Firms pay different prices for same VPN services, study finds

Companies that use global virtual and dedicated private networks are battling to get best value for money in the face of widely differing prices for the same services, a study has revealed.

Global VPN prices

Companies that use global virtual and dedicated private networks are battling to get best value for money in the face of widely differing prices for the same services, a study has revealed.

Market analyst TeleGeography found that prices for international network service vary dramatically by service provider, by country, and by class of service. Different rates of change in pricing also make it harder to optimise communications budgets, it said.

TeleGeography's latest Enterprise Networks Research Service found the median price of a 2mbps E-1 IP VPN port in London was $576 per month in Q1 2008, but a comparable connection cost $1,034 in Hong Kong, $2,871 in Beijing and $6,083 in La Paz, Bolivia.

"The wide range of prices quoted by telecommunications companies for similar services within a given city suggests that telcos, too, are having a difficult time finding appropriate prices for their services," it said. In Beijing, prices for 2mbps VPN ports varied from $1,300 per month to nearly $5,000 per month.

The rate of price change also varies widely by market. The median monthly price of a 1.5mbps T-1 port in Atlanta fell 19% from $580 to $470 between Q2 2007 and Q1 2008. In contrast, the median E-1 port price in Dubai, one of the most expensive markets tracked by TeleGeography, fell 4%, from $16,538 to $15,877.

"VPNs lie at the heart of modern corporate networks," said TeleGeography analyst Gregory Bryan. "However, the tremendous range and variability of prices reflect that this market is neither transparent, nor commoditised. Both buyers and sellers of wide area networking services need to keep close track of market prices to ensure that the prices they charge - or pay - are appropriate to the markets in which they operate."

 

Network services

E-carrier systems permanently allocate capacity for a voice call for its entire duration. This ensures high call quality because the transmission arrives with the same short delay (latency) and capacity at all times.

T-carrier, sometimes abbreviated as T-CXR, is the generic designator for any of several digitally multiplexed telecoms carrier systems originally developed by Bell Labs and used in North America, Japan, and Korea.

The two are incompatible.




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