IP Transit Price Decline Accelerates

By Tony Chan


The drop in IP Transit pricing is accelerating, according to new data from TeleGeography. The trend, identified by TeleGeography’s IP Transit Pricing Service, saw pricing of GigE ports in multiple markets plummeting sharply between the second quarter of 2011 and 2012, and at a level far steeper than historical declines.  

 According to TeleGeography, the median monthly lease price for a full GigE port in London dropped 57% between Q2 2011 and Q2 2012 to US$3.13 per Mbps, compared with a 31% decline compounded annually from Q2 2007 to Q2 2012. In New York, the comparable price dropped 50% to US$3.50 per Mbps over the past year, and 26% compounded annually over the five-year period. 


 In these mature markets, the price per Mbps per month has now dropped below the US$1.00 mark in the case of some short-term promotions, or high capacities. The decline has also spread to other markets such as Hong Kong and Sao Paulo. Both cities saw a 22% compounded annual decline in the past five years. 


 “IP transit prices have reached extremely low levels in developed markets, but remain high in many developing markets and in countries that are remote from major IP transit hubs,” said TeleGeography analyst Erik Kreifeldt. “Nevertheless, few places remain where transit prices exceed US$100 per Mbps. As carriers expand into emerging markets and establish new price floors in developed markets, global IP transit prices will continue to fall.”  – 



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