacity submarine networks of international internet bandwidth providers, Flag and Sea-We-Me 3. Therefore, the two key lines of web-based communication between the Middle East and North Africa, and Europe and the US.

The short-term effects were dramatic. “Telecoms operators across the region suffered anywhere from 20% to 95% reductions in their international internet capacity as a result of the incident,” says Mohsen Malaki, senior analyst in IDC’s CEMA telecommunications group.

Rather than undermining the viability in submarine networks, however, the shock is expected to spur greater investment in submarine networks by the region’s telcos. If anything positive came out of the disaster, its effects demonstrated the importance of establishing diversified, robust routes for IP peering with internet backbones elsewhere in the world.

“It was a unique thing that [the earthquake] cut both cables at the same time,” says Walid Irshaid, Middle East and Africa vice president of Flag Telecom, which serves over 20 operators in the region and claims to carry around 70% of the area’s internet traffic. “[That] made it really hard to manage. Operators lost all their traffic going from here to the West,” he explains.

But the incident also highlighted the fact that operators have under-utilised the alternative route to the US for traffic, through Asia-Pacific. “There were operators that survived as [they had invested] in going East and West, by not only going through Europe to the US, but also by routing through Japan, the Pacific and the US West Coast,” says Irshaid.

As a result, telcos and ISPs have been looking to expand their options. Recently, for example, ISPs in Kuwait and Omantel, the incumbent operator in Oman, have increased their satellite bandwidth. The latter, as with many other telcos, is also considering connecting to the trans-continental cables going through Asia-Pacific.

“The earthquake didn’t undermine the viability of [submarine] transport services,” claims Irshaid. “[Operators] have learned the hard way that the Middle East does not have many [international connections] and [sufficiently] diversified routing. We only really have two systems and we became very vulnerable. Europe, for instance, was not hit by the earthquake as badly, as there are [more] systems there. The Asian countries, although some of their traffic travels through this part of the world, were [also] able to restore their systems very quickly,” Irshaid adds.

The impact of the earthquake also comes at a time when the region’s telcos have been increasingly investing in submarine networks, not just for insurance, but also to cut the costs of offering internet access to subscribers and to create capacity for new, multimedia services.

As a result, E-Marine, Etisalat’s submarine cable installation, storage and maintenance subsidiary, is expecting demand for its services to pick up this year. “The region has a large population and a lot of potential for growth in [usage of] data communications and the internet,” says Omar Jassim Bin Kalban, chief executive officer of E-Marine.

“With [the region’s] communications networks lagging, the [best] way to go is to have high-capacity submarine cables — not only to connect regional countries, but also to connect to hubs where internet [content] is hosted, such as the US,” he explains.

Bin Kalban also expects there to be greater investment in alternative, international routes by operators in the near future. “[In the past two years,] the industry has been affected in [the area of] long-haul connections, [but] we have reached a stage where diversified routing is a must, either by having two cables running in the same direction to the US and Europe, or in opposite directions,” he argues.

Bin Kalban also sees signs of greater demand for high-capacity links between countries in the region, rather than between continents.

“You can see that, in the Middle East, international rates [for internet traffic] are much higher than in the US. One of the issues that causes this is the lack of connectivity between countries,” he says.

“If I showed you a map of the Middle East, there [aren’t many] cables connecting [each country.] There is only one cable connecting the UAE and Qatar, although a second is being planned. Iran [has] only one submarine connecting it and the UAE, although another is planned as well. [At present], most of the traffic is going via satellite,” he explains.

As a result, E-Marine is experiencing increasing interest from local operators in the installation of ‘festoon’ projects — shorter networks linking countries by creating coastal networks connecting various landing points positioned onshore.

“The [main] trend nowadays is towards [networks of] between 50km and 400km in length. This has proven to be more cost-effective for two countries with a long coastline. I think that there will be a large market in that area in the next two years,” he adds.

Emirates Internet Exchange (EMIX), Etisalat’s international bandwidth provisioning arm, is also predicting considerable expansion this year. Before the earthquake, EMIX forecast 50% growth for its business in 2003, and announced in May that it plans to raise its capacity to meet the growing demand. Over the next few months, the provider is aiming to add at least four more STM-1, 155Mbits/s circuits to its network to raise its total bandwidth capacity to almost 2Gbis/s. And as EMIX allows ISPs to connect the networks of Flag and Sea-We-Me 3 in both directions to the US, the next few weeks may see further growth.

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Also, operators have been reviewing their international bandwidth supplies. Although many of their efforts were insufficient or too late to avoid the earthquake’s impact, Jordan Telecom’s timing couldn’t have been better, after signing a deal to lease capacity from EMIX only two weeks before it struck.

In Lebanon, the monopoly fixed operator Ogero, started a tender earlier this year for an internet node that will pool the capacity requirements of the ISPs it serves and provide them with symmetrical bandwidth at lower rates.

While internet penetration has grown to around 150,000 subscribers in Lebanon, according to research firm the Arab Advisors Group, Ogero’s revenues have been hit by the decision of many ISPs to turn to satellite connections by a lack of sufficient bandwidth in the country.

However, the operator is expected to finalise the tender by the summer, and raise its capacity by 90Mbits/s, through two 45Mbits/s fibre optic links

Telecom Egypt has already made a similar move. Earlier this year, the Cairo Regional Internet Exchange (CRIX) was launched, to allow the monopoly operator to purchase international capacity from Flag Telecom and distribute it to ISPs in the country, as well as offering them interconnections to exchange domestically-bound traffic. Through the move, Telecom Egypt, will form a monopoly over the provision of bandwidth to ISPs, other than to ‘Tier 1’ service providers that have the option of sourcing capacity from elsewhere.

The increased demand for international bandwidth is expected to give Flag’s business a boost, following its exit from Chapter 11 bankruptcy protection a few months ago.

Accordingly, it is upgarding its network to meet the demand. Despite the damage done to the Mediterranean stretch of its network, the provider is pressing on with an ongoing programme to upgrade the high-capacity cables it has running between Europe and Asia.

As part of the expansion, the provider has contracted Fujitsu to double the capacity available on key stretches of the network between the UK and the Middle East.

Forming the second phase of a three-track global upgrade programme, Flag is also integrating DWDM into the Europe-Middle East section, which it says can ultimately increase the network’s original capacity by a factor of eight.

Additionally, Irshaid claims the provider is in initial discussions with various operators in the Gulf and North Africa about providing them with direct access to its network through establishing a greater number of points of presence (PoPs) across the region.

“We are upgrading [the network] to offer higher capacity, because of the greater demand we are experiencing,” says Irshaid.“This is a modular upgrade, and it can bring us an additional 80Gbits/s in the Middle East. [Also,] some operators are realising the importance of having their own landing stations, and direct access to trans-continental systems, rather than routing services through other countries. [As a result,] we are exploring how to extend services to some countries who do not have [that] direct access,” he adds.

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This growing trend could also see telcos cutting expensive international bandwidth charges by preventing domestic-bound traffic from being routed via the US and Europe.
While in Saudi Arabia and other countries, this problem has been addressed by the integration of IP routing into the national backbone, other countries with multiple backbones could cut costs by allowing IP peering between the backbones through national internet exchanges.

It has also been suggested that this process could be duplicated on the regional level, with internet exchanges being set up in one or more places to filter traffic bound to neighbouring countries.

“Why would an ISP in Saudi Arabia want to pay for expensive international bandwidth to have its customers access a web site hosted in Egypt or the UAE? [The establishment of regional exchanges] would permit the easy routing of region-bound internet traffic through these exchanges, once the respective ISPs establish IP peering, while internationally-bound traffic would be routed using the trans-oceanic routes,” says IDC’s Malaki.

However, politics would seem to be one of the main reasons why the move has been held back. “This seems like a natural decision. [But] many of the region’s telcos have failed to address [the problem] because of policy-driven issues, such as the desire for independence from neighbouring countries in terms of international connectivity,” says Malaki.

But the development of more locally-based content is expected to add to the incentive for a regional exchange to be
set up.

“Regional-bound traffic is still in its infancy, since locally hosted content is still dwarfed by the content hosted in, and accessed from, North America and Europe,” adds Malaki.
And with many telcos and ISPs relying on broadband take-up for future growth, the question is how long they can afford to wait. According to IDC, between 30% and 60% of the operating costs ISPs face for ADSL is generated by the international bandwidth consumed by that connection.

“It is well known that international bandwidth is very expensive in the Middle East, so minimising the traffic that would traverse on [international] connections would save the telcos and ISPs money. [This] could, instead, be passed on to end-users in the form of lower access costs,” says Malaki. As a result, usage of satellites for international capacity looks set to decline further as submarine networks gain market share.

But they are still expected to have a role in emergencies.“While satellites have a very pivotal role in other international services, such as maritime communications and telephony in remote areas, their use for international internet bandwidth is rapidly being marginalised by submarine cable,” says Malaki. “Many telcos and ISPs in the region are using satellite [only] as back-up,” he adds.

In the meantime, both EMIX and Flag claim to have restored their networks to 100% capacity following the earthquake. But the timely resoration serves as a reminder of the importance of having contingency plans in place.

“The [network was repaired] by 18th June,” says Irshaid. “In normal cases, it takes one ship and 10 days, but the substantial damage caused us to use 2 ships [and] it took a total of 28 days [to restore],” he adds.
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