Google’s Bet on Asian Bandwidth Boom Will Likely Pay Off

If you want to send data from New York to London, the underlying connectivity costs are up to eight times lower than if you wanted to send it via the Pacific, according to research out today from Telegeography. The research firm issued info related to the cost of 10 Gbps wavelengths along both routes to show how the pricing is still high for trans-Pacific cables. The firm’s analysts believe those prices will drop as more capacity is added.

Companies ranging from Google (s Goog) to any number of telecommunications firms have a stake in some of the new Pacific cables designed to connect the Western U.S. with some of the world’s biggest broadband consumers as well as areas within the region. Om said such an investment in cables could presage an economic boom. From my standpoint what the new construction most likely means is that costs will go down for undersea transport. Theoretically that should lower bandwidth costs in the region for Internet companies sending fat files to Asia — be it video or corporate data. From Telegeography:

TeleGeography Research Director Rob Schult noted that conditions in Asia are ripe for further price erosion. Google and five carriers have just completed construction of the trans-Pacific ‘Unity’ cable, and additional cables are planned for East Asia. ‘We don’t expect that circuit prices in Asia will ever reach the exceptionally low levels seen in the Atlantic, but it’s certain that new cable construction in Asia and the Pacific will pull down prices,’ said Schult.

The report notes that 10 Gbps wavelength prices between Los Angeles and Tokyo have fallen at a compounded annual rate of 21 percent in the past two years, and prices from Singapore to Tokyo have dropped by nearly 50 percent in the past year alone. That’s good for Google as a bandwidth buyer, even if it cuts down on the potential margins it can achieve as a co-owner of a trans-Pacific pipe.

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