ANALYSIS: Fujairah SmartHub aiming to spark Middle East growth

29 August 2013 |


A partnership announced at the end of August between UAE carrier Etisalat and carrier-neutral interconnection company Epsilon could entirely change the connectivity landscape into and out of the Middle East.

The agreement, which will see Epsilon deploy its Middle Eastern network exchange in Etisalat's SmartHub facility located in Fujairah, UAE, could potentially see the emirate become established as a connectivity hub for the region, similar to what Frankfurt is to Europe and Hong Kong is to Asia.

Ali Amiri, EVP of carrier and wholesale services at Etisalat, believes the amount of cable landings in Fujairah make it a logical place for a telecoms hub in the Middle East.

"It is a crossroads for connectivity and can really serve a range of businesses, from content providers through to international carriers," he said. "SmartHub, located in Fujairah, has the right mix of geographical convenience, regional and international connectivity and access to a population that is hungry for content and telecoms services."

And while SmartHub is an Etisalat initiative, Amiri was keen to stress that the development of Fujairah as a potential hub for the Middle East was facilitated through a commitment from numerous carriers and content companies operating in the region.

"A critical mass of companies have chosen SmartHub as a jumping-off point for international connectivity and interconnection in the Middle East," he said.

Welcome competition
Companies including Microsoft, Akamai, Limelight Networks, Level 3, PCCW Global and China Telecom are now all present in the region, bringing welcome competition to a market that was formerly restrictive to international players.

This lack of competition has traditionally hindered the growth of international connectivity and content services coming in and out of the Gulf, according to Andreas Hipp, CEO at Epsilon. It has only been in the past two years where the market has begun to open up and there has been a change in mindset amongst the larger players, Hipp said.

"In a free market you have competition and that is something that is not always appreciated in some places," he said.

"This has had to change – particularly in the Gulf – because if you don't open the market up, you cannot get a rich portfolio of networks, which means the market will never truly modernise to its potential."

Amiri revealed to Capacity that discussions over establishing a hub for the Middle East have been ongoing for years, and maintains that now is the right time for development.

"The timing of a distinct and real hub for the region being established comes down to what the market wants," he said. "The continent is hungry for content, the infrastructure is in place and the timing is right."

A catalyst for growth
Both Etisalat and Epsilon are hopeful that the development of SmartHub will serve as a catalyst for the growth of the Middle Eastern ICT market, which has fledged behind some of the other developed industry verticals.

Hipp, however, is mindful of the limitations the Middle East has in terms of population and geographical reach.

"Even with the market opening up, the carriers in the Gulf understand the limits of the population and the limited amount of business they can do," he said. "A lot of the carriers are now investing internationally, as domestic markets begin to reach maturity."

Fujairah offers companies access to the TEAMS cable, IMEWE, SeaMeWe3, SeaMeWe4 and TGN Gulf, while facilitating connections into a range of high-growth markets, including Turkey and Kuwait.

PCCW Global's VP for Middle East and North Africa, Sameh Sobhy, said the emirate is enabling traffic growth between Fujairah and Africa. The company has installed a PoP in SmartHub and Sobhy cited increasing trade links between the two continents as a valuable wholesale opportunity.

"We see traffic between Asia, Africa and the Middle East growing strongly over the next five years," he said. "The economic ties between Asia and Africa are becoming more important, and telecom services are supporting economic growth."
 
After Fujairah, it is likely to be Africa where telecoms will see the next major international hub, according to Hipp, and he is particularly confident on where it will be.

"Angola sits in the middle of the traffic that comes in from South Africa and it appears the market as a whole is fairly open in making the country an exchange hub for the continent."