In 2024, we noticed many telecom headlines within the mainstream media. There have been tales on the night information about submarine cables referring to geopolitics, community outages, and even the potential affect of AI.
At this yr’s Pacific Telecommunications Council convention, I assumed it will be attention-grabbing to take a more in-depth have a look at how these headlines really impacted the market when it comes to pricing.
Submarine cables are all the time a scorching matter, and 2024 was no totally different. With the variety of delayed methods lastly coming to fruition and cable bulletins all year long, there was numerous anticipation in regards to the affect of this new provide on markets world wide.
Wavelength costs continued their regular decline all through 2024. Throughout key routes, weighted median 100 Gbps costs decreased a median of about 11% compounded yearly over the previous three years.
Now, how these new community investments affect every area varies considerably.
Beneath, I’ve mapped out 100 Gbps wavelength costs versus CAGR value decline.
In areas the place new high-capacity cables have lately come on-line, value erosion is accelerating.
Latin America—which noticed the launch of Firmina in 2024—and Africa—which noticed a large inflow of latest provide from the launch of Equiano—are reporting the very best charges of value erosion.
As compared, on routes with continued delays in new provide, the tempo of value erosion is slower.
The chart under takes a more in-depth have a look at routes connecting to and inside Asia that had been hit notably exhausting by provide chain points and delays in new methods coming on-line over the previous few years.
You may see throughout the important thing routes featured right here, 100 Gbps costs decreased simply 5% compounded yearly over the previous three years.
That is starting to vary a little bit bit. With the launch of ADC and the anticipation of JUNO in early 2025, we’re beginning to hear some lower cost factors out there.
So, these are positively routes to observe heading into 2025. However for now, that slower price of value erosion helps to take care of and even amplify international value variations.
Listed below are 100 Gbps wavelength costs relative to London–New York.
Marseille–Singapore costs at the moment are about 4.5 instances greater than London–New York costs. That’s up from 2.7 instances the value simply 5 years in the past.
Los Angeles–Tokyo has persistently hovered between 2–3 instances the value of London–New York. As compared, Miami–São Paulo is now just a bit over twice the value of London–New York, down from 4.5 instances 5 years in the past.
As we begin to see new methods come on-line, we do anticipate that accelerating value erosion will assist slender these gaps going ahead. However we don’t anticipate to ever see a common value level as a consequence of variations in underlying prices or totally different demand ranges throughout routes, however some narrowing of that hole going ahead.
We don’t anticipate to ever see a common value level as a consequence of variations in underlying prices or totally different demand ranges throughout routes, however some narrowing of that hole going ahead.
As I discussed, half of what’s fueling accelerating value erosion is the surge in new cable building.
This determine highlights whole cable building prices by area from 2023 to 2027.
These prices are forecasted to achieve over $16 billion over the following few years. Lots of that funding is concentrated on connecting to and inside Asia, which we forecast will proceed to gasoline additional value erosion.
This subsequent determine is from our Transport Community’s Forecast Service. It highlights forecasted 100 Gbps wavelength value erosion from year-end 2024 out to 2030.
The highest routes—Chennai–Singapore, Los Angeles–Singapore, Singapore–Tokyo, Marseille–Singapore—are routes we’ve been speaking about for the previous few years. There have been delays in community provide, and numerous new methods are coming to fruition. So, we’re forecasting accelerating value erosion on these routes for certain.
Subsequent, my presentation shifted gears barely to a subject that’s prime of thoughts for a lot of: making certain community range and resilience.
With bandwidth necessities escalating, the launch of latest community companies is one other scorching matter.
You may examine conserving tempo with capability necessities—and the evolution of IP transit on this planet’s greatest hubs—by downloading my full PTC ’25 slide deck.
