IP VPN prices falling, particularly at low capacities

1 Nov 2012

New data from TeleGeography’s Enterprise Network Pricing Service reveal that MPLS IP VPN port prices are tumbling around the world. Median prices for 10Mbps ports in 96 major cities in Europe, Asia, and North and South America fell 17 percent between Q3 2011 and Q3 2012, while 155Mbps port prices declined 11 percent. The average rates of decline for both capacities were fairly consistent across all four regions, ranging from 10 to 20 percent.

VPN port prices and their rate of change, however, continue to vary widely by city. Between Q3 2011 and Q3 2012, the median 10Mbps port price in London fell 38 percent, to $703 per month, while 10Mbps prices in Tokyo fell a more modest 12 percent to $1,626 per month. In Mexico City, the median price of a 155Mbps port declined just 5 percent, similar to rates of decline seen in New York and London, but at $17,300 per month, it remains nearly four times more expensive than a comparable port in either city.

In many major business centers, prices of 10Mbps and other low capacity ports have fallen faster than prices of higher capacity ports — in some cases, far faster. In London, 10Mbps VPN port prices declined 38 percent, while 155Mbps prices fell just 7 percent between Q3 2011 and Q3 2012. Similarly, 10Mbps prices in both Mexico City and Singapore declined over 20 percent more than 155Mbps prices.

“A key reason for the brisk price declines at lower capacities lies in customer demand,” said TeleGeography analyst Rob Schult. “A recent survey of service providers by TeleGeography revealed that nearly 90 percent of VPN ports sold are 10Mbps or below, and that more than half are 2Mbps or below. Therefore, rapid declines of low capacity port prices reflect competition more than they do costs.”

TeleGeography’s Enterprise Network Pricing Service provides detailed data and analysis of prices for international IP VPN, retail private line, and Dedicated Internet Access (DIA) services.

To speak with an analyst, please call +1-202-741-0042 or email press@telegeography.com.

http://www.telegeography.com/research-services/enterprise-network-pricing-service/index.html