04 September 2012
Brought to you in collaboration with TeleGeography's Global Bandwidth Research Service.
Prices for wholesale IP transit services continued to decline
globally over the last few years.
TeleGeography has identified that GigE ports declined at a
compounded annual rate of 34% in London, 28% in New York, 26%
in Hong Kong and 20% in São Paulo between Q2 2009 and Q2
Although prices have declined globally, significant geographic
differences remain. TeleGeography notes that the median GigE
price in Hong Kong has remained 2.7 to 5.1 times the price of a
GigE port in London over the past three years.
Similarly, the price of a GigE port in São Paulo has
remained between 5.2 and 8.2 times the price of a comparable
port in New York.
Bandwidth pricing continued to
decline in 2012. TeleGeography indicates that new subsea cable
construction and upgrades to existing systems have resulted in
price reductions worldwide.
Between Q1 2011 and Q1 2012, links to Asia and Latin America
experienced the greatest declines. In particular, 10Gbps median
monthly lease prices on the Los Angeles-Tokyo and
Miami-São Paulo routes fell 37% and 31%
Despite the reduction, 10Gbps prices on intra-Asia routes
remain five times the price of comparable connections within
the US and up to nine times the price of comparable connections
on intra-European routes.
Growth in global demand for international bandwidth declined
for a third straight year in 2011. Although the pace of growth
has slowed, TeleGeography indicates that demand still increased
at a robust rate of 45%.
Carriers reached an impressive 67Tbps of capacity on their
international internet, private and voice networks in 2011,
six times the 11.1Tbps in service in 2007.
Overall, TeleGeography identifies a "sustained appetite for
bandwidth", which it believes will continue to drive the
development of terrestrial and submarine links worldwide.
Demand for international bandwidth
grew 45% in 2011, experiencing an annual compound growth rate
of 57% between 2007 and 2011.
TeleGeography describes this as a "brisk" pace of growth, which
despite slowing since 2008 has still ensured that aggregate
capacity requirements are more than doubling every two
The pace in international bandwidth growth has varied
regionally, with emerging markets recording the most rapid
growth. Between 2007 and 2011, for example, international
bandwidth usage in the Middle East grew 98% compounded
annually, increasing from 148Gbps to 2.3Tbps.
During the same period, Africa’s international
bandwidth usage increased 85% compounded annually, and now
stands at 677Gbps. Similarly Latin America’s
international bandwidth usage grew 71% compounded annually,
TeleGeography indicates that broadband subscriber growth is the
major driver of bandwidth demand in the Middle East and Africa,
where the number of subscribers grew from 9.4 million to 19.4
million between 2007 and 2011.
International bandwidth requirements in Asia and Europe,
meanwhile, grew moderately at around 60% compounded
annually between 2007 and 2011. International bandwidth
demand was marginally lower in North America and Oceania, which
each grew by 47% compounded annually.
TeleGeography indicates that there has been a decline in the
growth of broadband subscribers in Europe and North America.
Instead, international bandwidth growth in these regions is
being fuelled by an increase in average broadband access
speeds, enabling more frequent use of high-bandwidth
applications such as video.
"Although international bandwidth usage growth is slower
in mature markets, their capacity requirements are far larger
than those of emerging markets," says TeleGeography analyst,
Jon Hjembo. "North America’s international
bandwidth usage is nearly 10 times greater than that of the
entire Middle East."
Cable operators can light capacity incrementally as demand
dictates, up to the system’s total potential
According to TeleGeography, lit capacity increased on all major
subsea cable routes between 2007 and 2011. Potential capacity
on major subsea routes is also growing, meaning a large amount
remains untapped. This has been driven by advances in optical
technologies, which allow subsea cables to be upgraded well
beyond the original estimates.
Transatlantic subsea cables have experienced an increase in
potential capacity with the introduction of 40Gbps
As a result, the percentage of potential transatlantic capacity
that is lit decreased from 25% to 19% between 2009 and
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