By Tema Hassan, Senior Product Manager at Zayo Europe
IP Transit remains a cornerstone of global connectivity on the public Internet, especially in increasingly interconnected markets like Europe and the Middle East. Both regions have experienced rapid changes in digital infrastructure, driven by surging online activity, new technologies, and growing Internet reliance. Over the next two years, IP Transit demand is poised to experience varied growth rates in Europe and the Middle East, shaped by regional developments, policy initiatives, and technological advancements.
The Growth Drivers for IP Transit Demand
Geopolitical Influences: Digital independence movements are accelerating demand for regional transit services. For example, Europe’s push for digital sovereignty is driving local providers to develop capacity rather than rely on global players. Meanwhile, the Middle East is embracing diversification efforts through projects like Saudi Vision 2030 and the growing influence of Gulf tech startups.
Increased Internet Penetration: Both Europe and the Middle East are seeing increased broadband coverage expanding into underdeveloped rural areas, driving moderate yet steady increases in IP Transit needs. The Middle East, specifically, has rising Internet penetration in countries with burgeoning populations, such as Saudi Arabia, Egypt, and Iraq, fueling explosive growth in IP demand.
Emerging Markets and Rural Broadband Access: Governments and private entities are collaborating to bridge the digital divide in underserved areas. Europe’s Digital Decade strategy aims to improve gigabit connectivity by 2030, which will encourage stable growth in IP Transit demand in its Eastern and Southern regions. In the Middle East, nations like Qatar and the UAE are rapidly upgrading their Internet infrastructure.
Data Centres and Cloud Computing: The expansion of data centre infrastructure across both regions has created major demand for high-bandwidth IP Transit services. Hyperscale data centres in Europe (especially Germany, the Netherlands, and Scandinavia), and cloud services expansions into Middle Eastern hubs like Saudi Arabia and the UAE are among the biggest contributors to rising demand.
Regional Demand Trends
- Europe: Moderate Growth, Green Initiatives, and Edge Computing
IP Transit demand is expected to grow steadily over the next two years, supported by factors such as:- Increasing deployment of edge computing to reduce latency for high-bandwidth applications.
- Expansion of renewable-powered data centres, particularly in Northern Europe, as part of green ICT initiatives.
- A rising focus on cybersecurity and compliance with data sovereignty regulations (e.g., GDPR) bolstering demand for regionalised traffic routing.
- Declining dependency on transatlantic bandwidth as intra-European traffic grows.
- Western Europe, being a mature market, will witness slower demand growth compared to Eastern and Southern Europe, where IP Transit deployments are aligning with governmental digital transformation goals. For instance, Turkey and Greece are rapidly becoming IP Transit hubs for the region due to their strategic connectivity to Europe, the Middle East, and Africa.
- Middle East: Rapid Expansion and New Cable Deployments
The Middle East is projected to experience higher IP Transit growth due to:- Massive investment in submarine cable projects connecting Asia, Africa, and Europe via the region. Examples include Google’s Blue and Raman cables and hyperscale expansions from Microsoft and Amazon.
- Nationwide digital transformation initiatives, such as those under Saudi Vision 2030 and the UAE’s National AI Strategy, accelerating cloud adoption and IP Transit demands.
- Growth in gaming, OTT platforms, and video streaming. Many Gulf Cooperation Council (GCC) countries are seeing rising content creation, driving an increase in video traffic.
- Significant connectivity developments, including CDNs and PoPs.
- These investments, combined with the population’s digital growth and e-commerce expansion, make the Middle East one of the fastest-growing IP Transit regions globally.
Challenges and Barriers
- Regulatory Challenges:
Policy restrictions and regulatory bottlenecks continue to present obstacles, especially in cross-border connectivity projects. In Europe, compliance with GDPR and international trade disputes may restrict optimal IP Transit configurations. In the Middle East, some regions still grapple with restrictive Internet policies and centralised state control, which can slow demand growth. - Capacity and Infrastructure Constraints:
While Europe generally boasts sufficient capacity, parts of the Middle East depend heavily on international cables, making them vulnerable to interruptions. Regional IP Transit providers need to address these issues to meet the anticipated spike in demand.
The Future Outlook for IP Transit
Across both Europe and Middle East, IP Transit demand over the next two years will grow alongside emerging technologies, although the pace of change will differ by market segment:
- Consumer Segment: Growth in household broadband, 5G deployments, and online streaming will drive steady consumer-level demand in Europe. In the Middle East, mobile-first connectivity models and younger populations will accelerate user activity, requiring robust IP transit backbones.
- Enterprise and Wholesale Segments: Demand for wholesale IP Transit among telecom operators, ISPs, and content providers is expected to increase, particularly in cloud services and fintech hubs like Dubai, Stockholm, and Frankfurt.
- New Technologies: Advances in satellite broadband services and 5G private networks for enterprises will create opportunities but also add competition for terrestrial IP Transit providers.
Conclusion
The anticipated changes in IP Transit demand will be influenced by a mix of technological, economic, and regional factors. While Europe will see consistent growth, particularly in developing economies and sustainability-driven infrastructure, the Middle East digital transformation initiatives, rapid investments in international connectivity, and burgeoning digital economy will position it as a potential hotspot for IP Transit growth. Stakeholders need to navigate regulatory, capacity, and geopolitical challenges to fully harness the opportunities presented by the increasing demand for Internet bandwidth.
About Zayo Europe IP Transit
Zayo provides scalable IP Transit bandwidth options underpinned by efficient, low latency routing and sensible security, with competitive pricing structures. As a Tier 1 Operator, our IP network has over 400 global PoPs, more than 40Tb of peering capacity, continuing to increase capacity adding a terabyte every quarter.