Trans-Pacific wholesale circuit prices have plummeted over the last two years, as new competition arose, research shows.
The median monthly lease price of a 10 Gbps wavelength between Los Angeles and Tokyo fell to $36,000 in Q2, down 63% from Q2 2009, TeleGeographysaid.
Prices for 10 Gbps Los Angeles-Singapore and Hong Kong-Los Angeles links have also fallen by 33% and 39% respectively in the last 12 months alone.
The price slump is due to the construction of three new trans-Pacific subsea cables since 2008 – Asia-America Gateway, Trans-Pacific Express and Unity.
But TeleGeography analyst Greg Bryan expects price erosion to slow down soon. “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,” he said.
Price declines will fall back to be in line with historical trends in coming years, he said, “barring new shocks to the market.”