Carriers’ Ethernet Investments Yield Accelerating Price Declines for Enterprise

0

Enterprises rely on their data networks to link employees around the globe, and increasingly require a consistent end-user experience at all locations. To meet this demand, carriers are channeling investments towards broadening the geographic availability of their Ethernet portfolios.

New data from TeleGeography’s Ethernet Pricing Service reveal that as Ethernet service availability has grown around the world, price declines have accelerated. Between H1 2013 and H1 2014, median monthly lease prices for 100 Mbps point-to-point Ethernet over MPLS (EoMPLS) pseudowires declined an average of 44 percent, compared to 26 percent annually since H1 2011.

EoMPLS_price_declines_normal

As carriers’ on-net EoMPLS coverage increased 17 percent in Latin America and 10 percent in Asia over the past year, price declines picked up speed. Between H1 2013 and H1 2014, the median price of a 100 Mbps EoMPLS pseudowire between Buenos Aires and Miami fell 39 percent, to $5,321, while the median 100 Mbps EoMPLS price between Hong Kong and Tokyo dropped 46 percent, to $4,200 per month. By comparison, over the previous three years, 100 Mbps prices on these routes decreased at a more moderate annualized rate of 28 and 27 percent, respectively.

Prices also fell rapidly in the U.S. and Europe, where carriers’ on-net EoMPLS coverage grew 12 and 10 percent, respectively. The median 100 Mbps EoMPLS price between Los Angeles and New York decreased 49 percent between H1 2013 and H1 2014, to $943—well above the 20 percent annualized decline of the previous three years. Similarly, the median monthly 100 Mbps pseudowire price between Frankfurt and London fell 29 percent in the past year, to $725, compared to an annualized rate of 19 percent over the previous three years.

“Both global and regional carriers are expanding their on-net coverage and adjusting their prices as they seek to position themselves in the market,” said TeleGeography analyst Brianna Boudreau. “Buyers can expect to see further price erosion as service availability continues to grow.”


Telecomdrive Bureau
TelecomDrive is an effort to create a unique content focused platform for the telecoms and communications segment.