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Increasing VPLS service availability yields price declines

19 Nov 2012

The number of carriers offering Ethernet Virtual Private LAN Service (VPLS) services is growing rapidly, driving down prices around the world. According to data from TeleGeography’s Ethernet Pricing Service, international VPLS prices declined in all world regions between H2 2011 and H2 2012. However, regional differences in service maturity and availability have resulted in significant price disparities.

European carriers were among the first to deploy Ethernet services, and VPLS is more widely available in Europe than in any other region. Because of this relatively high level of competition, VPLS prices in western Europe are among the lowest in the world. The median price of a best efforts FastE VPLS port in London was USD2,918 per month in H2 2012, while the price of a comparable port in Frankfurt was USD1,752 per month—down 39 percent from a year earlier.

By contrast, prices remain high in emerging markets where VPLS is less mature and competition is more limited. For example, median monthly FastE prices in Sao Paulo were USD10,973 in H2 2012—twice the price of a comparable port in New York or Los Angeles. Different levels of service availability and competition contribute to this price difference. VPLS availability, a measure of reported points of service for cities surveyed, was 28 percent in New York in 2012, compared to only 6 percent in Sao Paulo. Prices remain particularly high in many Asian cities. For example, the median price of a FastE VPLS port in Mumbai was USD22,111 per month in H2 2012—down 13 percent from a year earlier, but is still nearly eight times the price of a comparable port in London. Unsurprisingly, a far larger number of carriers offer Ethernet VPLS service in London than in Mumbai.

“Carriers are expanding their Ethernet footprints to meet growing customer demand,” said TeleGeography analyst Brianna Boudreau. “VPLS service availability increased 9 percent worldwide between 2011 and 2012. As new players enter the market and the service continues to mature, prices will continue to decline, and regional disparities will narrow.”

TeleGeography’s Ethernet Pricing Service benchmarks international Ethernet service pricing from 58 providers on 78 key international routes by service type (VPLS, EoMPLS, EoSDH, EoDWDM) and capacity.

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