U.S. Wholesale IP Pricing Among World's Cheapest

The price of wholesale Internet access is dropping rapidly in the U.S. and what is surprising is that it is plunging even faster than wholesale Internet access prices in countries where the technology is priced way higher, according to a report released Tuesday.

TeleGeography Research noted in its assessment that median monthly IP transit prices for 1,000 Mbps Gigabit Ethernet (GigE) in major U.S. cities were from $10 to $14 per Mbps in the second quarter. The telecommunications market research firm said GigE port pries fell 30 to 40% in U.S. cities from the second quarter of 2007 to the second quarter of 2008.

TeleGeography found that prices in major Latin American cities -- expensive to begin with -- are only declining at a rate of 15 to 20%. Prices in Santiago, for instance, averaged about $86 a month.

"Disparities suggest that there is plenty of room for IP transit prices in Asia and Latin America to decline," said TeleGeography analyst Erik Kreifeldt in a statement. "However, because prices in both the U.S. and Europe are declining at least as fast as prices in higher cost regions, wide price disparities will likely persist for years to come."

Prices in Asia also remain significantly higher than U.S and Europe prices. A month of 1,000 Mbps GigE service in Seoul was about $30 while it was about $45 in Tokyo.

TeleGeography said declining equipment and transport costs as well as competition were driving down wholesale Internet prices.

Even as Internet access prices plunge and traffic explodes globally, TeleGeography has found that capacity is more than keeping up with demand with the result that the market research firm sees no Internet traffic jams on the immediate horizon.