IP transit service prices continue to decline throughout the world. According to new data from TeleGeography’s IP Transit Pricing Service, median 10Gbps Ethernet (10 GigE) port prices across key global transit markets decreased an average of 14% compounded annually between 2012 and 2015, and 22% in the past year. Despite widespread declines, significant price disparities persist between primary Internet traffic hubs and more remote markets.
The median 10 GigE port price in London, which serves as a critical international traffic hub for Europe, Africa, and parts of Asia, fell 16% compounded annually over the past four years to reach USD1.00 per Mbps per month in Q2 2015 and is among the lowest in the world. Similarly, median prices in both Los Angeles and Miami, which serve as traffic hubs for Asia and Latin America respectively, fell 14% per year to USD1.20 per Mbps per month.
Prices have fallen much slower and transit is more expensive in regions that remain largely dependent on long-haul links to Europe or the US to gain access to international connectivity. Here, service providers incur the cost of transport and price local transit accordingly, yielding much higher prices than in hub markets.
For example, in Sao Paulo, where most internet traffic is ultimately exchanged remotely in Miami, the median 10 GigE port price fell only 5% compounded annually between 2012 and 2015 to USD16 per Mbps per month. Service in Sydney, for which a significant amount of internet traffic is exchanged in Los Angeles, also remains costly, at USD18 per Mbps per month for a 10 GigE port in Q2 2015.
‘While IP transit prices have reached extremely low levels in principal markets, they scale considerably higher outside of these core hubs,’ said TeleGeography analyst Erik Kreifeldt. ‘Transport costs remain a primary factor in this price disparity. As carriers expand IP networks and distributors push content closer to end-users, ISPs in remote markets will become less exposed to those costs.’