- Home
- Article
New cable systems continue to drive bandwidth prices down
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 annually.
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 markets.”
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 countries.
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.
Related Articles
Microsoft lays out $1bn to build first data centre in Malaysia
16h | Antony Savvas
Chilean internet connectivity increased 62% by the end of 2020
18h | Natalie Bannerman
Deutsche Telekom in green cloud project with energy-zero target
18h | Alan Burkitt-Gray
Linxdatacenter acquired by Russia's wealth fund to build national infrastructure
19h | Antony Savvas