7 – 13 February 2001

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Malta’s Internet backbone link doubles in capacity

By David Lindsay

Malta’s Internet users are expected to see a dramatic increase in their connection speeds as of this week, as a result of Maltacom’s intensive negotiations with Telecom Italia. The talks’ positive result, coupled with revamped and attractive connectivity rates, is expected to provide further incentive for foreign companies to set up their Internet-based operations in Malta.

The negotiations have provided for a doubling in capacity of Malta’s fibre-optic link to the Global Internet Backbone, which runs via a Telecom Italia cable stretching from Malta to Palermo. The link’s capacity has been doubled from 34Mbps to 68Mbps directly to the USA, where the vast majority of Malta’s Internet traffic originates – at no extra charge on Maltacom’s part, which implies that Malta’s consumers will feel no trickle-down effect.
As a result of the upgrade, Malta’s Internet Service Providers (ISPs) will see their Internet connection speeds increased by more than 75 per cent, which effectively means considerably higher speeds for Malta’s Internet users.
The Maltacom – Telecom Italia talks, furthermore, have provided for the signing of a statement of intent for the same link to be upgraded to 155Mbps in the near future – effectively re-doubling its capacity.
Maltacom has also announced that, through a subsidiary company, DataStream Ltd, it plans to offer a special package for foreign companies looking into establishing Internet facilities in Malta. DataStream’s package will offer attractive connectivity rates, with a special emphasis on upstream Internet speed – ensuring that overseas Internet users will receive the fastest possible speed to sites hosted in Malta.
DataStream CEO, Godfrey Vella explains, "Companies setting up an Internet presence in Malta will benefit from reduced rates, thanks to this agreement. For example, a foreign company requiring a 6Mbps connection to the Internet for access by users from outside Malta will notice a reduction of about two-thirds when compared to the existing rates."
Over the course of last year, Maltacom had constantly increased the nation’s Internet connection speed, while simultaneously lowering the price to ISPs, by negotiating rates reduced rates with Telecom Italia.
Over a period of 15 months, the cost of each megabit of connection speed bought has been reduced by more than 80 per cent.
The boosted connection capacity compliements the government’s initiatives to develop the sector, particularly in attracting foreign IT-related companies to base their operations in Malta.
The government’s recently introduced e-commerce legislation is aimed at capitalising on the sector’s potential. According to Finance Minister John Dalli, the Finance Ministry has taken steps to be part of e-commerce, explaining that an initial step was the establishment of a competitive package, coupled with strong regulation and compliance procedures for companies choosing to set up a betting operation in Malta.
Betting via the Internet holds the promise of becoming one of the largest markets in the near future, with a current market turnover of over US$100 billion expected to rise to around US$700 billion by 2002. This type of Internet activity is particularly relevant at the moment, with many European countries instituting betting taxes far higher than Malta does – a fact that is a main factor in many of these companies’ Malta presence.
Stanley Leisure was the first of 13 similar companies to be granted a local licence, with an further 22 in the pipeline – all the more important, as a considerable number of job opportunities is expected to be created by these companies over the next two years. Additionally, just last week, Blue Square, the Internet bookmaker famous for sponsoring sport on BSkyB, has prepared the way for a move to Malta if the UK government fails to reform betting taxes.
The setting up of the e-commerce framework in Malta began around a year ago and a considerable number of applications have been processed.
However, the e-commerce industry is dependent on telecommunications and if the new industry is to expand in Malta, it will have to face the challenge of removing capacity bottlenecks and providing high bandwidth infrastructure.

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt