Shortage of undersea cables keeps broadband pricing high

High cost of using undersea internet cables is holding back the growth of the industry, says head of Bahraini operator Batelco.

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Expensive internet links are holding back growth of the Gulf's telecommunications industry, according to the head of the Bahraini operator Batelco.

Relatively few undersea internet cables serve the Gulf, which means local telecoms operators pay more to connect their customers to the rest of the world.

This, in turn, means pricing of consumer broadband packages is high.

Rashid Abdulla, the chief executive of Batelco Bahrain, said this was the one of the main impediments to the industry.

"Getting out of the Gulf is still very expensive," he said. "Prices compared to many other countries are not really as low as they should be."

Fewer undersea internet cables serving the Gulf markets mean that regional operators must pay more for capacity on international data networks, driving up consumer prices, he added.

"We have got routes going outside the Gulf, but it is not really as many as it should be.

"With more competition, and more cables coming to the region, hopefully the prices will go down."

Mr Abdulla said home and mobile broadband connections were the main source of revenue growth for regional operators.

The pricing situation is likely to be eased with the activation of an additional internet cable connecting the Gulf region.

Gulf Bridge International (GBI), the Middle East's first privately owned regional cable operator, said on Sunday that its undersea cable was ready for use.

The cable, laid at a cost of US$445 million (Dh1.6 billion), connects India with Europe via the Gulf and Egypt.

Ahmed Mekky, the chief executive of GBI, said the company was exploring the possibility of extending the reach of its services.

"We have strong plans for the growth of GBI. Expanding eastward - to Asia, India - and expanding to East Africa is definitely in our plan.

"We will announce the plan at the right time," Mr Mekky said.

Other regional operators agreed that demand for broadband was boosting international data traffic.

"We are seeing huge demand for broadband," said Homoud Alkussayer, the vice president for wholesale at the Saudi operator STC.

"Every year we are seeing double the capacity. And I think we will continue to do so."

Ali Amiri, the executive vice president of carrier and wholesale services at Etisalat, said the UAE operator was also seeing more demand for data capacity.