Middle East telecom operators are investing in new cables and in extending the life of existing systems to handle growing bandwidth requirements, which are expected to increase at 43 per cent per year by 2015.

Simultaneously, pressure on cable capacity will soar from 2Tbps in 2008 to 19Tbps in 2010, according to new projections from TeleGeography's global bandwidth forecast service.

The projections said bandwidth requirements will grow 33 per cent between 2008 and 2015. At this rate, trans-Atlantic capacity will be exhausted by 2014, and cables providing diversity along geographically unique routes may run out of capacity even sooner.

Despite the balancing of supply, demand and price since the turmoil of the early 2000s, the market for trans-Atlantic bandwidth faces a looming supply hurdle.

The trans-Atlantic submarine cable market was a stark example of the capacity glut in the early 2000s. Six new cables entered service between 2000 and 2003, greatly exceeding near-term requirements. The excess capacity and competition crushed prices, resulting in a wave of bankruptcies and financial restructuring.

The bandwidth glut now lies well in the past: rapidly growing international bandwidth requirements restored the balance of supply and demand, and cable operators have been adding capacity to their networks since 2004. Superficially, the trans-Atlantic market now appears sound: prices have stabilised, and demand grew 38 per cent in 2008. However, clouds loom on the horizon.

Bill Collins, new business sales director for networks and enterprise at Motorola, said: "This is a concern, as the bandwidth per user increases to at least two to three gigabyte every month, and in the younger generation it's every day. Operators in the Middle East are definitely making investments in telecom infrastructure. In the GSM days, Motorola played an active role in building telecom infrastructure, but not any more. With the new entrants in the telecom arena, pressure is increasing on bandwidth."

New capacity will clearly be needed; less clear is who will deploy this capacity, how they will deploy it, and how they will finance it. The bandwidth glut at the start of the decade forced cable operators to restructure their finances or to file for bankruptcy, writing off the cost of cable construction. Consequently, current wholesale rates of approximately $14,000 (Dh51,387) per month for a 10Gbps wavelength reflect only the incremental cost of the optical equipment needed to provision the circuit, but not the cost of cable construction.

"Trans-Atlantic cable operators and wholesale buyers are facing a slow-motion crisis," said TeleGeography analyst Alan Mauldin. "The cost of circuits on a new cable built today would be far higher than prices prevailing in the market."

While 2014 is five years away, lengthy cable financing and construction cycles mean that carriers must confront this challenge far sooner. New technologies, such as 40Gbps transmission line rates, may allow operators to expand capacity on some existing systems, delaying the need for new cables. However, these technologies remain unproven on a commercial long-haul submarine cable, and will only postpone the inevitable day of reckoning.

The main cables that link the Middle East with Europe are SeaMeWe-3, SeaMeWe-4 and Flag Europe-Asia. Etisalat uses SeaMeWe-3, SeaMeWe-4, Flag Europe-Asia, Flag Falcon, Aletar, FOG, ITUR, Qatar-UAE Submarine Cable System and UAE-Iran. Du is connected by SeaMeWe-3, SeaMeWe-4, Flag Europe-Asia, Flag Falcon and Transworld.

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