Leased line prices in decline

Michael Carroll
25 May 2012

Global line leasing costs are falling due to the launch of new submarine cables, however the rate of decline varies greatly between regions, TeleGeography claims.

The research firm notes the arrival of new subsea links is having a positive impact on wholesale prices in traditionally high-cost markets including Africa, Middle East, South Asia and Latin America. However, price variations between the regions still exist, due to local regulation, competition and even geography, TeleGeography analyst Erik Kreifeldt states.

“Despite the fact that modern submarine cable systems all employ similar technologies, and that major industry participants are generally present across multiple markets, market dynamics vary widely by region,” he says.

TeleGeography estimates the median lease price for a 10-Gbps wavelength connecting Los Angeles with Tokyo fell 35% year-on-year in 1Q12, while the cost between Hong Kong and Singapore fell 10% over the same period. Prices in India also fell, with a London to Mumbai link down 22% year-on-year. However, the research firm notes the cost of around $175,000 per month means India is still a relatively expensive market.

While the firm notes there have been no new cables laid between the US and South America for over a decade, it states capacity upgrades on current connections is spurring price falls. Median monthly prices between Miami and São Paulo fell 29% year-on-year in 1Q12, and TeleGeography predicts further declines over the next two years as new cable projects come online.

The firm bases its figures on 200,000 anonymous carrier price quotes for bandwidth ranging from 2-Mbps E-1 circuits to 40-Gbps wavelengths on 180 of the world’s most important routes.

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