Traditionally, the 2 most predictable traits within the bandwidth market have been constant demand development and worth erosion. However these traits have been challenged over the previous few years.
Latest provide chain points and geopolitical challenges have dramatically slowed worth erosion globally. For the primary time, we’re asking ourselves, are costs really rising?
I took a deep dive into world pricing traits earlier this 12 months at PTC ’23. So let’s take a more in-depth look.
In my presentation, I famous that the tempo of worth erosion varies by market.
Within the determine above, we map out 100 Gbps wavelength CAGR worth decline over the previous three years. As you possibly can see, it ranges from about 24% on routes like Miami-São Paulo, to only 6% on London-Singapore.
General, we have seen that on routes with extra ample provide, like Miami-São Paulo, worth erosion charges have been highest. Compared, routes which have extra restricted provide, such because the Europe-Asia route, have exhibited slower worth erosion.
However the largest story is how these charges of worth erosion examine to historic traits. They’re dramatically slower.
On this determine, you possibly can see our 2019-2022 CAGR worth decline for 100 Gbps wavelengths (darkish blue) mapped in opposition to the longer-term historic development (turquoise).
Between 2017 and 2019, 100 Gbps wavelength costs decreased a median of 23% compounded yearly throughout these key world routes. That is in comparison with 13% over the previous three years, which is basically inclusive of our COVID time interval and after we began to see a few of these provide chain points emerge.
There are a couple of components concerned right here.
If you would like to study extra, you possibly can obtain my full slide deck.
Along with what we have already coated right here, these slides present why worth erosion is slowing, the influence of transport on transit pricing, worth traits in hubs vs. secondary markets, the potential influence of recent provide based mostly on present cable techniques, and extra.
