Telecom’s Biggest Race

In an effort to remain competitive and meet the growing demand for cloud technology in the region, telcos are locked in a race to build data centers.

The UAE’s du is the latest to invest after launching an $80 million data centre in January through an alliance with California’s Equinix. The companies said the hub is the first of its kind in the region and ‘carrier neutral’, meaning telecom operators other than du will be able to use it.

Equinix, which has about 90 data facilities globally and 4,000 customers including IBM and HSBC, bought a newly- built mid-sized data centre in Dubai and will invest $40 million in the project.

du will invest a similar amount over the next five years, providing connectivity and managed services to tenants, which are likely to include financial institutions, telecom carriers from other regions and internet content providers.

Eric Schwartz, Equinix president for Europe, Middle East and Africa, said at the launch that the more applications and content that are located in the Middle East versus being served somewhere in Europe or Asia, the more individuals and businesses will see meaningful performance increases.

The bulk of data held at the Dubai centre is likely to come from international firms using it as a hub to re-route traffic to and from other regions.
Still, there is growing local demand for outsourcing cloud services.

Ihab Al Saheli, general manager of IT solutions provider CNS, which has offices in Abu Dhabi, Dubai and Muscat, said: “Data Centres are no longer an option, rather a must for organisations with multiple operating locations and/or organisations providing technology based services. This allows for centralised data and information management, standardisation of technology and applications; thus unifying their customers interaction experience.”

According to the Tariff Consultancy, revenue for Middle Eastern data centre providers is forecast to increase by eight per cent per annum from last year to 2017, an increase from $296 million to $410 million Dilip Rahulan, executive chairman of Pacific Controls, which has built data centres for Etisalat in the UAE, said: “Telcos will build or buy capabilities or risk their future.

With increasing pressure on margins and revenue, the clock is ticking for telcos to adapt themselves to the market – and cloud services are a rapidly rising revenue opportunity.

“Operators must ensure cloud computing is an integral part of their strategies — either as providers, users or both. Their networks must have the capacity and intelligence while their business processes and support systems must be optimised for cloud services. An understanding of the evolving cloud ecosystem, partnerships and business models will be vital, as they enter the emerging cloud market,” he added.

Pacific Controls has partnered with Etisalat to offer cloud based managed services to the regional market hosted out of a facilities campus in techno
park Dubai.

Analysts say the volatile global economic outlook will be an added impetus for cloud adoption as consumers and businesses continue to keep a close watch on expenditures.

An early and rapid adoption of cloud services has in part been driven by businesses willing to embrace new business models and ways of working. Seen as a trusted partner, telecom operators with cloud offerings become a natural choice for enterprises taking advantage of the technology.

With rising demand for cloud-based services, global cloud services revenues are expected to reach $148.8 billion in 2014, according to Pacific Controls.
GCC telecoms providers are keeping a close eye on developments in the market, including du’s latest alliance.

Abdulla Hashim, senior vice president ICT at Etisalat, said in response to the announcement: “This augurs well for the data centre hosting industry in UAE as well as regionally and is indicative of market trends gravitating towards IT infrastructure outsourcing.

“At Etisalat, we have always advocated the business value of hosting and had embarked on an expansionary data centre investment strategy in 1992. We are currently offering nine data centres across the UAE. Data centres remain at the core of our growth objectives and to this end we raised the bar in 2012 by launching a Tier 3 certified data centre in Dubai, thereby doubling our capacity in three years to become the single largest provider in the region.”

The Qtel Data Centre is the largest in Qatar, and one of the more sophisticated and advanced in the region. It provides Qatar businesses in aviation, finance and real estate with a range of services, including enterprise hosting, cloud services and backup disaster recovery sites.

A Qtel spokesperson said: “Qtel welcomes new capacity in the region and competition on data centres, as it sharpens our focus and enhances the customer experience by providing customers with more choice and greater value.

“Our customers trust us because the Qtel Data Centre is designed in compliance with world-class Tier 3 standards, based on data centre think tank the Uptime Institute, ensuring 99.98 per cent availability per month.” The spokesperson said: “In 2011, we completed a major upgrade and expansion which offers 300 percent increased capacity, ensuring that we grow ahead of the booming economy and the needs from the country’s key enterprises.”

Andrew Hanna, chief commercial officer at STC Bahrain ‘VIVA’, added: “We are considering all options including data center for our customers. However, as VIVA Bahrain is a local operator, our plans are not yet extending into the GCC.”

Data storage needs in the GCC will accelerate in the coming years alongside the thirst for faster and more reliable internet from individuals and businesses. It leaves telecoms operators with a clear choice: invest and upgrade your systems for the future or fall behind the pack.