Wholesale IP transit service prices fall more than 50% in some cities

Service and content providers can now rest a bit easier when they budget for IP transit services: A new TeleGeography study indicates that global wholesale IP transit service prices continue to fall.

The research firm said that the price declines accelerated between Q2 2011 and Q2 2012 in a number of key global markets, including London and New York.

In London, the monthly price of a full GigE port dropped 57 percent to $3.13 per Mbps from Q2 last year to Q2 2012 and 31 percent annually since Q2 2007. Likewise, in New York, the comparable price declined 50 percent to $3.50 per Mbps over last year and 26 percent compounded annually over the past five years.

Of course, not all regions are created equal. TeleGeography notes that while the price of a GigE port in Hong Kong, for example, fell 22 percent between the second quarter of 2007 and Q2 2012, median prices for this service is still 2.7 to 5.1 times higher than that of London. Similarly, the price of a GigE port in Sao Paulo, Brazil declined 22 percent during the same five year period, but is still between 5.2 and 8.2 times higher for the service offered in the New York market.

"IP transit prices have reached extremely low levels in developed markets, but remain high in many developing markets and in countries that are remote from major IP transit hubs,' said TeleGeography analyst Erik Kreifeldt. "Nevertheless, few places remain where transit prices exceed $100 per Mbps."

Kreifeldt added that what will drive down the prices of IP transit in emerging markets where there were only a few incumbent players will be competition from other global players. "As carriers expand into emerging markets and establish new price floors in developed markets, global IP transit prices will continue to fall."

Telegeography GigE IP Transit prices

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