August 2, 2012 – Despite all the catastrophising about rising costs and flattening revenues for mobile telcos and Internet access providers generally, IP transit prices, at least, are actually in steepening decline according to TeleGeography. By I.D. Scales.
IP transit is a key incremental cost for Internet providers. It’s what a Tier One Internet backbone provider (one of the huge ones which is broadly peered to the other huge backbone providers) charges other, smaller or regionally-based ISPs or large Internet businesses to carry their traffic across the Internet. The more data users ‘consume’ the greater aggregate transit capacity a provider must buy to cope with demand.
If we assume that IP transit is a highly competitive market – which it appears to be – it gives us the best idea of what the underlying Internet connectivity costs actually are and – just as important – how fast they are heading down (or not).
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