Bandwidth prices start to stabilise

Bandwidth prices are stabilising on several key routes in Europe, the US and across the Atlantic - a trend that could help many...

Bandwidth prices are stabilising on several key routes in Europe, the US and across the Atlantic - a trend that could help many battered service providers stay afloat. However, corporate users may have to kiss goodbye to bargain rates on some popular routes.

After years of rapid decline, bandwidth prices on many major long-haul routes have stabilised and, in some cases, even risen, according to data published this week by market research group Telegeography.

The price plunge has eased on one of the world's busiest international routes, New York to London, while prices on several popular routes within Europe and the US have risen.

The median price for a 155Mbps monthly circuit lease on the Atlanta to New York route, for example, increased 4.6%, according to Telegeography.

Alexandra Rehak, director of European operations at Telegeography's London office, sees two factors underlying recent price changes. "On the one hand, some of the companies that had offered very low prices are out of business, while others have pulled out of certain regions, thus decreasing competition," Rehak said.

"On the other hand, customers aren't focused as much on price as they have been over the past couple of years. Many of them are interested in working with a financially secure partner and are prepared to pay a little more for greater stability," she added.

This is not to say that everyone is opening up their chequebooks. "Some enterprises continue to look for opportunities and, in some cases, are trying to buy capacity at wholesale prices instead of retail prices," Rehak said. "This is happening but it's the exception."

If prices are stabilising in Europe and the US, their erosion continues unabated on many routes within Asia and across the Pacific, where new submarine cables have or will soon come online, according to Rehak.

"We're noticing huge variations in the Asia markets, with some suppliers charging two times as much as others on the very same routes," she said.

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