Making sense of local access pricing

John C. Tanner
20 Nov 2012

The state of the telecom wholesale bandwidth sector in recent years has been reasonably consistent. Indeed, the last few reports on IP transit pricing from research firm TeleGeography have painted a fairly predictable picture of the sector, in which IP transit prices continue to decline, and that certain regions have higher prices than others, often determined by local backhaul costs.

For example, according to the latest IP transit study from the research firm, the price of a GigE port in Hong Kong has remained 2.7 to 5.1 times the price of a GigE port in London over the past five years, despite prices going down in both markets.

But what about local access connections that link a corporate customer's building to its service provider's network PoP within a given city? Do they follow the same trend as the IP transit routes feeding into those markets?

Not even close, as it turns out. A new research report from TeleGeography released in October, which for the first time analyzes local access price trends worldwide, found that local access prices do not follow the same patterns as wholesale IP transit or data transport prices.

For example, says TeleGeography analyst Greg Bryan, while major cities in Europe enjoy the lowest IP transit and data transport prices in the world, the same is not true for local access.

"If you look at IP transit in India, it costs roughly 15 times more than in the US and Europe, but the average price of an E1 local loop in central Mumbai is lower than the price of a comparable circuit in Frankfurt, Washington and Paris," he says.

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