Wholesale Revenue Growth Remains Elusive

May 28, 2008

[Press Release] New data from TeleGeography's Global Bandwidth Research Service reveal that the average price of wholesale circuits in most major markets dipped 10 to 20 percent in 2007. This decrease would represent a steep decline in most industries, but it's a far cry from the price collapse carriers experienced in the early 2000s.

As price declines have moderated, international bandwidth demand has remained strong, growing at a compounded annual rate of 52 percent over the past five years.

Miami-New York High-Capacity Circuit Prices, 2005-2007

Still, revenue growth remains elusive for many wholesale network operators. A key reason lies in bandwidth buyers’ changing purchase patterns. Instead of simply buying more circuits to handle their growing traffic volumes, wholesale buyers are purchasing larger, higher-capacity circuits. Companies that may have purchased a few 155 Mbps STM-1/OC-3 circuits five years ago are now opting for 2.5 Gbps or 10 Gbps wavelengths. These large circuits are far cheaper in terms of the price per Mbps of capacity than the smaller circuits.

“The effective price per Mbps of capacity sold is falling a lot faster than nominal circuit prices, themselves,” observed TeleGeography Research Director Robert Schult. “Carriers need to sell ever larger volumes just to maintain stable revenues.”

TeleGeography’s Global Bandwidth Research Service provides the most detailed analysis of the long-haul network and submarine cable industry available—including supply, demand, costs, and pricing analysis as well as profiles of 119 submarine cables and 176 network operators.

For more information please contact us at: +1 (202) 741-0042 or press@telegeography.com.