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TeleGeography Research Says Bankrupt Carriers Pricing Less Aggressively Than ExpectedA recent study by TeleGeography, a research division of PriMetrica, Inc., reveals that median IP transit prices in U.S. and Western European cities slid 10 to 20 percent between the first two quarters of 2003. The report, which also covers international IP traffic volumes and bandwidth, attributes the continued decline of transit prices to cutthroat competition and slower than expected growth in demand. However, bankruptcy is one variable TeleGeography research rejects as a deciding factor in the price declines. "There is little evidence that carriers re-entering the market after bankruptcy are using reduced debt levels to price services more aggressively than their competitors," says Senior Research Analyst Rob Schult. "The cheapest rates tend to originate from suppliers with low network utilization. Their attempts to gain market share and to get customer traffic onto the network frequently result in prices that are at or below marginal cost." The report also shows that although price differences between providers in cities are beginning to narrow, there is no indication that downward price pressure will cease. "Demand for IP Transit continues to grow at a healthy rate, however IP transit price stability will remain elusive until further consolidation takes place," Schult explains.
Rob Schult |
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