October 2011 Newsletter

'Pipes' and politics

Foreign politics is one conversation topic always liable to spark a heated debate. In recent months, the Capacity editorial team has reported extensively on the growth of terrestrial cable projects between Asia and Europe, and given their dependency on cross-border relations, the development of these can sometimes resemble a game of political chess.

A recent panel session on international connectivity at this year’s Capacity Russia & CIS 2011 in Moscow illustrated just that.

All was calm and serene, until the Mongolian carrier Gemnet’s president, Ulaankhuu Dulguun, stepped up and declared his intentions to deploy dark fibre into China by exploiting a ‘loophole’ in the UN peace treaty that enables any landlocked country access to its neighbouring nation’s port for critical infrastructure. Subsequent murmurings rippled through the audience and fellow panellists were seen quickly scrambling for glasses of water to mask their surprise.

Now clearly Dulguun wasn’t proposing Mongolia should invade China. Rather a delicate tapestry of circumstances had unfolded that strengthened Mongolia’s position to supply an alternative and potentially valuable terrestrial route on its own terms.

Mongolia is a nation almost the same size as western Europe, largely filled with an inhospitable terrain of jagged mountains, barren deserts and a thriving wolf population. It is also, however, home to some jaw-dropping gigantic mineral reserves – including some of the world’s largest deposits of copper, rare earths and uranium. Unsurprisingly big multinational mining corporations have come knocking on the country’s door, with the likes of Rio Tinto and Ivanhoe Mines pledging billions of dollars worth of investment in projects out there.

The repercussions of this could be widespread for the country’s comparatively miniscule 2.5 million inhabitants, and its telecoms sector in particular could flourish immeasurably. Identifying this, Gemnet deployed an 11,000km cable in 2008 alongside the trans-Mongolian railway, which is a branch line of the famous trans-Siberian route.

Whereas previously pricing on this route may have been at the mercy of the neighbouring powerhouses Russia and China, the potential of these critical resources gives Mongolian operators a much stronger hand with which to negotiate. The reliance of the mining industry, for instance, on telecoms to operate mining equipment and machinery remotely using M2M technology will only drive connectivity. Likewise, Dulguun identifies that demand for internet in Mongolia is almost quadrupling every two years – and will no doubt be spurred on further as the nation’s GDP gathers more momentum.

Essentially, Mongolia no longer needs to be pushed around by its much bigger and noisier neighbours. It’s could be on the brink of developing a newfound and extraordinary wealth, which fascinatingly would change not only its position in the global political sphere, but its role in the telecoms market as well.

Just how close is the link between foreign politics and international connectivity? Share your insider tips and comments by clicking here.

Alex Hawkes

Deputy Editor, Capacity

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