Bandwidth demand for submarine systems in the Indian Ocean, Persian Gulf, and Red Sea growing nearly 50% per year, say analysts

May 5, 2004 Boston, MA -- De-regulation is encouraging new and incumbent operators to expand beyond their domestic markets and to meet demand for increased choice and redundancy on ultra-long haul routes. But the main driver of future investment growth will be demand for connectivity and route diversity on shorter-haul routes between countries in the same region, contends a new report from Pioneer Consulting.

Outsourcing to India is providing a rationale for greatly increasing the level of international connectivity, but Pioneer argues that this phenomenon is only one of a number of drivers affecting demand for bandwidth in this region. The pace of development in the Persian Gulf is more measured but, with the eyes of the World upon them, most countries have now committed to market liberalization. Government-backed infrastructure investment in certain Red Sea states is also creating new opportunities. This dynamic commercial environment is spawning new business models. Pioneer's report weighs up the pros and cons of various models for submarine cable construction and operation.

"While there is a certain synergy between these regions, there are key differences in the way that demand for submarine cable connectivity is developing," explains Julian Rawle, senior market analyst at Pioneer Consulting, "And this, in turn, affects the efficacy of various business models used to take advantage of the opportunities which undoubtedly exist in this part of the world."

Pioneer's report provides forecasts of supply and demand for each country over the next ten years and distinguishes between ultra-long haul "intercontinental" demand and demand for "intra-regional" connectivity between neighboring states. The forecasts are backed up by a profile of each country, which provides a wealth of data points, as well as a qualitative assessment of country-specific demand drivers. Description and analysis of potential business models is supported by descriptions of each existing, planned, and proposed cable system.

"What we found," says Rawle, "is that entrepreneurship is a defining characteristic of the Indian Ocean region, while the Persian Gulf region is driven more by incumbents looking to defend their market position or re-invent themselves. So when you look at a cable system connecting the two regions, you end up with some innovative hybrid business models."

For more information on the "New Business Models for the Indian Ocean, Persian Gulf, & Red Sea Submarine Cable Industries," including an abridged version of the executive summary, visit the company's Web site at www.pioneerconsulting.com.

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