Prices for wholesale IP transit service are declining around the world, but vast geographic price disparities persist. According to data from TeleGeography’s IP Transit Pricing Service, between Q3 2007 and Q3 2011, median GigE port prices in New York and Hong Kong declined at a compounded rate of approximately 17 percent, while prices in London fell by more than 20 percent. Despite these decreases, median GigE prices in Hong Kong have remained 2.5 to 3.5 times higher than those in London.
The lowest IP transit prices, by far, are found in major North American and European cities. In Q3 2011, median GigE prices were $7 per Mbps per month in New York and $6 per Mbps per month in London. By contrast, median GigE prices in Hong Kong and Sao Paulo were $22 per Mbps per month and $39 per Mbps per month, respectively.
IP transit service can be expensive outside of primary markets, especially in places that are remote, have limited bandwidth supply, or little competition. For example, GigE prices in Sydney and Manila can exceed $60 per Mbps per month—ten times the median price in London. Prices in locations away from major Internet exchanges reflect both the cost of transport to a primary exchange and the competitiveness of the local market.
“Carriers will inevitably expand into more remote regions in search of new customers and favorable market conditions,” said TeleGeography analyst Erik Kreifeldt. “When that happens, prices in these areas will fall, causing the vast geographic price differences we see now to lessen.”
TeleGeography’s IP Transit Pricing Service is a comprehensive database of wholesale Internet access price quotes by port capacity and committed data rate from 30 carriers in 82 cities around the world.
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