Cost of transit and options in APAC

Mikael Abrahamsson swmike at swm.pp.se
Fri Aug 13 00:20:04 CDT 2010


On Thu, 12 Aug 2010, Benson Schliesser wrote:

> Further, how does the situation compare to past examples like Europe?

Countries in Europe are all in different phases of competition and 
pricing. There is at least 10x difference in transit prices across Europe, 
with central and northern Europe being the cheapest, and southern and 
eastern being the most expensive.

I agree totally with Mr Gilmore that it's all about competition. When 
there are 3+ (preferrably 4+) providers or something and the market is 
de-regulated then you get huge downward pressure on price and you soon hit 
levels of 5-20% operating margin and a mature market.

I still remember back around 2000-2001 when we purchased 30 megs of 
transit from Ebone at around 120 USD per megabit/s, 2-3 years later the 
price was down to ~10-20 USD/megabit/s and then it's slowly decreased over 
time from that, basically as new faster technology came online so things 
could be done cheaper and at grander scale (you need the same amount of 
people to run a 155 megabit/s network as a 5*10G network, so price per bit 
goes down.

APAC needs to go thru this as well, but things are generally still heavily 
regulated and the people are still adopting internet use instead of the 
situation in most of Europe and US where "everybody who wants Internet 
connection has one". It's when mass market deployment and deregulation 
happen together that sensible pricing occurs.

Oh, competition needs to happen at all levels, from fiber in the ground to 
end user access. You can't have any single entity having a (de facto) 
monopoly/duopoly on any part of the chain. You need 4+ here as well (or a 
neutral party who just do one part and does it well, like municipal 
fiber rented at decent prices to anyone who wants to rent).

-- 
Mikael Abrahamsson    email: swmike at swm.pp.se




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