A new report from TeleGeography finds that bandwidth prices for backbone transit continue to decline rapidly across the globe. In San Francisco, for instance, the price per mbps of Gigabit Ethernet transit has dropped 38 % in the past 12 months. Developing countries are also enjoying substantial price cuts in 15 to 20% range.
But if the Internet’s core is controlled by an oligopolistic cartel—as Tim Wu argued in a recent New York Times essay—then why does bandwidth keep getting cheaper?
Perhaps it’s because the fourteen or so firms which offer backbone IP transit are competing fiercely to win over business from smaller carriers and enterprises. And as businesses of all sizes demand faster connectivity, more dark fiber is being lit, creating an expansion in network capacity. In DC, for instance, a price war has made high-speed commercial data services much more affordable, with one communications provider offering converged 10mbps full-duplex dedicated Ethernet over copper for less than the market price of four bonded T1 lines.
Why are some providers moving towards data transfer caps if bandwidth prices are dropping ? In part, it’s because backbone transit is not the only usage-variable expense that residential ISPs face. Last-mile bandwidth remains a highly contested resource in many neighborhoods, and the cost per megabit of bringing faster speeds to the doorstep far exceeds the cost of adding more wavelengths to a long-distance fiber optic line. As consumers demand greater speeds, providers are investing heavily in network upgrades—these costs are adding up, and there’s a strong case to be made that heavy users ought to shoulder a larger portion of the burden than light users.
I’ve been re-reading Nicholas Negroponte’s brilliant and extraordinarily prescient 1995 book 
MY DEAR AMERICAN FRIEND:
I AM NEEDING TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.
I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED NEED FOR LARGE TRANSFER OF FUNDS OF 700 BILLION OF YOUR DOLLARS ( US). IF YOU WOULD ASSIST ME IN THIS TRANSFER IT WOULD BE MOST PROFITABLE TO YOU.
I AM WORKING WITH HIGHLY REPUTABLE MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY IF MY POLITICAL PARTY WINS UPCOMING ELECTION, WHICH WE CERTAINLY WILL BECAUSE WE ARE IN CONTROLING OF THE HIGHEST SUPREME COURT. YOU MAY REMEMBER HIM AS A SENATOR AS LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S.
I AM ALSO WORKING WITH HIGHLY REPUTABLE MR. BARNEY FRANK, MEMBER OF CONGRESS FROM PEOPLE’S REPUBLIC OF MASSACHUSETTS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY IF OTHER POLITICAL PARTY, LED BY MR. BARACK OBAMA, WIN UPCOMING ELECTION, WHICH HE CERTAINLY WILL BECAUSE HE IS IN CONTROLLING OF VOTING IN ILLINOIS, OHIO, FLORIDA, AND MANY OTHER STATES. MR. BARNEY FRANK IS VERY KNOWLEDGEABLE ABOUT FINANCIAL TRANSACTIONS OF ALL KINDS, FROM WHOREHOUSE ADMINISTRATION TO HOME LOAN BUSINESS, AND FAITHFULLY TEACHES PRECEPTS OF MR. BARACK OBAMA (“FROM TINY A.C.O.R.N. GROWS GIANT FORECLOSURE OAK!”).
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
