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 influence of AI.
At this yr’s Pacific Telecommunications Council convention, I assumed it might be attention-grabbing to take a better take a look at how these headlines really impacted the market when it comes to pricing.
Submarine cables are at all times a sizzling subject, and 2024 was no totally different. With the variety of delayed techniques lastly coming to fruition and cable bulletins all year long, there was numerous anticipation concerning the influence of this new provide on markets around the globe.
Wavelength costs continued their regular decline all through 2024. Throughout key routes, weighted median 100 Gbps costs decreased a mean of about 11% compounded yearly over the previous three years.
Now, how these new community investments influence every area varies considerably.
Under, 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 recent provide from the launch of Equiano—are reporting the best charges of value erosion.
As compared, on routes with continued delays in new provide, the tempo of value erosion is slower.
The chart beneath takes a better take a look at routes connecting to and inside Asia that have been hit significantly laborious by provide chain points and delays in new techniques coming on-line over the previous few years.
You’ll be able to 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 just a little bit. With the launch of ADC and the anticipation of JUNO in early 2025, we’re beginning to hear some cheaper price factors out there.
So, these are positively routes to observe heading into 2025. However for now, that slower charge of value erosion helps to keep up and even amplify international value variations.
Listed here are 100 Gbps wavelength costs relative to London–New York.
Marseille–Singapore costs are actually about 4.5 instances larger than London–New York costs. That’s up from 2.7 instances the worth simply 5 years in the past.
Los Angeles–Tokyo has constantly hovered between 2–3 instances the worth of London–New York. As compared, Miami–São Paulo is now just a bit over twice the worth of London–New York, down from 4.5 instances 5 years in the past.
As we begin to see new techniques come on-line, we do anticipate that accelerating value erosion will assist slim these gaps going ahead. However we don’t anticipate to ever see a common value level on account 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 on account 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 development.
This determine highlights complete cable development prices by area from 2023 to 2027.
These prices are forecasted to achieve over $16 billion over the subsequent few years. A variety of that funding is targeted 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 techniques 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 recent community companies is one other sizzling subject.
You’ll be able to examine preserving tempo with capability necessities—and the evolution of IP transit on this planet’s largest hubs—by downloading my full PTC ’25 slide deck.
