What We have Realized About Wavelength Pricing From The 2024 Convention Circuit Thus Far

Midway by way of 2024, TeleGeography’s pricing group has logged plenty of frequent flyer miles on the convention circuit. From PTC in January, to Capability occasions in March, and ITW later within the spring, we have been accumulating as a lot pricing intel as potential.

As we sift by way of our notes—particularly our newest ITW findings—we start to see a clearer image of what is occurring with wavelength pricing all over the world.

New submarine cable methods are at all times a degree of emphasis at conferences. The cardboard shortages and provide chain points that stalled new deployments, stabilized costs, and dominated conversations in 2023 have principally been resolved.

Whereas financial inflation nonetheless impacts some pricing schemes and venture funding, the surroundings for brand spanking new connectivity endeavors is far more healthy than just a few years in the past. Funding in new submarine cables is surging, with the worth of recent cables coming into service from 2024-2026 forecasted to succeed in over $10 billion. 

Whereas financial inflation nonetheless impacts some pricing schemes and venture funding, the surroundings for brand spanking new connectivity endeavors is far more healthy than just a few years in the past. Funding in new submarine cables is surging, with the worth of recent cables coming into service from 2024-2026 forecasted to succeed in over $10 billion. 

Nevertheless, the impacts investments have on every area range.  

Excessive-Capability Cables Make Their Mark

In areas the place new high-capacity cables have entered service, worth erosion is accelerating. Africa is a superb instance of this. With the latest launch of Equiano and anticipation of 2Africa in 2024, the Johannesburg-London route is flush with new provide and competitors, fueling worth erosion.

Between Q1 2021 and Q1 2024, weighted median 100 Gbps costs dropped 24% yearly to $46,863. They usually aren’t stopping there. Reported low costs at ITW prolonged right down to $25,000.  

Latin America is an identical case, nonetheless feeling the results of recent cables, various fiber pair possession, and upgrades to present methods. To not point out the anticipation of recent cables coming on-line within the subsequent 12 months or two.

Worth declines on the core Miami-São Paulo route topped 28% yearly over the previous three years. With the Firmina cable scheduled to launch later this 12 months—additional growing provide on this already aggressive route—it is secure to imagine that costs will maintain tumbling. 

Weighted Median 100 Gbps Wavelength Costs & CAGR Worth Decline on Choose Worldwide Routes

Asia’s Costs Stay Secure

On routes to and inside Asia, nevertheless, tasks stay delayed and costs are nonetheless steady. That is largely attributable to geopolitical and environmental points that proceed to plague new methods and upgrades.

Over the previous three years, 100 Gbps costs on Los Angeles-Tokyo and Singapore-Tokyo decreased simply 9% and eight% compounded yearly. However we’re on the cusp of an enormous inflow of recent capability in these areas between 2024 and 2026.

Throughout the Pacific, the launch of JUNO anticipated by year-end 2024 has the potential to additional decrease prices on the Los Angeles-Tokyo route, whereas Echo and Bifrost will assist erode the premium on the Los Angeles-Singapore route after they enter the market in 2025.

Inside Asia, ADC, SEA-H2X, SJC2, and ALC will come into service over the subsequent two years with a variety of possession. This nearly actually ensures accelerated worth erosion, particularly in secondary markets akin to Indonesia, Malaysia, and the Philippines.  

Infrastructure progress has been stalled on the route between Europe and Asia as properly and provide stays extraordinarily restricted. This isn’t solely attributable to delays in new methods and upgrades due to geopolitical points. Latest cable faults to AAE-1, EIG, and SEACOM/Tata TGN-Eurasia within the Crimson Sea have compounded the problem.

Infrastructure progress has been stalled on the route between Europe and Asia as properly and provide stays extraordinarily restricted. This isn’t solely attributable to delays in new methods and upgrades due to geopolitical points. Latest cable faults to AAE-1, EIG, and SEACOM/Tata TGN-Eurasia within the Crimson Sea have compounded the problem.

In consequence, 100G costs on the important thing Marseille-Singapore route decreased simply 1% yearly over the previous three years. At ITW, some suppliers reported even fetching greater costs from clients attributable to provide shortage.

However this is not anticipated to final endlessly. Whereas the timeline for cable repairs is unsure, attendees hoped that when Crimson Sea faults are mounted and deliberate cable tasks are accomplished, worth developments would return to historic norms. 

The Impression of Google Cables on the Pacific

One other sizzling matter throughout our ITW conversations was Google’s deliberate subsea cable exercise within the southern Pacific Ocean.

Two proposed tasks drew dialogue throughout and shortly after the convention: Humboldt—which might join Chile with Oceania—and the not too long ago introduced Umoja system—which might join South Africa with Australia.

These be part of Honomoana and Tabua, which have been introduced earlier this 12 months, as a part of the Pacific Join initiative. The system’s two introduced companions, Telstra and Vocus, are well-known gamers within the Oceania market.

Google is promoting complete and partial fiber pairs on its non-public cables. The quantity and kind of events buying pairs may have a big effect on future worth erosion.

TeleGeography clients with entry to our pricing suite can learn extra of our convention takeaways. Customers can log into their TeleGeography account to learn extra.