8 things we learned at Capacity Middle East 2024

The general impression from the conference stages and the event halls was that Middle Eastern connectivity is more geopolitically relevant than it has ever been. This global buy-in helps move projects and initiatives forwards, but it also brings more attention and involvement from international and government bodies. The decisions made on which routes to take, what to build, or where to locate infrastructure have moved far beyond purely commercial decisions. The obvious area for this focus at the moment is subsea – Capacity Middle East 2024 took place amid veiled threats against Red Sea cable infrastructure – but as we heard on stage, this relevance also touches on sustainability requirements, data localisation, and other areas.

 

The submarine cable market in the Middle East is more active than it has ever been. But building the cables is not enough. They must be looked after too, and several factors are combining to make cable maintenance a headache.

One is a shortage of ships. The sheer number of new projects means much longer lead times for ships capable of working with cables, be that for cable laying or cable maintenance.

Another factor is the increased complexity of modern cables. With some systems hosting up to 24 fibre pairs and deeper burials than ever before, there is massive coordination required to carry out maintenance, and the new techniques needed are proving an upskilling challenge.

Finally, there is the port clearance aspect. Ships often have to spend up to 10 days undergoing port clearance, and there needs to be more international cooperation to encourage countries to simplify the entrance of cable ships into territorial waters. With charges to consortia of up to $40,000 per day, these are expensive delays, and they impact profitability across the sector.

 

As an industry meeting place, Capacity Middle East usually sees quite a few announcements of partnerships, project launches, and other new initiatives in connectivity. This year, several of the announcements made last week had an Iraqi flavour.

Sparkle unveiled its first Iraqi point of presence in the northern city of Erbil, working with Iraqi provider Novel Point, and Infonas and FastIraq also announced a new corridor between UAE and Frankfurt via Iraq. And on the internet exchange side, DE-CIX opened IRAQ-IXP on 7 February, the first nationwide facility in the country. Iraq is a big market in its own right, but the slew of announcements – as well as a keynote address from Iraq’s Minister of Communications, Hayam al-Yasiri - highlighted the growing importance of the country in providing route diversity and lessening reliance on the Suez corridor for international routes.

 

In some markets, enterprises, connectivity operators and users define their needs, and governments legislate to support them. But in many of the Middle East’s markets, things work the other way around. In the Kingdom of Saudi Arabia, for example, the government’s enormous spending and development programmes are the driving force behind what is happening in connectivity. These different focus areas – such as route diversification, data centre provision, or smart city establishment – then drive a response from companies participating in the market.

There are multiple effects of operating in this order. One is that technology adoption becomes easier than if multiple market participants were each developing their own initiatives. The wide-reaching and influential government programme is a hallmark of the region. KSA’s Vision 2030 is an example, and Kuwait, Oman and Qatar all operate various digital transformation roadmaps too. These will help define how the global sector acts to meet the region’s huge demand.

 

Sustainable operations make sense for connectivity, from an opex, social responsibility and reputational standpoint. But Capacity Middle East delegates heard about the importance of another ESG driver for anybody operating on the region – requirements from investors. A huge amount of foreign direct investment is entering the Middle East to fund the infrastructure development required. These investors are required to file reports on sustainability across every step of their operations, such as the Scope 3 requirements and recent European Union legislation.

This does not change a huge amount in terms of the priority of ESG – it is already vital for the sector – but it is another aspect to consider in the sustainability equation, which already suffers from confusion on differing reporting standards and requirements.

 

Gaming in the Middle East is worth around $6 billion annually, and the connectivity industry has work to do to help the market reach its full potential. Wider 5G coverage has helped move more gamers from indoor to mobile gaming, and this requires a nimble approach from providers with exclusive games or bundles made available.

The key to tapping into gaming revenue, delegates heard in Dubai, is understanding the market better. How do gamers behave and what are their usage patterns? Which devices do they use? How does the network perform? To answer these questions, there needs to be a stronger relationship with game developers, mobile operators, and smartphone manufacturers. From there, it will become clear which packages to offer, which frequencies and bandwidths are used in which country, and the exact infrastructure offerings required to secure a slice of the market.

  

A topic that came up repeatedly on the Capacity Middle East stages was the encouraging progress of route diversity, particularly offering alternatives to the Suez route – more important than ever before given the current landscape. This route diversity is itself diverse, and current and planned projects involve routes through Iraq, Oman, the UAE, Jordan, Bahrain, Qatar, Saudi Arabia, and more.

This is helped by the fact that every country in the Middle East is pulling its weight when it comes to putting the region on the map. While the UAE and Saudi Arabia are historically important drivers of development, there are numerous projects across other countries too – submarine cable landing points, data centres, cloud zones, digital hubs, and more. This interconnectivity between countries, helped by a hyperscaler-led push for open concept, will incentivise data centre operators to set up in the region alongside the many builds already underway. This is necessary to meet the huge demand for locally available content and increased cloudification of the Middle East’s business community and government operations.

 

You can’t take your eyes off the region when it comes to agreements and partnerships. Agreements and MOUs have been signed to develop a new 11,000km subsea project, an initiative to restore trust in international telecoms, IoT in the Middle East and North Africa, a UAE-Frankfurt corridor, VoLTE solutions, and cooperation between two international telcos – and this was just over the three days Capacity Middle East took place. The Middle East is living up to its importance as a hub position, and the activity in the market is at a level to match.

 

For more information on what happened at Capacity Middle East 2024, head to the Capacity Media LinkedIn page for photos, announcements and much more.