While it is true that IP transit service prices are declining, a new TeleGeography report revealed that they differ dramatically depending on the market.
Between the period of Q3 2007 and Q3 2011, the research firm revealed that median GigE port prices in major markets such as New York and Hong Kong declined at a rate of about 17 percent, while prices in London were down by over 20 percent. However, median GigE prices in Hong Kong continue to be 2.5 to 3.5 percent higher than prices in London.
The majority of the lowest priced IP transit services can be found in both North American and European cities. As of Q3 2011, GigE prices were $7 per Mbps per month in New York and $6 per Mbps per month in London. Conversely, median GigE prices in Hong Kong and Sao Paulo, Brazil were $22 per Mbps per month and $39 per Mbps per month, respectively.
Not surprisingly, IP transit prices tend to be the highest in remote locations, or have limited bandwidth supply or have only one dominant service provider. In areas like Sydney and Manila, GigE prices can stretch beyond $60 Mbps a month.
Despite the challenges of serving emerging markets, TeleGeography analyst Erik Kreifeldt said that "Carriers will inevitably expand into more remote regions in search of new customers and favorable market conditions," adding that when "that happens, prices in these areas will fall, causing the vast geographic price differences we see now to lessen."
For more:
- TeleGeography has this article
Related articles:
TeleGeography: Service providers scramble to keep up with colocation space demand
IP networking: Building value through network subscriber and application awareness
TeleGeography: Long haul Ethernet service comes at a steep price
2010 Year in Review: Incumbents work through IP growing pains