Trans-Pacific bandwidth prices slow to drop

Australian and New Zealand prices for wholesale bandwidth over optical wavelengths are refusing to budge, despite big price drops on other routes elsewhere around the world.

Analyst firm Telegeography revealed new data shows that between the last quarter of 2011 and 2012, the monthly lease cost for 10 gigabit per second wavelengths fell 37 percent. 

However, Telegeography research analyst Brianna Boudreau told iTnews that the Los Angeles-Sydney route has not seen the rapid price decline that other core trans-Pacific routes has.

"Given the distance and fewer number of providers operating on the route, the Australian market does maintain a price premium," Boudreau said.

Cost of 10Gbps wavelengths. Source: Telegeography

While Telegeography data shows that prices for 155 megabit per second STM1 and OC-3 circuit dropped 12 percent on routes elsewhere in the world last year alone, falls were less pronounced on the LA-Sydney route.

"Over the past three years, STM-1 prices on the [LA-Sydney] route have declined five percent compounded annually," Boudreau said.

"When looking at wavelengths, IRUs are still predominant in the Australian market, and only saw prices decline three percent between 2011 and 2012".

However, the situation could change with new providers coming onstream, Telegeography believes.

"With the current upgrades going on on this route, providers announcing they are testing 40 and 100 Gbps, and rumours of new cable construction, we do expect to see price declines pick up in the future," she said.