Halfway through 2024, TeleGeography's pricing team has logged lots of frequent flyer miles on the conference circuit. From PTC in January, to Capacity events in March, and ITW later in the spring, we've been collecting as much pricing intel as possible.
As we sift through our notes—specifically our latest ITW findings—we begin to see a clearer picture of what's happening with wavelength pricing around the world.
New submarine cable systems are always a point of emphasis at conferences. The card shortages and supply chain issues that stalled new deployments, stabilized prices, and dominated conversations in 2023 have mostly been resolved.
While monetary inflation still impacts some pricing schemes and project investment, the environment for new connectivity endeavors is much healthier than a few years ago. Investment in new submarine cables is surging, with the value of new cables entering service from 2024-2026 forecasted to reach over $10 billion.
While monetary inflation still impacts some pricing schemes and project investment, the environment for new connectivity endeavors is much healthier than a few years ago. Investment in new submarine cables is surging, with the value of new cables entering service from 2024-2026 forecasted to reach over $10 billion.
However, the impacts investments have on each region vary.
High-Capacity Cables Make Their Mark
In regions where new high-capacity cables have entered service, price erosion is accelerating. Africa is a great example of this. With the recent launch of Equiano and anticipation of 2Africa in 2024, the Johannesburg-London route is flush with new supply and competition, fueling price erosion.
Between Q1 2021 and Q1 2024, weighted median 100 Gbps prices dropped 24% annually to $46,863. And they aren’t stopping there. Reported low prices at ITW extended down to $25,000.
Latin America is a similar case, still feeling the effects of new cables, diverse fiber pair ownership, and upgrades to existing systems. Not to mention the anticipation of new cables coming online in the next year or two.
Price declines on the core Miami-São Paulo route topped 28% annually over the past three years. With the Firmina cable scheduled to launch later this year—further increasing supply on this already competitive route—it's safe to assume that prices will keep tumbling.
Weighted Median 100 Gbps Wavelength Prices & CAGR Price Decline on Select International Routes
Asia's Prices Remain Stable
On routes to and within Asia, however, projects remain delayed and prices are still stable. This is largely due to geopolitical and environmental issues that continue to plague new systems and upgrades.
Over the past three years, 100 Gbps prices on Los Angeles-Tokyo and Singapore-Tokyo decreased just 9% and 8% compounded annually. But we are on the cusp of a massive influx of new capacity in these regions between 2024 and 2026.
Across the Pacific, the launch of JUNO anticipated by year-end 2024 has the potential to further lower costs on the Los Angeles-Tokyo route, while Echo and Bifrost will help erode the premium on the Los Angeles-Singapore route when they enter the market in 2025.
Within Asia, ADC, SEA-H2X, SJC2, and ALC will come into service over the next two years with a diversity of ownership. This almost certainly guarantees accelerated price erosion, especially in secondary markets such as Indonesia, Malaysia, and the Philippines.
Infrastructure progress has been stalled on the route between Europe and Asia as well and supply remains extremely limited. This is not only due to delays in new systems and upgrades because of geopolitical issues. Recent cable faults to AAE-1, EIG, and SEACOM/Tata TGN-Eurasia in the Red Sea have compounded the issue.
Infrastructure progress has been stalled on the route between Europe and Asia as well and supply remains extremely limited. This is not only due to delays in new systems and upgrades because of geopolitical issues. Recent cable faults to AAE-1, EIG, and SEACOM/Tata TGN-Eurasia in the Red Sea have compounded the issue.
As a result, 100G prices on the key Marseille-Singapore route decreased just 1% annually over the past three years. At ITW, some providers reported even fetching higher prices from customers due to supply scarcity.
But this isn't expected to last forever. While the timeline for cable repairs is uncertain, attendees hoped that once Red Sea faults are fixed and planned cable projects are completed, price trends would return to historical norms.
The Impact of Google Cables on the Pacific
Another hot topic during our ITW conversations was Google’s planned subsea cable activity in the southern Pacific Ocean.
Two proposed projects drew discussion during and shortly after the conference: Humboldt—which would connect Chile with Oceania—and the recently announced Umoja system—which would connect South Africa with Australia.
These join Honomoana and Tabua, which were announced earlier this year, as part of the Pacific Connect initiative. The system's two announced partners, Telstra and Vocus, are well-known players in the Oceania market.
Google is selling whole and partial fiber pairs on its private cables. The number and type of parties acquiring pairs will have a big impact on future price erosion.
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Brianna Boudreau
Senior Research Manager Brianna Boudreau joined TeleGeography in 2008. She specializes in pricing and market analysis for wholesale and enterprise network services with a regional focus on Asia and Oceania. While at TeleGeography, Brianna has helped develop and launch several new lines of research, including our Cloud and WAN Research Service.