TeleGeography’s Global Bandwidth Forecast Service presented new numbers this week, covering intra-Asian submarine cables and some interesting market dynamics at work. Of course, projected demand for bandwidth on this particular piece of infrastructure remains strong – as would be any forecast against demand on anything to do with bandwidth these days. A 39% annual growth projection is pegged for the time period between 2011 and 2018 (1).
The picture painted illustrates a need to find some 99Tbps of lit capacity to meet growth expectations. To align this forecast demand with capacity, consider the current situation of existing intra-Asian routes and their respective capacity, coupled with projects coming online. Telegeography identifies a large amount of potentially available capacity within the existing infrastructure. Three consortium cables are also anticipated to come online by 2014, including the Asia Submarine Express (ASE), the Southeast Asia Japan Cable (SJC), and Asia Pacific Gateway (APG) system.
Naturally, as this new capacity becomes available to the market, expectations are that prices will fall fairly rapidly between 2012 and 2014. As the market absorbs the introduction of the new cable systems, TeleGeography expects prices to fall rapidly, especially between 2012 and 2014. For example, Telegeography cited an example of a 27% decline – compounded annually…
So, the interesting crux is that demand growth is not seen as strong enough to completely offset the supply/demand price erosion effect. The underlying issue pointed out by Telegeography Analyst Erik Kreifeldt is that, “as demand grows, bandwidth buyers continue to obtain greater volume discounts. Volume discounts compound the effect of Unit price declines, and amplify their effect on service provider revenues.” Let that be a lesson to your business model, indeed…
- Telegeography, New Cables and Falling Prices to Disrupt Intra-Asian Submarine Cable Market
