New undersea cables to cut circuit prices in APAC

NEW YORK, USA: For many years, submarine cable operators have charged far more for circuits connecting to Asia than Europe, but this gap is narrowing, says market research firm TeleGeography in its latest reasearch on Wholesale Bandwidth Pricing Database.

The report notes that capacity costs is five times more on key trans-Pacific and intra-Asian routes than across the Atlantic. Carrier prices for a 10Gbps wavelength lease ranged from $9,000 to $20,000 per month between New York and London; the same product cost between $65,000 and $80,000 per month between Tokyo and Los Angeles

Also Read: Undersea cables: The information arteries

The report further adds that a recent wave of network construction and upgrades in Asia and Pacific has brought renewed pricing pressure to those markets. 10Gbps wavelength prices between Los Angeles and Tokyo have fallen at a compounded annual rate of 21 percent over the past two years, and prices from Singapore to Tokyo have plummeted by nearly 50 percent in the past year.

Conversely, prices for 10Gbps wavelengths between New York and London have fallen at a compounded annual rate of only three percent – unusually stable, by the standards of the bandwidth market.

TeleGeography research director Rob Schult noted that conditions in Asia are ripe for further price erosion. Google and five carriers have just completed construction of the trans-Pacific 'Unity' cable, and additional cables are planned for East Asia.

'We don’t expect that circuit prices in Asia will ever reach the exceptionally low levels seen in the Atlantic, but it’s certain that new cable construction in Asia and the Pacific will pull down prices,' said Schult.