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Local access prices not as unpredictable as they seem

3 Oct 2012

Data from TeleGeography’s new Local Access Pricing Service reveal that local access prices do not follow the same patterns as wholesale IP transit or data transport prices. Local access circuits are used to connect a corporate customer’s building to its service provider’s network point of presence (PoP) within a given city. The impact of these relatively short circuits on the total cost of end-to-end service is often disproportionate to their length. For example, the average annual price of a 2Mbps E-1 local loop within central London is USD6,823 — nearly 30% more than that of a 5,500 km E-1 circuit from New York to London.

While major cities in Europe consistently enjoy the world’s lowest IP transit and data transport prices, this does not always hold true for local access. IP transit in India costs roughly 15 times more than in the US and Europe, but the average price of an E-1 local loop in central Mumbai is lower than the price of a comparable circuit in Frankfurt, Washington, and Paris. Conversely, E-1 circuits in Seoul, a city known for its dense access coverage and its competitive consumer broadband prices, cost an average of USD6,535 per year — almost twice as much as in Mumbai. The relative price of local access can also vary by technology. While a T-1 local loop in Washington costs slightly less than an E-1 in Mumbai, Paris, and Frankfurt, the cost of 10Mbps Ethernet local access in Washington is nearly two times higher than in the other three cities.

‘Local access prices are, as their name suggests, determined by highly localised market conditions,’ said TeleGeography analyst Greg Bryan. ‘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.’

TeleGeography’s new Local Access Pricing Service provides local access price benchmarks and trend analysis for Ethernet and leased line circuits in 77 major cities around the world. Data reflect over 82,000 actual transaction prices with an annualised value of USD1.4 billion.

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