Asian wholesale IP still costs three times more than US, Europe

10 Oct 2008

Asian wholesale bandwidth tariffs fell by about a third over the past year but are still much more pricier than in North America or Europe.

The latest Telegeography survey reveals that the average monthly price of a 1 Gbps gigabit Ethernet (GigE) port in Asia range from $30 per Mbps in Seoul to $45 in Tokyo.

The Tokyo price was down by 35% compared with a year earlier. Yet prices in London and San Francisco had fallen even further - by 40% and 38% respectively - despite the fact that they were already much lower.

The IP transit prices in major US and European cities ranged from $10 to $14 per Mbps in Q2 2008. Prices typically in major US cities typically had declined 30% to 40%.

What gives‾ Bandwidth prices continue to go down every year in every market because of the declining unit cost and rising competition. It would seem counter-intuitive that the lower Europe and US/Canada tariffs would increase their price disparity, but that's the case.

It simply shows that competition in the developed economies is more intense than in Asia and Latin America (where prices are even higher than Asia). TeleGeography analyst Erik Kreifeldt observes that "wide price disparities will likely persist for years to come."

A lot of fresh capacity is due to go in the water across the Pacific and within the region in the next two years. We will shortly see if the extra bandwidth volume can drive down Asian wholesale prices.

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