Internet traffic growth outpacing price declines

Stuart Corner
Monday, 18 September 2006 18:38

IT Industry - Strategy

Wholesale Internet service providers have seen traffic growth in the past five years that are unheard of in other industries, but price reductions have wiped out any revenue gains. Now, says Telegeography, traffic growth is outstripping price reductions.

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According to the latest research in TeleGeography's Global Internet Geography 2007, international IP traffic growth actually accelerated over the past 12 months, but the pace of price erosion abated noticeably in many of the world's most competitive markets.

"At the moment, nearly all markets have growth rates that more than compensate for the steady decline in wholesale prices, providing opportunities for carriers to increase return on investment," says  Eric Schoonover, senior research analyst with TeleGeography. "This is particularly true in high growth markets, including Latin America and Asia. For example; in Buenos Aires, the average price for STM-1 access to Internet networks (known as IP Transit) fell only 11 percent to $US187 per Mbps in 2006; at the same time, average Internet traffic from Buenos Aires increased by 119 percent.

However, TeleGeography says the good times may not last: "Residential broadband markets, one of the chief drivers of Internet traffic, are already becoming saturated."