Trans-Pacific Circuit Prices Plunge

August 02, 2011

Data from TeleGeography’s Wholesale Bandwidth Pricing Database reveal that trans-Pacific circuit prices have plummeted over the past two years. Between Q2 2009 and Q2 2011, the median monthly lease price for a 10 Gbps wavelength from Los Angeles to Tokyo fell 63 percent, from $98,500 to $36,000. Prices are tumbling on other trans-Pacific routes, too: Over the past 12 months, median 10 Gbps wavelength prices from Los Angeles to Singapore fell 33 percent, while Hong Kong-Los Angeles 10 Gbps prices declined 39 percent.

Median Trans-Pacific 10 Gbps Wavelength Prices, Q2 2010-Q2 2011

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A key driver of falling trans-Pacific circuit costs has been the construction of three new undersea cables since 2007: The Asia-America Gateway (2008), Trans-Pacific Express (2009), and Unity (2010) cable systems. The construction of these cables introduced both new capacity and a host of new competitors.

While price declines accelerated over the past two years, trans-Pacific bandwidth demand is growing rapidly, and carriers’ need for diverse and redundant capacity ensures that bandwidth purchases will be distributed across multiple systems. Barring new shocks to the market, the rate of price declines will likely abate in the coming years, and be more in line with historical trends.

TeleGeography’s Wholesale Bandwidth Pricing Database provides more than 100,000 anonymous carrier price quotes on more than 180 critical routes for bandwidth products ranging from 2 Mbps E-1 circuits to 10 Gbps wavelengths.