10G wave prices tumble as buyers seek fatter pipes

26 Feb 2013

Wavelengths are replacing lower-capacity SDH/SONET circuits as the primary unit of wholesale bandwidth in an increasing number of markets around the world. As a consequence of this, wavelength prices are falling rapidly, while price declines for lower-capacity circuits are moderating. According to new data from TeleGeography, between Q4 2011 and Q4 2012, median monthly lease prices for 10Gbps wavelengths on key global routes fell 37 percent, while prices of 155Mbps STM-1/OC-3 circuits declined 12 percent.

Despite this general trend, price levels and rates of change vary widely by region. For example, the median monthly lease prices of 10Gbps circuits on Hong Kong-Tokyo and Hong Kong-Los Angeles fell at a compounded annual rate of 32 percent between Q4 2009 and Q4 2012, to $23,250 and $43,800, respectively. Over the same period, STM-1 prices on these routes declined at a more modest one and 21 percent annually, to $6,948 and $6,400 per month.

While intra-European and trans-Atlantic circuit prices are lower, similar patterns prevail. Between Q4 2009 and Q4 2012, median monthly 10Gbps wavelength prices between London and New York fell at a CAGR of 13 percent, to $9,000, while STM-1 prices declined just two percent annually, to $2,816. Frankfurt-London 10Gbps prices fell 26 percent annually, to $3,500 per month, while STM-1 prices fell 10 percent, to $1,540.

‘As carrier demand for bandwidth continues to shift toward higher capacities, 10Gbps wavelengths will remain the common denominator of the global wholesale market," said TeleGeography analyst Brianna Boudreau. “While 10Gbps price declines will outpace those of smaller SDH circuits for some time, 40Gbps and 100Gbps wavelengths are becoming more widely available. As these products mature and provide volume and cost efficiencies for network operators, savings will be passed on to bandwidth buyers in the form of steady price declines.’

TeleGeography’s Wholesale Bandwidth Pricing Database provides more than 230,000 anonymous carrier price quotes for more than 230 key routes for bandwidth products ranging from 2Mbps E-1 circuits to 100Gbps wavelengths.

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