Pricing Limbo – Trends and Shocks

Michael Bisaha, Senior Analyst, TeleGeography

Overview

• Setting the Stage : Wavelength price levels and historical

trends

• Price multiples, then and now

• Route convergence . . . “are we there yet?”

• New cables - New demand drivers

Setting the Stage

10G Wavelength Pricing

10G & 100G exhibit related trends

But price ranges persist

Price declines vary by capacity

Price Multiples, then and now

100G/10G price multiple is

shrinking

While the 10G/1G range stabilizes

Price convergence ... “are we there

yet”?

Prices are indeed converging

Geographic differences do

persist….

Carlsbad, CA | Washington, DC | Exeter, UK | Singapore | www.telegeography.com | info@telegeography.com

But not all hubs are created equal

Carlsbad, CA | Washington, DC | Exeter, UK | Singapore | www.telegeography.com | info@telegeography.com

Provider positioning differs, even in similarly priced markets

New cables – new demand

drivers

Content provider cable

investments

Note: Only publicly disclosed content provider investments shown.

Provider Cable RFS Provider Cable RFS

Google Unity 2010 Amazon Hawaiki 2018

Southeast Japan Cable (SJC) 2013 JUPITER 2020

FASTER 2016

Monet 2017 Facebook AEConnect 2016

Tannat 2018 Asia Pacific Gateway (APG) 2016

Junior 2018 MAREA 2018

Pacific Light Cable Network (PLCN) 2019 Pacific Light Cable Network (PLCN) 2019

INDIGO-West 2019 HAVFRUE 2019

INDIGO-Central 2019 JUPITER 2020

HAVFRUE 2019

Curie 2019 Microsoft Hibernia Express 2015

Hong Kong-Guam 2019 AEConnect 2016

New Cross Pacific 2018

MAREA 2018

Trans-Pacific 100G rates exhibit regular decline

. . . accelerated when new Content Cables come online

2016 – new Content

Cable comes online

Similar trend seen in the Atlantic

Similar trend seen in the Atlantic

new Content Cables in

late-2015 and early-2016

And Intra-Asia . . .

And Intra-Asia . . .

2016 – new Content Cable comes

online

10G rates show more muted relationship to Content Cables

Summary

• Wavelength pricing is indeed falling, especially at upper 100G capacities levels,

driven by continued user bandwidth demand

• Price ranges exist, and will continue to persist

– Differences between providers and the market segments they target

• Geographic differences persist, though the spread is still shrinking at

higher capacities

• New cables can cause accelerating shocks to wavelength price declines

– Especially seen when content-sponsored cables come online

– Effects are most explicitly seen in the 100G product