Tuesday, July 8, 2008

IP VPN Prices Not a Commodity

IP VPN prices vary dramatically, by service provider, by country, and by class of service, TeleGeography finds. For example, while the median price of a 2 Mbps E-1 IP VPN port in London was USD 576 per month in Q1 2008, a comparable connection would cost USD 1,034 in Hong Kong, USD 2,871 in Beijing and USD 6,083 in La Paz, Bolivia.

The wide range of prices quoted by telecommunications companies for similar services within a given city suggests that telcos, too, are having a difficult time finding appropriate prices for their services. For example, in Beijing, prices for 2 Mbps VPN ports varied from just over USD 1,300 per month to nearly USD 5,000 per month.

The rate of price change also varies widely by market. The median monthly price of a 1.5 Mbps T-1 port in Atlanta fell 19 percent from USD 580 to USD 470 between the second quarter 2007 and first quarter 2008.

In contrast, the median E-1 port price in Dubai, one of the most expensive markets tracked by TeleGeography, fell only four percent, from USD 16,538 to USD 15,877.

"The tremendous range and variability of prices reflect that this market is neither transparent, nor commoditized," says TeleGeography analyst Gregory Bryan.

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