TeleGeography: IP transit price, peering revenues to fall 6 percent to $3.2B by 2021

Global IP transit revenues are going to drop 6 percent annually between 2014 and 2021, from $4.9 billion to $3.2 billion, says telecom data company TeleGeography, but declines will vary by region.

TeleGeography said that while developed markets will "remain relatively static" during the seven year period, developing regions will drop "significantly." Disparities will be seen between North America, Europe, Africa and the Middle East.

In North America, IP transit revenues will rise 1 percent compounded annually, while Europe will drop 1 percent each year. The largest declines will come in Africa and the Middle East, which are set to decline 9 percent and 11 percent per year, respectively.

What's driving the diverse drops in these regions are two factors: the rate of price declines and how the share of Internet traffic is exchanged via transit agreements. ISPs in emerging markets, a segment that's seeing the strongest growth of Internet traffic, is moving to develop free peering arrangement faster than those in Europe and North America, where peering has been a common practice. In Africa, TeleGeography forecasts that the share of the country's Internet traffic exchange via transit will drop from 84 percent in 2015 to 62 percent by 2021.

Alternatively, IP transit prices in developed markets such as North America and Europe are far lower, meaning it makes sense for ISPs to buy transit from another provider versus building out new network infrastructure to peers. As a result, U.S. Internet traffic exchanged via transit is forecast to drop from 44 percent in 2015 to 39 percent in 2021.

Despite the declines in developing markets, TeleGeography said ISPs and customers will win by gaining access to lower price services.

"Lower IP transit prices and more peering in developing markets will drive cost savings for ISPs and customers located in these areas," said Erik Kreifeldt , a senior analyst for TeleGeography, in a report. "As carriers continue to expand their networks, ISPs in emerging markets will see increasing opportunities to peer outside of traditional hubs in Europe and North America."

Telegeography IP Transit revenue change by region

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