Competition drives IP transit prices below $1 per Mbps, study says

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The ongoing demand for higher capacities to drive even faster network speeds, combined with technological enhancements to deliver greater throughput per bit, is pushing the price of IP transit below $1 per Mbps, according to new data developed by TeleGeography.

The price drop, which the research firm did not see as necessarily bad, is being fueled by a highly competitive marketplace where high bandwidth is requisite and price wars are popping up as carriers offer to deliver more speed for less cost.

(Source: Telegeography)

"As buyers' bandwidth requirements grow and they transition to higher capacity ports, the unit price they pay for transit decreases," a TeleGeography press release stated. "While median GigE and 10 GigE port prices have decreased at a compound annual rate of 28 and 30 percent respectively, over the last five years, buyers making the transition between the two have obtained a steeper price decline."

Falling prices really should be a concern anyone, including vendors, because it all eventually comes out in the wash, said analyst Erik Kreifeldt in the press release.

"The rapid decline in price per Mbps may appear alarming, but the total price of a large port still runs thousands of dollars per month," he pointed out. "At $1 per Mbps, the price of a full 10 GigE port is $10,000 per month. furthermore, robust demand growth helps neutralize the effects of price erosion on IP transit revenues."

For more:
- TeleGeography issued this press release

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