Bankrupt carriers avoiding price wars, according to TeleGeography research
9 April 2003 Washington, DC Lightwave -- After three years of uninterrupted bad news, there are finally signs that the battered long-haul bandwidth industry is reaching bottom.
9 April 2003 Washington, DC Lightwave -- After three years of uninterrupted bad news, there are finally signs that the battered long-haul bandwidth industry is reaching bottom. New network construction is at a standstill, much needed consolidation is beginning to reduce the number of competitors, and long-haul bandwidth prices in the U.S. and Europe are finally stabilizing, after falling by as much as 70% in previous years, according to a new report by research firm TeleGeography.
The report also lays to rest a persistent fear that has plagued the industry. "There's no evidence to support the rumor that bankrupt telecom companies are waging a price war," states Stephan Beckert, research director at TeleGeography. "Based on the thousands of data points we've collected for our Bandwidth Pricing Database Service, we've found that the most aggressive pricing on competitive routes comes from established carriers, or those in financial difficulty but not bankrupt."
The telecommunications sector still has a long way to go before it returns to health, however. Only 5% of potential inter-city bandwidth is active in North America, and only a fraction of this bandwidth is actually being used. And while the sector has shifted from expansion to consolidation, many inter-city routes in Europe and the U.S. are still served by more than 20 bandwidth providers.