Long-haul bandwidth prices stabilising on key routes

14 October 2002 -- After years of rapid declines, long-haul bandwidth prices on many major routes have stabilised - and even risen - in recent months, says TeleGeography.

Oct 14th, 2002

14 October 2002 -- After years of rapid declines, long-haul bandwidth prices on many major routes have stabilised - and even risen - in recent months, according to new research published in TeleGeography's Bandwidth Pricing Database.

On the world's busiest international communications route, New York to London, monthly lease prices for 155Mbit/s circuits have increased slightly each month since April 2002. Over the same period, bandwidth prices for most major US domestic routes have experienced only small declines of 2-4%, with price increases in a few cases. The median market price for a 155Mbit/s monthly lease on the Atlanta to New York route, for example, increased 4.6%.

Why are many of these densely supplied and well-established routes experiencing price stabilisation? First, some of the most aggressive carriers are no longer competing across the same range of markets due to restructuring; second, price is no longer the primary consideration of bandwidth buyers. Some of the most established carriers have taken advantage of their clients' renewed interest in stable supplier relationships in order to raise prices.

Not all routes are stabilising, however. Price erosion has continued unabated on many intra-Asian and trans-Pacific routes, where new submarine cables have or will be coming online in the near future.

Table. Price stabilisation on selected 155Mbit/s routes
.........................................2002 price change.....Av. monthly price
........................................Jan-Jun.....Jun-Sept.........Q3/2002
Amsterdam-London....-30.0%.......+3.5%..........USD4,200
New York-London........-14.3%........-8.3%..........USD6,025
New York-Frankfurt..........0.0%.......+6.7%..........USD8,300
New York-Los Angeles...0.0%.....+27.3%........USD17,720

Note: Monthly wholesale bandwidth prices based on 12-month lease excluding install fees.
Source: TeleGeography's Bandwidth Pricing Database Service.

www.telegeography.com

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