IP transit channel feature
IP Transit Costs are Dropping Rapidly
IP Transit is what connects you to the Internet. It is a form by which wholesale Internet bandwidth is sold to Internet service providers (ISPs) and content providers. Pricing is typically offered on a per-megabit, per-second, per-month basis and requires the purchaser to commit to a minimum volume of bandwidth. Pricing for the bandwidth can be reduced significantly by purchasing larger volumes or extending the contract term.
According to new data from TeleGeography’s (News - Alert) IP Transit Pricing Service, prices for wholesale IP transit service are not only dropping, but are doing so more rapidly. 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.
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 Sao 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 USD100 per Mbps. As carriers expand into emerging markets and establish new price floors in developed markets, global IP transit prices will continue to fall.”
This means that it costs less to deliver bits across undersea and overland cables. That’s great for big companies that buy a lot of bandwidth, but it’s not something that consumers will necessarily see benefits from. Many parts of the world, because last mile and middle mile access is not as competitive the lowered cost for transit, don’t reflect in savings on the end consumer’s broadband bill. But for investors in companies moving a lot of bits around this is good news.
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.
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Edited by Rich Steeves
IP transit resources
- IP Transit
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