Bandwidth rates to dip by 25% in Asia

BANGALORE: Gartner Inc. has released its report on International Bandwidth Pricing Trends Asia-Pacific, which states, International leased line prices from India are five times more expensive owing to factors like less competition, as compared to hub routes like Singapore-Hong Kong or Singapore-Tokyo.

It also stated that international bandwidth prices in the Asia-Pacific region will continue to decline by 20 to 25 percent annually in the next 3 years. This is because of the large number of players aggressively competing for enterprise business and the excess capacity across Asia.

For the fast growing Indian market, new submarine cables like TICS (Tata Indicom Chennai Singapore), FLAG Falcon (Reliance) and SMW-4 will add capacity on both the western routes towards Europe and eastern routes towards Singapore. This will result in a 40 to 50 percent annual price decline for international connectivity from India.

Commenting on the report, Puneeth Punja, Principal Analyst- Gartner said, “Significant price variations continue to exist between open markets and controlled markets. On the high-traffic competitive routes that connect relatively open markets like Singapore, Hong Kong and Japan the monthly recurring charge for a 1 Mbps international leased line is $700 to $900. The prices from the hubs to developing markets like Indonesia, Malaysia, Thailand, and India are more than 5 times higher.”

According to Gartner, the most competitive markets for international bandwidth are Hong Kong, Singapore, Japan, Taiwan and South Korea, whereas the least competitive markets are Indonesia, Malaysia and India.

Local access costs constitute more than 50 percent of total end-to-end cost for international connectivity. Even with increasing de-regulation there will be limited competition in access and prices for the link between the end-user premises and the international bandwidth provider’s point-of-presence will not decline much.

Local access costs are the lowest in Taiwan, India, Hong Kong and Singapore, while they are the highest in Thailand, Philippines, Japan and Indonesia.