Backbone access prices fall by 50%

10 Sep 2004

New research from TeleGeography, a division of PriMetrica, has revealed that the price of backbone access for large corporations and ISPs has fallen sharply over the last twelve months. According to new data published in TeleGeography’s Global Internet Geography online information service, the average price for STM-1 (155Mbps) connectivity to the global internet has dropped 49% in European cities and 55% in US cities in the last year. The report adds that prices in Asia have fallen at a comparable rate, but that they remain twice as high as those in Europe and the US.

While prices have fallen dramatically, which is good news for end users, service providers have also witnessed impressive rises in usage, and in many cases this has offset the revenue lost from price reductions. TeleGeography says that in Hong Kong, for example, although monthly charges fell by almost 50% from USD204 per Mbps to USD105 between June 2003 and June 2004, traffic has grown by around 350% over the same period, creating a healthy market for backbone service providers. Some regions have seen slower traffic growth, however, and the sector has therefore been much flatter.

The biggest price cuts evident in the 25 cities covered by the TeleGeography survey came in Oslo, where average prices fell from USD137 in the second quarter of 2003 to USD56 in the same period this year. The lowest prices are found in US cities such as Los Angeles, Seattle and Dallas, where average IP transit prices per Mbps in 2Q2004 were around USD51.

More information on TeleGeography’s Global Internet Geography online service and printed reports can be found at www.telegeography.com

TeleGeography’s Global Internet Geography