Final month, the TeleGeography staff joined scores of ICT infrastructure professionals in Nationwide Harbor, Maryland for Worldwide Telecommunications Week.
One of many many matters mentioned was value erosion in Latin America. The principle pattern doubtless comes as no shock: costs preserve falling. However there may be nuance to how value erosion is going on in several markets.
Let’s discover the context in additional element.
The Battle of Aggressive Wavelength Pricing
Connectivity to Latin America has traditionally been far more costly than in additional established areas, such because the trans-Atlantic. And whereas capability providers in Latin America nonetheless have a tendency to come back at a premium, that distinction has shrunk.
Based on our Wavelengths Community Pricing Database, in Q1 2023, the weighted median 100 Gbps value on Miami-Sao Paulo ($18,000) was simply thrice costlier than London-New York. That is down from 6.6 occasions costlier in 2018.
Within the determine under, you possibly can see how costs for 100 Gbps wavelengths on a number of different outstanding routes in Latin America have fallen lately. Since 2020, the common value for 100 Gbps on these key routes has fallen 30%, compounded yearly.
Supply: © 2023 TeleGeography
There are a number of elements contributing to the fast tempo of abrasion.
One issue talked about at ITW was market disruption. Some particular examples that we heard cited embrace the creation of Cirion Applied sciences from Lumen’s former Latin America belongings, the creation of V.Tal within the wake of Oi’s chapter course of, and basic non-public fairness funding within the area. This elevated competitors would possibly assist clarify pricing traits in affected markets.
Pennies on the Greenback for IP Transit
One other wholesale product with costs plummeting in Latin America is IP transit. And in some markets, the decline has been sharp.
Utilizing information from our IP Transit Community Pricing Database, the determine under reveals simply how rapidly IP transit costs have fallen in key Latin American cities.
Supply: © 2023 TeleGeography
Whereas IP transit value erosion is actually noteworthy throughout a number of markets, costs in Brazil have been a sizzling matter at ITW. That’s as a result of the Q1 2023 weighted median value for a ten GigE port in São Paulo was $0.35—a drop of 39%, compounded yearly, since 2020.
Within the submarine cable-friendly Rio de Janeiro and Fortaleza, pricing is reported even decrease, with weighted median prices of $0.31 and $0.27, respectively.
Though the Brazilian market has traditionally had considerably extra aggressive IP transit pricing than different Latin American markets, over the previous 12 months, erosion has introduced its IP transit pricing consistent with main hubs in the US. ITW attendees we spoke with attribute this to cable launches, extra competitors within the market, and the rise of caches in Brazil.
The Seek for the Subsequent Scorching Market
In previous months, Colombia caught our eye as an more and more interesting place to spend money on telecommunications infrastructure. That’s nonetheless the case, however community operators have turned their heads to different markets as effectively.
One such place is Peru, the place the not too long ago launched South Pacific Cable System/Mistral additional connects an space gaining consideration from carriers and traders alike. With techniques like South America-1 and South American Crossing approaching retirement, the potential for an infusion of extra bandwidth looms on the horizon. This might lead costs in Peru—sometimes a bit larger than in neighboring nations like Colombia and Chile—to fall at an accelerated tempo.
Additional north, we proceed to listen to about Querétaro, Mexico as a booming marketplace for funding—each for information facilities and the fiber wanted to attach them. Actually, information heart progress has elevated a lot that there are issues over whether or not the vitality provide is adequate to maintain additional growth.
All through Latin America, the scenario stays comparable: dynamic markets with costs that preserve falling.
All through Latin America, the scenario stays comparable: dynamic markets with costs that preserve falling. ITW 2023 was a useful likelihood to verify in with contacts all through the area and assess the place the remainder of 2023 is perhaps headed for a rising area.
