April 23, 2002 — (WEB HOST INDUSTRY REVIEW) — The dramatic price collapse of bandwidth, caused by the infamous “bandwidth glut,” may be nearing an end, according to a new report from research firm TeleGeography (Telegeography.com).
The new report, titled “Terrestrial Bandwidth 2002,” confirms that the supply of city-to-city bandwidth still exceeds actual needs. According to TeleGeography, more than 6.5 terabits of lit capacity now traverse London, for example – four times more than the combined bandwidth requirements of the forty largest cities in Europe.
However, with prices already at or even below costs, TeleGeography said it seems unlikely that the capacity oversupply will depress prices any further. According to the research firm, any future price collapse would come as a result of other market forces, rather than the continuing capacity glut.
“Bandwidth prices are no longer driven by supply and demand,” said TeleGeography analyst Stephan Beckert. “They’re driven by short-term costs, and by the fear of bankruptcy court. But as prices fall below costs, carriers will not be able to remain solvent.”
