Lessons from the Middle East IP Market

At MENOG 7, I had the pleasure of listening to James Cowie from Renesys explain the state of the Middle Eastern IP market. His presentation laid out a compelling case: deregulated markets outperform controlled ones, often by a staggering margin.

For network operators and policymakers, the takeaway is simple—sometimes the best way to stimulate growth is to just get out of the way.

The data tells a clear story. When networks are allowed to interconnect freely, the internet ecosystem thrives. Here’s why:

• More connectivity means a bigger market
  There’s a strong correlation between the number of networks (active ASNs) in a region and the size of the market (announced IP addresses) (slide 8). More interconnection leads to increased competition, driving down prices while improving the relevance and variety of services available. The result? More organisations go online, and the market expands.
• Resilience improves with diversity
  When a region has multiple independent networks, global carriers have a strong incentive to build redundant routes into the region (slide 25, 36). This means that when a major fibre cut occurs (and in the Middle East, that’s not exactly rare), connectivity isn’t completely wiped out. Instead, traffic can be rerouted dynamically, preventing widespread outages.
• Local content stays local
  In tightly controlled markets, content is often hosted in the US or Western Europe, adding latency and costs for local users. But in deregulated markets, content providers set up shop inside the region, improving performance and creating local jobs. The more networks a region has, the greater the incentive for content to move closer to the users.

For incumbent telcos, there’s a huge opportunity to grow revenues in an expanding market—but only if they embrace interconnection.

• More competition means customers choose providers based on quality. According to the research, when customers have alternatives, they gravitate toward innovative and disruptive providers—the ones that prioritise regional peering (for low-latency local traffic) and strong transit agreements (for high-quality international reach).
• Peering makes capacity cheaper because traffic stays local. If an incumbent refuses to peer in an attempt to protect market share, they may slow down their own users while competitors offer faster, more reliable service.
• Defending a 100% market share is impossible in a competitive market. The goal should shift from trying to control the market to thriving in a booming one. Peering and interconnection provide new revenue opportunities rather than just eroding old ones.

At the moment, the Middle East lacks a dominant IXP. Many networks still haul traffic to London, Amsterdam, or Frankfurt for peering. But that will change as regional provider density increases and local IXPs reach a critical mass. The key question is: which providers will adapt and grow, and which will cling to outdated models until it’s too late?

The lesson from deregulated markets worldwide is clear—embracing competition and interconnection doesn’t weaken the market, it supercharges it. The Middle East is at a turning point, and those who seize the opportunity now will define the region’s digital future.