TeleGeography: Local access prices are determined by market conditions

Pricing for local access circuits, which are used to connect a business customer's site to its service provider's network in the city it operates in, aren't based on an exact science, but rather are determined by local market conditions, a new TeleGeography study indicates.

Local access prices in select cities.

In London, the average price of a 2 Mbps E-1 connection is $6,823, for example. This is almost 30 percent more than what a 5,500 km E-1 circuit from New York to London would cost.

Even though the prices for IP transit and data transport prices are typically low, local access is a completely different story.

A business that wants to purchase an IP transit circuit in India should expect to pay 15 times more than what it would pay in either the United States or Europe. However, the average E-1 local loop circuit price in Mumbai, India is significantly less expensive than what is available in Frankfurt, Washington and Paris.

In addition to geography, local access prices can also vary by the technology used. A T-1 local access circuit in Washington may be less expensive than an E-1 in Mumbai, Paris or Frankfurt, but the cost of a 10 Mbps Ethernet local access circuit in the U.S. capital would be almost two times higher than in the other three cities.

"Local access prices are, as their name suggests, determined by highly localized market conditions," said TeleGeography analyst Greg Bryan in a statement. "While they can vary widely across regions and even within a single city, they are far from random. In fact, a close analysis of local access transactions reveals clear tendencies by market in terms of typical price ranges, service offerings, and competitive intensity."

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