Each January you can find the TeleGeography team at the Pacific Telecommunications Council annual conference. Our annual PTC workshop is our first opportunity of the year to share our latest research and analysis on international networks. (And it's where you might have seen some of our greatest hits, like our bandwidth and IP pricing rundown.)
This year, Data Science Manager Mike Bisaha is gearing up to share info on the pricing limbo in which wholesale circuit and IP transit prices have found themselves in.
These prices been falling for years, but the pace varies widely and can determine the difference between profits and losses for carriers. How are recent network investments, emerging market players, and the deployment of 100 Gbps technology affecting international prices?
Lucky for us, Mike sat down to talk through some of these ideas. I caught up with him as he was finessing his final PowerPoint; we chatted about price trends, consolidation, cloud hubs, and more. You can find excerpts from our conversation below.
Jayne Miller: Hi Mike! You’re gearing up for PTC 2018. It’s rapidly approaching. Maybe you could give us a preview of what you’ll be covering at this event next month.
Mike Bisaha: Yes, we’re getting ready for PTC. Obviously it’s one of our big opportunities to discuss the overall trends we’re seeing, especially in the Asian market and the wholesale side of things. I’m going to be focusing primarily on the pricing trends we’re seeing on Asia-Pac, particularly the 10 and 100G price levels and what those multiples are looking like over time. We’re certainly watching those shrink over time, as we’d expect, but we’re looking forward toward what the next steps in that evolution will be.
The other thing we’re hoping to focus on is how those prices are changing between the key cloud hubs around the world–cities that have a lot of the Google, Amazon and other large web-scale cloud providers versus some of the more tier-two cities that have may a lot of available capacity, but may not be “cloud hubs” yet in their own right.
The other thing we’re hoping to focus on is how those prices are changing between the key cloud hubs around the world–cities that have a lot of the Google, Amazon and other large web-scale cloud providers versus some of the more tier-two cities that have may a lot of available capacity, but may not be “cloud hubs” yet in their own right. For this upcoming presentation, I’m looking to dive into how the cloud infrastructure is continuing to drive what’s going on in the wholesale bandwidth market.
JM: That sounds like a good lineup. If my memory serves me correctly, I believe that one of the things you’re really looking closer at is the deployment of that 100 Gbps technology, is that right?
MB: Yeah, absolutely. There’s definitely a lot more 100G technology coming online, whether new cable builds or upgrading old cables. So we’re definitely keeping an eye on how that technology is progressing. A lot of the larger cables are ready for 100G and new cables that are up for discussion are certainly looking at newer capacity levels that can go even beyond that.
In terms of the pricing that we’ll be looking into, I’ll be looking to cover how the historical relationships between 10G and 1G rates can apply to trajectory of 100G and 10G rates. What can we learn from the trajectory that 10G and 1G has taken in the past and apply that to the 10 and 100Gs of the future?
JM: In your experience, you’re looking at how those trajectories are impacting international prices. Are there any interesting stories that jump out? Any markets that are particularly impacted?
MB: Yes. We’ve been seeing a lot of the 100G activity being much hotter on key Trans-Atlantic and Trans-Pac routes. And some of the less built-out options like U.S.-LatAm or routes to Africa, or even some of the intra-Asia routes where 10G is obviously more expensive but 100G is still less in-demand.
We’ve been seeing a lot of the 100G activity being much hotter on key Trans-Atlantic and Trans-Pac routes.
We’re definitely seeing differences in those trajectories. And a much hotter market for that 100G connectivity along those key Trans-Atlantic and Trans-Pac routes.
JM: That’s interesting. I’ve talked a little bit about some of these markets with our colleagues like Patrick and Kate and Cynthia and have heard similar reports. These are stories we’ll have to keep following in 2018.
JM: And with the year winding down—we were both just talking about sprinting to the finish line—are there any other stories you’re looking forward to in 2018? Things you’re keeping an eye on or think that we’ll be reading more about as time progresses?
MS: Yes. Obviously consolidation in the market is something we’re keeping an eye on. There’s been a lot of that for the last several years and I think we generally expect that to continue. So how does the difference in the number of players change these markets? How do different cable projects or infrastructure investments continue going forward?
So how does the difference in the number of players change these markets? How do different cable projects or infrastructure investments continue going forward?
Another one that I think we’ll be watching is how content providers continuing to get into the submarine cable game will continue to drive new cable development—whether that’s building a new cable sponsored by a large content players to a new content hub they’re launching or simply buying more capacity to a newly developing geography. That might be Latin America, Asia-Pac, Africa—places outside the core Western Europe and United States hubs that already exist.
JM: Those are good tips for me. Always looking for a good telecom story for our Spotlight readers.
MB: Sounds great.
JM: I know you’ve got lots to prep for as PTC approaches, so I’ll let you go. Thank you so much for taking the time to give us a preview into this presentation and all of your pricing research.
MB: Of course, thanks Jayne.
Watch the 2017 PTC Presentations
Submarine Cables: Are We in a New Bubble? We went 12 years without building a new cable in the Atlantic. In the last two years we've seen two builds, another announced, and more planned. Are we in a cable bubble? Watch.
Another Bandwidth and IP Pricing Trends Rundown in 15 Minutes If we take a closer look at global bandwidth and IP pricing, what do we see? If you've got 15 minutes, Brianna Boudreau will show you. Watch.
The Colocation Sector: Shifting Dynamics, Stable Fundamentals Jon Hjembo, Senior Analyst and Director of Colocation Research at TeleGeography, gets everyone up to speed on the state of the colocation landscape. Watch.
Mike Bisaha is a senior analyst at TeleGeography. Mike's research include both wholesale and enterprise telecommunications services with a focus on North American and European markets.