UAE fibre network build out to boost local economy

Abu Dhabi is preparing itself to be the first capital city in the world with 100% fibre connectivity by the end of 2009, as part of a US$1.4 billion build out across the UAE to be completed by 2011. The incumbent, Etisalat, plans to raise the coverage of fibre from 60% to 90% in two years, connecting one million homes and businesses - twice as many as today - through its e-Life service.

The technical plan is to trump DSL bandwidth and offer up to 100Mbps for new services such as IPTV, video on demand, online gaming, and creating smart homes and cities. But, Khalifa Al Shamsi, senior VP of Marketing at Etisalat, placed the emphasis on the knock-on economic benefits for the country as he revealed the plan during the recent FTTx MEGNA show. He pointed out that FTTH deployments often enhance service exports and attract foreign direct investments, so this deployment appears to be for the benefit of the UAE economy as well as its entertainment hungry citizens.
Chinese vendor Huawei was chosen for the deployment last year, and will build out a GPON network to homes throughout the country. While other countries across the globe have historically balked at the price of fully optical last mile access, the UAE appears to be looking past the cost to the financial benefits it will bring over the long term. Businesses, for example, will be able to plug directly into high-bandwidth fibre to extend their Ethernet networks globally without the need to revert to a leased line. Certainly, the simplicity this presents to businesses will give them another reason to relocate to the UAE business community, and planning an office in Abu Dhabi looks even more attractive from that aspect.
Meantime, it's unclear if Etisalat needs further finance for the project from a bond issue announced in June. Certainly, it has an aggressive expansion program outside of the UAE, including the recent announcement it will acquire one of Sri Lanka's mobile operators, Tigo. Etisalat currently has operations in 18 countries, but made 98% of its profit in the first half of 2009 from its UAE business, suggesting that fibre optical build outs at home are not its only goal for the next two years.

Nicolas Jacquey
Simon Marshall