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Tuesday, 2 August 2011

Competitive broadband market? Compete with this!

Seems wholesale prices for fibre longhaul are plummeting, with a 63% drop in 2 years for a 10Gbps wavelength from Los Angeles to Tokyo now costing £22,000 ($36,000) as compared to £60,000 ($98,500) in 2009.

This blog post can be read at

What has caused the drop? Three new undersea cables, mucho more capacity, and a host of new competition. Funny that. The competition comes when you chuck as much capacity as you can at the problem, not the least.

Unity - a total capability of 7.68 Tbit/s
Trans-Pacific Express -a total capability of 5.12Tbps
Asia - America Gateway - a total capability of 2.88Tbps

Individual customers can start with a 10Gbps wavelength. I can feel the need to move coming on again: after all we are now down to less than the price I was quoted for 2Mbps!

When will we see a similar drop in longhaul/backhaul prices within the UK? Or are we going to continue to pursue the scarcity model forever?

LA to Tokyo is 5400 miles, which would be 9 times up and down the UK from Land's End to John O'Groats - as crows fly. So, it seems that pricing by distance doesn't always have to apply.


PhilT said...

Presumably the competition also follows demand ?

Traditional economics would suggest that competition is drawn to invest where a market is showing a return well above the cost of capital required to meet the market demand.

Cybersavvy UK said...

Traditional telco economics involve the false scarcity model and look where that has got us! Chuck a company like non-trad non-telco like Google in the pot and all of a sudden we hit abundance and competition...

Somerset said...

How many telco companies are on the Ofcom list? All of whom can install cables across the UK, removing the scarcity.

PhilT said...

Telco's are good at maximising revenue. The EU ruling on roaming charges for example increased the call minutes but reduced the call revenue so the telcos had it right in maximising their profit.

I'm not convinced their's a "false" scarcity model where there is a shortage of available bandwidth like in a notspot. Add 6 Gbits/s of fibre in an FTTC cab and the scarcity goes away.

Can't blame telcos if nobody can be arsed to compete.