Wholesale Internet Bandwidth Prices Keep Falling
Sure it’s not like back in the early 2000s, when those crooks from Enron were driving the prices of bandwidth down into the ground, but even today prices on Internet bandwidth continue to fall. If you are a consumer, however, there’s a good chance you’re wondering what I’m talking about — after all, broadband service providers like Comcast and Time Warner are talking about putting the meter on the bandwidth they serve up to residential subscribers.
What I’m talking about is wholesale Internet bandwidth that is sold to Internet services providers (ISPs) and content companies like Yahoo and Google. This is called IP Transit and it is sold at a rate of “per megabit per second per month” and often requires a monthly bandwidth commitment. Cogent Communications, Level 3 Communications, Tata Communications, Global Crossing and AT&T are some of the more well-known IP Transit providers.
Today research firm Telegeography came out with a report that shows the price of wholesale Internet access (IP transit), while varied around the globe, are still in decline. Here are some facts.
- GigE port prices in major U.S. cities fell 30-40 percent between Q2 2007 and Q2 2008. Median monthly IP transit prices for 1,000 Mbps Gigabit Ethernet (GigE) ports in major U.S. and European cities ranged from $10-$14 per Mbps in Q2 2008.
- GigE port prices in Latin American cities declined a more modest 15-20 percent for the same period. Median GigE port prices range from $73 per month in Buenos Aires to $86 per month in Santiago.
- Prices for GigE ports in major Asian cities in Q2 2008 ranged from $30 per Mbps month in Seoul to $45 per Mbps per month in Tokyo, higher than the U.S. or Europe. The price declines were around 30 percent.
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Thanks, this is really interesting.
What does metering have to do with the price per throughput?
Time Warner and Comcast are increasing their advertised (and even delivered) speeds while introducing metering, after all.
Decreased prices for backbone speeds doesn’t much affect last mile capacity, anyway.
Om, at the end it is following the exponential growth of performance/costs that Ray Kurzweil predicts for most technologies: doubling the capacity/$ every year. It is the equivalent of the Moore’s law applied to communications. Read more
http://disruptionmatters.com/2008/09/23/telecom-at-the-speed-of-moores-law/
hopefully this will trickle down to consumers at some point! Or am I just a lousy shopper?!
@John Thacker That is exactly what I was saying. You just said it better. I think when you read my headline, you would simply wonder why my bills are going up. ;-)
Is there a discount when you’re using many gigaE ports?
I can imagine companies like and google and youtube to use a few hundred of these ports in their datacentres.
and now from the US carriers, 10GigE’s are now down in the low-single digits to $4/mbps.
Hopefully, as prices go down, things will move away from prepaid mobile to prepaid mobile broadband.
I’d love to pay to not have a contract, but still be able to use my laptop in the airport or in a remote place where a cell signal is possible.
The funny thing is that as part of the overall costs of running a network the cost of IP-Transit are only very limited. Most of the money is in Capex. Given a good peering and transit mix and some careful oversubscription the cost of Transit per customer would be somewhere in the dollar per month range for most ISP’s. (Back of envelope, no hard calculation) Certainly for the likes of AT&T they are on the receiving end of most transit deals and do not pay for transit to others as they are a Tier 1 provider.
Actually come to think of it… dropping income from transit deals might drive the likes of AT&T to put the squeeze on customers to get more money on that end of the two-sided market.
Also have a look at this peering and transit explanation (yes, by me)
http://arstechnica.com/guides/other/peering-and-transit.ars
@John Thacker
But metering isn’t really about last mile capacity, that’s just the carriers’ Big Lie. Metering is a tool to keep profits high (keep consumer Internet access constant while carrier’s price falls) and make it harder for TV over Broadband to compete with TV over cable/satellite. That carriers are so determined to ration access to the Internet is surely one of the factors driving falling Internet access prices.