Bandwidth Price Points

According to Telegeography Research (2009B):

• Prices are declining due to growing supply, greater competition, liberalizing markets, and technological advancements
• Prices for higher-capacity products are dropping faster than lower-capacity products
• The more you buy, the less you pay per Mbps
• High capacity means high revenue
• Prices change in large steps
• Prices vary by geography, carrier, customer

Wholesale private lines (IPLC, etc.):

• Compound annual decline 3% - 12% (median private line prices 2005 - 2008)
• Prices vary by geography: different prices correspond to different market conditions (competition, supply/demand balance, etc); Hong-Kong - Tokyo price/km is 5x London-New York
• Price trens vary by capacity: larger capacity, greater decline
• Price per Mbps decreases with increasing capacity
• Prices vary by carrier: different prices correspond to different paths, market segments served, regional strengts, SLAs, local access ownership, etc.; price changes occur in steps up to 50%; CAGR ranges from 0% - 28%
  

IP Transit:

• Compound annual decline 16% - 26% (globally)
• Prices vary by geography : prices correspond to different costs of underlying transport and market conditions (competition, supply/demand balance, etc.); Rio de Janeiro is nearly 8x Los Angeles
• Prices vary by capacity: price per Mbps decreases with increasing capacity (a 10 Gbps port at $5 per Mbps is $600,000 annual revenue; FastE at $15 per Mbps is $18,000); Higher capacities, greater declines
• Prices vary by committed data rate (CDR): price pe Mbps decreases with increasing capacity; 200 Mbps CDR price is 54% higher per Mbps than full port (but 70% less revenue)
• Prices vary by carrier: different prices correspond to different market segments served, regional strengths, SLAs, local access ownership, etc.; price changes occur in steps of up to 50%; compound annual decline ranges 20% - 35%
  

IP VPN:

• Prices vary by geography: retail price trend is more stable than wholesale; CAGR ranges 5% - 23%
• Prices vary by carrier: prices vary due to different market segments served, regional strengths, SLAs, local access ownership, etc.
• Price changes occur in steps of up to 50%, but demonstrate some convergence - CAGR ranges 11% - 36%
• Price bundle includes value-added: port bandwidth remains dominant price component; other elements' proportion varies by region; less tied to commodity pricing dynamics
  

Other Notes:

• Shift to high-capacity products, which are declining in price more rapidly, compounds decline in revenue per bit
• Price declines outpaced by demand growth, implying growing revenue
• Anecdotal price is not necessarily the market price (nor is the median price)
• Other terms, conditions, and relationships can affect actual price paid for capacity