At Menog 7, I had the pleasure of enjoying an explanation of the Middle East IP market place (link), provided by James Cowie at research organisation Renesys.

It demonstrates clearly that deregulated markets offer enormous advantages over controlled ones, and should serve well as a reminder to operators and policy makers that simply getting out of the way could be the best way to further their aims for industry in any given region.  This is mainly because:

• Allowing networks to interconnect freely (calculated as number of active ASNs in a region), and the size of the market (calculated from the pool of announced ip addresses in a region) are strongly correlated (slide 8).  My guess is that more organisations get online, because competition leads to price falling, whilst the versatility and relevance of services offered increases.
• When there are a larger number of networks in a region, the global carriers have a greater incentive (more customers!) to run diverse connectivity into the region.  This leads to a huge advantage to firms in a region, their connectivity carries on despite local major fibre breaks. (slide 25, 36)
• Content moves out of the US/Western Europe and into the local market place, creating opportunity (and jobs) for local players, and improving the performance of services for local users.

Incumbent networks in this region have a huge opportunity to grow revenues, as the market expands, as long as they are willing to interconnect widely in this region.  As the number of providers in a region expands, customers will be able to (and, according to this research, actually do) pick between innovative and disruptive new providers with excellent regional (via peering), and international (via transit) capacities.  Peering also makes capacity cheap, because traffic can stay local to the ISP.  An incumbent provider that refuses to peer in order to retain market share will not be able to compete in quality terms with the new providers.  Defending a 100% market share is impossible in a competitive market, so the strategy must change, the aim must become enjoying the fruits of a booming market instead of monopoly.  As the Renesys slides say, there is no dominent IXP in this region yet, with many networks dragging traffic to London, Amsterdam or Frankfurt to exchange, but this will change as the density of providers in the Middle East reaches a critical mass.