IP Transit Price Declines Steepen

Prices for wholesale IP transit service continue to decline throughout the world. According to new data from TeleGeography’s IP Transit Pricing Service, price declines in most locations accelerated between Q2 2011 and Q2 2012, compared with the longer-term trend.

The median monthly lease price for a full GigE port in London dropped 57 percent between Q2 2011 and Q2 2012 to $3.13 per Mbps, compared with a 31 percent decline compounded annually from Q2 2007 to Q2 2012. In New York, the comparable price dropped 50 percent to $3.50 per Mbps over the past year, and 26 percent compounded annually over the five-year period. Pricing for short term promotions and high capacities has dropped below $1.00 per Mbps per month.

Median GigE IP Transit Prices in Major Cities, Q2 2007-Q2 2012

Source: TeleGeography

While prices have declined globally, significant geographic disparities persist. For example, despite falling 22 percent compounded annually between Q2 2007 and Q2 2012, the median price of a GigE port in Hong Kong has remained 2.7 to 5.1 times the price of a GigE port in London over the past five years. The price of a GigE port in São Paulo also fell 22 percent compounded annually between Q2 2007 and Q2 2012, but has remained between 5.2 and 8.2 times the price of a comparable port in New York.

“IP transit prices have reached extremely low levels in developed markets, but remain high in many developing markets and in countries that are remote from major IP transit hubs,” said TeleGeography analyst Erik Kreifeldt. “Nevertheless, few places remain where transit prices exceed $100 per Mbps. As carriers expand into emerging markets and establish new price floors in developed markets, global IP transit prices will continue to fall.”

TeleGeography’s IP Transit Pricing Service is a comprehensive database of wholesale Internet access price quotes by port capacity and committed data rate from nearly 50 carriers in 70 cities around the world.