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  1. #1
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    Business Plan based on 10$/Meg BW?

    Working on a business plan that assumes bandwidth price will be $10/Meg or less in the next 3 years. So far Cogent has come close that at GIGE levels and HE.NET will do 13$. Who else do you think will offer $10 or less on BW at say 5Gig commit levels during the nest 12 months?.

    Jay
    CTO, Objectcube.com

    PS: Please don’t ask me details on what we are going to use 5000 megs, but www.objectcube.com is the company I am with and it should give some hints.

  2. #2
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    It would be safer to assume that bandwidth is a commodity market and that pricing is equally as likely to rise.

  3. #3
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    My bet is that it's going to rise in the next 2 - 3 years. It's clear from the lack of profits for a number of these providers that the business model just doe not work. Some will go out of business and some will be acquired with the new carrier raising the prices. Your model should look at something like $20-$30 per Mbs and you should plan on having a decent commit to get that pricing.

    My 2 cents.
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  4. #4
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    Originally posted by IRCCo Jeff
    It would be safer to assume that bandwidth is a commodity market and that pricing is equally as likely to rise.
    People have been saying this for the past 5 years, but the price keep going down...has their been ever a spike in BW price in the past 10 years ?

  5. #5
    I'd have to agree regarding upping your price for your business plan. Although you may be able to get the lowest price of $10/meg now (from Cogent) its not the best idea to build your business model around this for a number of reasons.
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  6. #6
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    jay23,

    Commodity markets will generally maintain a trend for 10 - 20 years. Expect another 5 - 15 years before any real increase in price begins to take place.

  7. #7
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    I doubt that prices will ever rise significantly, or to the levels of the past. There is way too much fiber in the ground and we're getting better and better technology to utilize that existing fiber. By the time we need to put more fiber in the ground, 1000 Mbps will seem like small potatoes.
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  8. #8
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    Once the need for more fiber arises, we'll be seeing pricing jump up closer to around $100/Mbps again (best guess) for another cycle as companies are needing to finance such construction as a result of a closing supply and demand curve.

  9. #9
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    Originally posted by IRCCo Jeff
    Once the need for more fiber arises, we'll be seeing pricing jump up closer to around $100/Mbps again (best guess) for another cycle as companies are needing to finance such construction as a result of a closing supply and demand curve.
    The question is when ? May be in 25 years ?

    Jay

  10. #10
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    Considering that most major telecom companies that provide broadband are planning to be at 10+ Mbps within 12-24 months, how can you say that bandwidth pricing will go up? If anything as demand increases, supply will increase at a faster rate as suppliers speculate and put more fiber in the ground. I don't see how we ever make it back to $100 per meg in the long run.
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  11. #11
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    You won't. Thats like saying telephone pricing will go up. It won't. There will be dips and shakeouts in the industry but gige speeds are as available as FastE was a few years ago and 10mbit before that. We will be talking about faster speeds as the new gigE in 5 years. Therefore per mb pricing will continue to go down.

    We haven't reached the limits of fibre reach or capacity so it won't be new fibre instals needed as rapidly in North America just upgrading end equipement take advantage of technology upgrades.

    WE are fairly fibre rich in North America and the technology to use the faster speeds is catching up at commodity prices.
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  12. #12
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    There is much more peering going on nowadays, so there will be tier2 giving competition. there will be rise and drops, but it won't go up to where it is before.

  13. #13
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    Bandwidth pricing will definitely rise. A little more consolidation, which has already started somewhat, then Cogent begins their shift from just grabbing customers to turning a profit, which will happen eventually, and you'll see prices go back up.
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  14. #14
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    Originally posted by QuickPacket
    Considering that most major telecom companies that provide broadband are planning to be at 10+ Mbps within 12-24 months, how can you say that bandwidth pricing will go up? If anything as demand increases, supply will increase at a faster rate as suppliers speculate and put more fiber in the ground. I don't see how we ever make it back to $100 per meg in the long run.
    I wouldn't count on that being the case. There is so much additional capacity still that I really do not see much new fiber being added. These companies were already burned in the dot com bust and will not make the same mistake again. I definitely see demand increasing higher than supply, thus increasing price. Increased consolidation will also lead to less fiber being put in the ground as aquisition is generally much cheaper than actually laying new fiber.
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  15. #15
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    Seeing as how everyone else is arguing about how much the price will be in 10 years, I will go back ON TOPIC and answer your question. You may wish to speak to GBLX or AboveNET. They might come awfully close. I know that about 1 year ago I could get AboveNET on a 1-2 gig commit. Their prices have gone down since. You may also wish to talk to Yipes/Williams etc..

    I don't think bandwidth prices will go up, everything is getting into the huge quantity, now that homes in the US are starting to get fiber/ADSL2+ etc.. These companies can stay in business because of the mass amounts of bandwidth required, therefore increasing their company cashflow. We cannot guarantee the stability of the companies at these low prices, whereas companies like MCI/AT&T/Level3 etc.. we know they'll be in business in the future (unless something drastic happens). My suggestion is to lock yourself into long term contracts. Even though the price still has a chance to go down, it's worth it to save yourself the hassle should prices go up. Depends on what kind of risk taker you are though

    Best of luck on your new venture.

  16. #16
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    GBLX nor AboveNet will come anywhere close to $10. AboveNet might come within a few dollars on a ratio agreement with a very, very large commit.

    To expand on what Karl was stating earlier, the fiber we have in the ground right now was not paid for by telecoms, it was paid for by ignorant investors. Now that the bubble has burst, companies are hard pressed to find that kind of capital and this will reflect in bandwidth pricing. No, it will not be 25 years but closer to 5 - 10.

  17. #17
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    GBLX and Above.net is not close to $10 yet, on very large commit, it may get to $15-$18 range, but if one know economics, then one would know prices are inelastic at the lower end.

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