John Linton
As I catch up with what has been said in the various 'industry' publications I didn't read over the past four weeks I have become increasingly puzzled by comments from a number of ISPs that the cost of IP bandwidth has "ceased falling" or "has become more expensive" over the past few months.
I can only use the information available to Exetel on the cost of IP bandwidth from both the companies whom we use at the moment, the companies we have used in the past and the companies that we approach or approach us to determine what pricing would be available to Exetel and therefore would be available to other ISPs who use IP bandwidth.
As IP bandwidth is a significant cost to any ISP, including Exetel, it's something that is constantly reviewed. Based on the various proposals submitted to Exetel over the past three years the cost of wholesale IP bandwidth has continued to slowly decrease throughout that period. Over that period the cost per mbps has declined around 15% at the relatively low quantities that Exetel buys from its current providers and we are now being offered IP bandwidth from two companies at a further 15% lower than the lowest price we currently pay.
While other ISPs may have already reached price points that are lower than those achieved by Exetel, and that is almost certainly the case as far as the larger ISPs are concerned, there is no indication that we can see that any IP costs are rising from any supplier - they are all continuing to fall.
Currently Exetel has around 1,500 mbps of IP "upstream" bandwidth but due to contractual issues with current providers is seldom in a position to buy in quantities of more than 500 mbps with any one supplier. At the 500 mbps level the price reduction over the last 12 months has been around 23%.
I look at IP costs every 2 - 3 months so that Exetel doesn't get itself 'locked in' to buying at unfavourable rates. I would expect that Exetel's IP bandwidth costs would fall over the next 9 months by a further 20% - 40% per mbps.
I can see no indication that IP bandwidth costs will increase and I would expect the buy price for 'quality' IP bandwidth to be well below $A200.00 per mbps in early 2008 falling to well below $A150 per mbps by early 2009.