06 June 2018
| James Pearce
Bandwidth prices have continued to plummet, with lease prices on selected routes declining an average of 26% between 2016 and 2017, according to figures from TeleGeography.
Research from the analyst firm found the 10Gbps wavelength
prices between Miami and Sao Paulo had seen the steepest price
erosion at 41% compounded annually. Brazil has seen significant
investment in subsea cable systems over recent years, with the
likes of Seabras-1 and Monet.
This route, TeleGeography said, was priced three times
routes crossing the Atlantic in 2017, compared with 7.9 times
the price in 2013.
Routes between New York and London are among the most
contested in the world – in 2014, the price was
already well under $10,000 for a 10Gbps wavelength, though this
has fallen to below $5,000 per month, down 19% compounded
Other routes highlighted by TeleGeography senior analyst
Brianna Boudreau, who specialises in pricing analysis for
international private line, IP Transit, and Enterprise
products, were between Hong Kong-Singapore and LA-Tokyo.
The route between Los Angeles and Tokyo has fallen 29%
compounded annually between 2013 and 2017, driven by strong
investment in trans-Pacific subsea cable systems.
Boudreau’s research found the average carrier
multiple of 100Gbps over 10Gbps service among key routes was
down from 6.4 in 2015 to 5.4 in Q4 2017. This means that
carriers are moving from 10 Gbps towards 100 Gbps as the basis
of their wholesale purchases
"Capacity multiples for 100 Gbps skew low when sellers
compete aggressively for 100 Gbps business but not for 10
Gbps," she wrote. "That is, a low 100 Gbps to 10 Gbps multiple
can arise both from a relatively low 100 Gbps price or a high
10 Gbps price. As price multiples fall, the share of 100 Gbps
circuit sales continues to increase and the service now
comprises a substantial portion of sales in a number of
The news reflects the increasing investment in subsea cable
systems over the last few years, driven by an increasing demand
for content and the need for lower latency connections in
emerging markets such as Latin America, Africa and some Asian
Following several years of relatively sparse submarine cable
development, 2016 ushered in a period of significant global
investment in the sector.
Cables with a combined construction cost of $4.9 billion
entered service during 2016 and 2017. Operators have set aside
an additional $8.7 billion of capex for new cables between 2018
and 2020. The transpacific route leads the way with $1.8
billion of new cable investment expected in 2018 to 2020.