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Summary:

Many retail broadband consumers are oblivious to the cost of bandwidth. For the majority of those here in the U.S., the monthly charge for a broadband connection is roughly $50 a month. The cost of wholesale bandwidth, however, is an entirely different story. TeleGeography, which researches […]

Many retail broadband consumers are oblivious to the cost of bandwidth. For the majority of those here in the U.S., the monthly charge for a broadband connection is roughly $50 a month. The cost of wholesale bandwidth, however, is an entirely different story. TeleGeography, which researches telecom trends and data, recently looked at what $15,000 a month would buy in terms of wholesale bandwidth.

The price differences among various locations across the globe were as jagged as the peaks of the Himalayas. (See chart.) For example, the median price of a 2 Mbps E-1 circuit between London and Johannesburg in the fourth quarter of 2008 was nearly $15,000. For that same amount, you could get a 10 Gbps wavelength — 500 5000 times the capacity of an E-1 — between London and New York.

what_15k_buys.gif The variations can largely be attributed to the numerous network build-outs taking place, as well as the number of competitive bandwidth providers. For instance, there are a lot of companies with fiber on the trans-Atlantic route, and as a result, a lot of bandwidth is available there for cheap. On the other hand, bandwidth costs to various African cities are extremely high because there aren’t that many cables in place. That might change with the many new cables currently under construction. Africa and Asia are two regions where a lot of new cables are being constructed, which is going to both help reduce bandwidth prices and spur demand for bandwidth-heavy applications and services.

The availability of cheap bandwidth can have a major impact on businesses and economic activity, as I argued in an earlier post, Can Optical Cables Predict Economic Shifts? In Africa, the growing bandwidth demand comes from a boom in mobile services, which, in turn, benefit when bandwidth prices fall and connections become aplenty. It is a virtuous cycle.

  1. You can’t combine nor compare dedicated circuit pricing to upstream BGP connections with an upstream provider., OM it’s apples and avocados. The routed connections are metered in one way or another, while the dedicated circuits are not.

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    1. Alan,

      Good point though I am not sure if I actually tried to do that. I just was merely pointing out the differences between the prices of the various types of pricing for different types of connections. By the way the apple/avocados is pretty good line to use :-)

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  2. Another metric would be how much bandwidth to the Internet would it buy you from a Tier-I or a fairly large Tier-I like player.
    -Tarun

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  3. It is not clear whether the 10G circuit a.k.a one lambda is lit or dark. Also not clear is whether the circuit is to Customer prem; or available at the Co-Lo’s only.

    To drive a circuit from NYC-LON requires atleast a DWDM gear on both ends costing a cool 200K list, with a maintainence for the gear at about 15% of cost price.

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  4. if the connection Johanesbourg-London is 2MB and New York-London is 10’000MB the diference is 5000 fold and not 500.

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  5. Ok with the Bandwidth but do you have enough gateways to share across without clogging

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  6. Opps i forgot some thing,
    Are we talking about a map which is round or are we taking the map in the above picture,
    If then not sure with the conductivity in water but on land it can travel faster
    Just a thought
    Cheers

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  7. so the question is how long will it take for there to be enough cable worldwide so that bandwidth cost is marginal wherever you are?

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    1. Jason

      I think there is a lot of fiber being put into the ground but there will always be some constraints and the pricing is going to be influenced by those constraints.

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  8. There are power lines running across the world,
    Our data is sent across digitally meaning just pulse signals,
    It does not take so much of wires or fibre optics to do the job,
    All you need to do is isolate a specific pulse rate or frequency in which we can communicate.
    No need to add more cables.!!!

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  9. It’s staggering to see the difference between South Africa’s prices and the rest of the world. Soon though bandwidth prices could come down as SEACOM has just been completed, and there are 2 more cables in the pipeline. Perhaps within 30 years the prices could be a bit more palatable :P

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  10. I would love to get information on how much I would pay on a monthly rate for a oc-192 in the Dominican Republic… Ive been to many sites and no one seems to take us seriously and others are protecting the competition…. anyone who thinks they can give me a good honest quote of a oc-48 to oc-192 from Miami florida to the Dominican Republic or any other way you think might be better pls msg me… send me a quote… I want to do bussiness.

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