Global IP wholesale rates falling 20% a year in EU, N. America

European and North American cities continue to enjoy the world’s lowest wholesale internet rates, with prices falling around 20% a year in the last three years.
 
A new study by TeleGeography has also found that east Europe IP transit prices declined to become close to parity with prices in west Europe.
 
The report reveals that during Q2 2009, the median price of a fully committed GigE port (1,000 Mbps) in major European and North American cities was approximately €6.8 per Mbps, per month. Over the last three years that price has dropped approximately 20% per year.
 
By contrast, prices in Asia and Latin America remain relatively high, even in advanced markets. In Tokyo, the median price of a fully committed GigE port in Q2 2009 was €21 per Mbps per month compared to, €35 in São Paulo, and €54 in Mumbai.
 
“High prices are not necessarily a reflection of an uncompetitive market. Higher prices may also simply reflect higher cost structures,” said TeleGeography analyst Erik Kreifeldt.
 
A significant reason for the high Asian costs is that a far greater share of Asian traffic must traverse higher cost submarine cables, while most European and North American IP traffic can be routed via terrestrial fiber networks at a lower cost.
 
“Declining submarine cable prices will help reduce the cost of wholesale Internet access in Asia, Latin America and Africa,” he said. But added that there was little reason to expect that they would reach the levels seen in Europe and North America.

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