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IP transit price declines slow globally

24 Sep 2014

After years of relentless decline, the pace of IP transit price erosion in major cities around the world has slowed. According to new data from TeleGeography’s IP Transit Pricing Service, the median price of a 10Gbps Ethernet (10 GigE) port in Hong Kong, London, New York and Sao Paulo fell less than 15% annually in each of the past two years. While high by the standards of many industries, these are the lowest rates of decline in the past five years, and far below the 50% plunge experienced in many markets in 2012.

While declines have slowed globally, current market prices and the rate at which they are falling vary widely by geography. Between Q2 2013 and Q2 2014, median 10 GigE port prices in New York and London decreased by just 4% and 9%, respectively, compared to 28% and 33% annually between 2009 and 2013. IP transit prices in New York and London are among the cheapest in the world, with median prices of USD1.64 and USD1.36 per Mbps per month, and the lowest prices at less than half this.

In the past year, median 10 GigE IP transit prices declined 10% in Sao Paulo and 14% in Hong Kong, well below the 16% and 34% compound annual rates of decline experienced in the previous four years. While prices in these two cities decreased more rapidly than in New York and London, they remain at a premium. At USD18 per Mbps per month, the median 10 GigE price in Sao Paulo is eleven times higher than in New York and 13 times above London. At USD6 per Mbps per month, prices in Hong Kong are more than three times those in New York and four times those in London.

‘While the pace of IP transit price erosion varies from place to place and fluctuates from year to year, the recent slowdown in price declines represents an unusually broad trend,’ said TeleGeography analyst Erik Kreifeldt. ‘Many of the carriers surveyed by TeleGeography are making only modest price adjustments, and this pattern holds true in both mature and emerging markets around the world.’

TeleGeography’s IP Transit Pricing Service is a comprehensive database of wholesale Internet access price quotes by port capacity and committed data rate from more than 60 carriers in over 100 cities around the world.

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