TeleGeography Research Suggests Bandwidth Revenues Stabilizing

The telecom boom—and the subsequent bust—has littered the landscape with renamed sports arenas, empty office parks, and a seemingly limitless amount of fiber-optic network capacity. While falling prices and overcapacity continue to plague the industry, new research by TeleGeography suggests that demand growth has begun to outpace price erosion on many city-to-city routes.

According to TeleGeography's recently released International Bandwidth, prices on most long-haul routes in the U.S. and Europe fell by 10 percent to 30 percent in 2003, while new deployments of Internet capacity--the key indicator of bandwidth demand—-increased almost 60 percent. For example, while average prices for a 155-Mbps circuit from London to Paris fell 89 percent between 1999 and 2004, London's cross-border bandwidth demand grew by almost 1,700 percent during the same time period.

"Revenues aren't necessarily skyrocketing," said TeleGeography analyst Stephan Beckert. "However, these new data do suggest that bandwidth demand is strong enough to offset recent price declines."

To learn more about global bandwidth supply, demand, and pricing, see International Bandwidth, available now from PriMetrica's TeleGeography Research Group.

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STATISTICAL APPENDIX

Bandwidth Demand Growth versus Price Declines, 1999-2003
 
London Circuit Usage (STM-1 Equivalents)
 London-Paris 155 Mbps Circuit Annual Lease Price Circuits x Price (US$ m)
1999
217.6
$436,764
$95
2000
825.6
$260,172
$215
2001
1,824.0
$76,608
$140
2002
2,355.2
$64,320
$151
2003
3,968.0
$49,356
$196
From: International Bandwidth 2004
Notes: Table is intended to present a hypothetical case only, and includes the simplifying assumption that all capacity is acquired each year as annual STM-1 leases.
Source: TeleGeography Research Group, PriMetrica, Inc.

 

 

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