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New Cables and Falling Prices to Disrupt Intra-Asian Submarine Cable Market

29 Feb 2012

According to new data from TeleGeography’s Global Bandwidth Forecast Service, demand for bandwidth on intra-Asian submarine cables is projected to grow 39% annually between 2011 and 2018. To meet this demand, intra-Asian routes will require an additional 99Tbps of lit capacity. In addition to existing systems, which have a large amount of untapped potential capacity, three consortium cables—the Asia Submarine-cable Express (ASE), the Southeast Asia Japan Cable (SJC), and the Asia Pacific Gateway (APG) system—are all expected to enter service by 2014.

As the market absorbs the introduction of the new cable systems, TeleGeography expects prices to fall rapidly, especially between 2012 and 2014. Median monthly lease prices for 10Gbps wavelengths between Hong Kong and Tokyo, for example, are projected to decline by 27% compounded annually, from USD42,500 per month in 2011 to USD16,400 per month by 2014.

‘As demand grows, bandwidth buyers continue to obtain greater volume discounts,’ said TeleGeography analyst Erik Kreifeldt. ‘Volume discounts compound the effect of unit price declines, and amplify their effect on service provider revenues.’

Demand growth will not completely offset this price erosion, leading to a dip in annual revenue through 2014. While revenue growth is expected to resume in 2015, the compound annual growth rate from 2011 could remain negative through 2018.

TeleGeography’s Global Bandwidth Forecast Service provides detailed forecasts of bandwidth demand, supply, prices, and revenues, updated quarterly.

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