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  1. #1
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    When will we reach 1$/Meg prices

    We are already seeing 2$/meg (I have seen advertised prices of 22.5K for a 10G so 2$/meg is out their). Also we got Ciena, Juniper and Alcatel rolling out their 100g gear.

    Will we see 10K for 10G pricing by end of the year ?

  2. #2
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    When people are trying to reach commits, they will sell for just about anything.
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  3. #3
    For transit? I doubt it, seeing as how having 100gbps routers and switches won't make the fiber currently buried in the ground go faster on it's own accord .
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  4. #4
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    No but better ciena gear can
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  5. #5
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    HE is $2 per Mbit now, $1.50 per Mbit with IPv6 certification and a 2 Gbit commit, so I hear.

    Not sure how much lower you'll get than that for awhile, but $2 per Mbit is dang low.
    I see your bandwidth and raise you a gigabit
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  6. #6
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    Quote Originally Posted by iansltx View Post
    HE is $2 per Mbit now, $1.50 per Mbit with IPv6 certification and a 2 Gbit commit, so I hear.

    Not sure how much lower you'll get than that for awhile, but $2 per Mbit is dang low.
    In DEC of last year I asked the same question but at 2$/meg and 90% of the people said it will be in 2010 but now middle of 2009 we are seeing this.

    Jay

  7. #7
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    At some point though, it has to stop going down. I highly doubt we will ever see it less than $1. There is just too much that goes into providing IP services (peering, ports, equipment, labor and other costs). IMHO, it will take a "named" tier 2 provider to fail in order for a market correction to begin.

  8. #8
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    Quote Originally Posted by moosh28 View Post
    At some point though, it has to stop going down. I highly doubt we will ever see it less than $1. There is just too much that goes into providing IP services (peering, ports, equipment, labor and other costs). IMHO, it will take a "named" tier 2 provider to fail in order for a market correction to begin.
    When I first bought IP, I paid around 5K for a T1 line, that was in the mid 80's and every year when the topic comes up of how low the prices will go, we keep saying their is limit...but every time i have seen it broken.

  9. #9
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    I suppose we could see $1 per Mbit some time next year, in select locations, on one or two carriers, for an unmetered/capped connection (not burstable), on a 10GE commit. FDCServers is already around $1 per Mbit on inbound, but that's just due to network surpluses.
    I see your bandwidth and raise you a gigabit
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  10. #10
    Quote Originally Posted by jay23 View Post
    When I first bought IP, I paid around 5K for a T1 line, that was in the mid 80's and every year when the topic comes up of how low the prices will go, we keep saying their is limit...but every time i have seen it broken.
    I agree but just wonder... what's below $1/mbps?

    Where do the providers make profit? it's mind boggling.

  11. #11
    Quote Originally Posted by lostmind View Post
    I agree but just wonder... what's below $1/mbps?

    Where do the providers make profit? it's mind boggling.
    What's below?

    Getting paid to send traffic. Yes it happens.
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  12. #12
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    In 2007, Verizon successfully field tested a 100 Gbps link on fiber that was originally conditioned for 10 Gbps, demonstrating that increasing a long-haul fiber route's capacity ten-fold could be accomplished merely by replacing the optics at each end.

    Consider that we have carriers selling at $10/mbit (and lower) today. Excluding the one-time CapEx required for new optics, going from 10 Gig to 100 Gig on the same fiber cuts their cost, per megabit, by 90%.

    They'll make up the revenue shortfall per megabit, by selling more megabits. So yes, $1/mbps is conceivable-- although you can bet the carriers will milk the status quo as long as they can.

  13. #13
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    I hope soon. Heck I'm hoping that providers will find a way to offer the same cheapness to lower commits like 10mbps for $20 would be ideal. I'm sure a lot of us want that cheap
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  14. #14
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    @stroh THat's what home connections and per-GB pricing are for :p
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  15. #15
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    Quote Originally Posted by Stroh View Post
    I hope soon. Heck I'm hoping that providers will find a way to offer the same cheapness to lower commits like 10mbps for $20 would be ideal. I'm sure a lot of us want that cheap
    I'd like that, too, but there wouldn't be much incentive for carriers to do that unless they used Cogent's business model of cheap per-meg pricing but large setup fees.

    I've been toying with bringing in a 10 meg Cogent circuit to use for OOB monitoring and control. The circuit is a measly $80/month, but the setup is $1,000 which is more than the entire year's recurring fees. I can get a DSL line for $40/month and $88 setup, which is easier to swallow. The tradeoff is substantially lower upstream bandwidth, although it's adequate for management tasks.

    Cogent's up-front provisioning labor is the same regardless of my bandwidth commit and I understand why they charge it. (hint: "because they can") But it's a lot easier to stomach a $1000 setup on a $5000 MRC circiut than it is on an $80 MRC.

  16. #16
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    Actually some carriers already offer prices for around (little higher, little lower) the 1$ per megabit. Usually for flatfee lines ith full CDR, but sometimes also for burstable connections.

    You need to be able to give solid and decent commitments. Just look for example at the offers segments, and you will see several Dutch based providers that can offer dedicated bandwidth for around 1 euro ($1,42 at todays exchange rate) per megabit.

    1 Euro is not 1 Dollar, but routing equiptment and servers do cost real money and profit must be made as well Our bandwidth cost per mbit (before counting in our routers, switches, etc) are, for example, under 1$ per megabit at the moment.
    Last edited by swiftnoc; 07-21-2009 at 09:55 AM.
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  17. #17
    We're more looking at transit pricing in the US, where there is no DE-CIX and AMS-IX running at under 0,50EUR per mbps .
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  18. #18
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    This is due to DE-CIX and AMS-IX , In US carriers don't like to peer as it cuts into their transit sales

    Jay

    Quote Originally Posted by swiftnoc View Post
    Actually some carriers already offer prices for around (little higher, little lower) the 1$ per megabit. Usually for flatfee lines ith full CDR, but sometimes also for burstable connections.

    You need to be able to give solid and decent commitments. Just look for example at the offers segments, and you will see several Dutch based providers that can offer dedicated bandwidth for around 1 euro ($1,42 at todays exchange rate) per megabit.

    1 Euro is not 1 Dollar, but routing equiptment and servers do cost real money and profit must be made as well Our bandwidth cost per mbit (before counting in our routers, switches, etc) are, for example, under 1$ per megabit at the moment.

  19. #19
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    They don't like to peer unless their name is Hurricane Electric :p
    I see your bandwidth and raise you a gigabit
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  20. #20
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    This is something I don't understand. Why in USA the providers don't use internet exchanges and preffer transit?

    In europe peering keeps the costs down. If I remember correctly 10gbps in AMS-IX is 3000 euro / month.

  21. #21
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    Actually a 10 gbps port at AMS-IX is 2000 euro / month.
    However you must setup peerings, house equipment (~ 1000 euro/mo)

    So the actual peering costs would indeed be ~ 3000 euro / mo. Setting up peerings is the hard part, large providers only peer with you once you can send them a considerable amount of traffic.
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  22. #22
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    And what is the problem if you send them not much traffic? Even if it's 50-100mbps, it doesn't benefit both providers?

  23. #23
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    Most larger providers will not peer with you, until you send them ~ 2 gbps and can peer with them on at least 3 or 4 different peering exchanges.
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  24. #24
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    In the US there's a whole lot more cable that needs to be laid from point A to point B. Hence higher pricing and the lower willingness to peer (unless you can peer at multiole locations with lots of traffic in different time zones). Also, on peering there must be a plus side for both providers...Level4 isn't going to peer with you unless they'd have to pay otherwise for traffic to you (which won't happen) or doing peering would get traffic off their network quicker and reduce their costs. Comcast for example would be more willing to peer since peering would mean they don"t have to pay a transit provider to get from their cable customers to your site. Of course, now they peer with enough providers and their network is attractive enough that you're probably going to end up buying transit from them instead. It's all about flow of value.

    HE is an extreme case of the above. They have to transit a ton of their traffic from point A to point B so every bit of peering helps them to keep costs down. Also, peering only means you have access to their customers, and since those customers pay HE for transit it's added value for HE to get access to your network directly for free, rather than having to go through Telia or such first.

    So effectively in the US you,re not using anyone's transcontinental cables unless they'd be paying more to get to you than you'd be paying them for transit. Since the cables are longer, transit is more expensive (higher cost fo entry, less nationwide carriers, etc.) and the balance is shifted versus the more compact, IX-rich Europe.

    At least that's how I'm seeing it.

  25. #25
    Peering is not only an economic consideration; it is a quality control consideration. The more direct relationships you have the more control you have over routing and the ability to work directly with your peer to solve problems.

  26. #26
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    It will get to $1 one day soon. I am old enough to remember when long distance telephone calls were deregulated and people used to pay something like $0.75/minute. Now it is like a nickle.

    That day will come, albeit Savvis, Level3, et. al. will go kicking and screaming. We'll send them to the AT&T graveyard.
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  27. #27
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    Quote Originally Posted by PSFServers View Post
    It will get to $1 one day soon. I am old enough to remember when long distance telephone calls were deregulated and people used to pay something like $0.75/minute. Now it is like a nickle.

    That day will come, albeit Savvis, Level3, et. al. will go kicking and screaming. We'll send them to the AT&T graveyard.
    Level3 will go kicking and screaming?
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  28. #28
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    I also accept that there will be a bottom, it might even be so that several carriers will go bankrupt or merge, whereafter the prices will rise. It would not suprise me at all.
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  29. #29
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    Quote Originally Posted by blahrus View Post
    Level3 will go kicking and screaming?
    I'm guessing he means the arrogant establishment will fight to the bitter end. The nimble players (such as Cogent) whose business models are built around deep discounts, will probably be the first to hit $1/mbit without requiring large commits.

    Companies like Level3 won't deal directly with you even in their own gateway facilities unless you commit to a large number of cabinets and/or bandwidth. So from that perspective, I don't think they will offer small to medium accounts anywhere near $1/mbit unless their hand is forced via competition from the discounters.

  30. #30
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    Quote Originally Posted by swiftnoc View Post
    I also accept that there will be a bottom, it might even be so that several carriers will go bankrupt or merge, whereafter the prices will rise. It would not suprise me at all.
    That wouldn't surprise me either, but I suspect there will always be a price-buster in the market, who will put on enough pressure to keep prices in check.

    Love 'em or hate 'em, we have to give Cogent a lot of credit for what their Walmart-style pricing has done to the bandwidth marketplace.

    Add in the fact bandwidth is getting cheaper to provide (10 Gig pipes can become 100 Gig pipes just by swapping out endpoint optics), and it's going to be harder for carriers to maintain the status quo on pricing.
    Last edited by Sekweta; 07-22-2009 at 01:30 PM.

  31. #31
    Look @ HE for sub 2 dollar bandwidth I was quoted 1.50a megabit on a Gige

  32. #32
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    Quote Originally Posted by Testtube302 View Post
    Look @ HE for sub 2 dollar bandwidth I was quoted 1.50a megabit on a Gige
    Yes, I have heard this through grapevine.

  33. #33
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    For LD, depends on where you are, sorta like bandwidth. Sub-cent per minute for VoIP, six and a half cents per minute in-state when you're calling from a co-op. Sorta like bandwidth, except bandwidth price differences are an order of magnitude higher.

    Also, it appears as though Cogent isn't leading price-wise these days for zero-mile bandwidth. HE's doing that (I thought $1.50 per Mbit required a 2 Gbit commit...I can only say wow about what appears to be $1500 for a Gbit line right now). Plus another provider or two (I've seen Mzima for cheaper than Cogent, and I'd take Mzima over Cogent if both were offered in a particular area).

    What's funny is the flip side of all this bandwidth: there are many areas in the US where you're lucky to get b\w for $100 per Mbit. Granted, we're talking 250 miles from a data center for some of that stuff, but I'm halfway between two Tier 2 markets I suppose (San Antonio and Austin) and 100 Mbits is $65 per Mbit on a five-year commit. Gotta love the last mile. If I wanted to pay $1500 for an internet connection, I'd probably end up with about 15 Mbits of connectivity if I went through Time Warner Cable on a five-year. If I wanted Tier 1 bandwidth, I might get half that.
    I see your bandwidth and raise you a gigabit
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  34. #34
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    Only time will tell.

    Things are getting cheaper and better, everyday.

  35. #35
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    Quote Originally Posted by HL-Adam View Post
    Things are getting cheaper and better, everyday.
    Not exactly, when the limit is reached, it can only source for alternatives. (e.g. Petrol)
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  36. #36
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    It makes me go green with envy reading these prices you guys are talking about. In Asia, it's kinda ridiculous. Especially in Singapore where distance is not exactly an issue.

  37. #37
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    Quote Originally Posted by iansltx View Post
    Gotta love the last mile.
    Yes, that's the part that confuses many: bandwdith price now seems mostly dependent on:

    - how many carriers offer bandwidth at a location
    - which carriers
    - how much they spent to light the location

  38. #38
    Is this $1.5/Meg from HE a capped line though? If so the real cost is higher than $1.5/Meg as you won't be able to use the full 1000Mbps without service quality degradation.
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  39. #39
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    I'm sure it is. Then again, it's not so bad for $1.50 per Mbit, right? Of course, this is coming from the perspective of a person who spends way too much time using residential broadband, where there's no such thing as 95th.
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  40. #40
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    I have seen transport at $1 a meg for on a 10gb commit but never for transit unless you have a very large commit level..
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