Q & A with Ciena Corp
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Written by Joy Milkowski
Given the recent consolidation in the telecommunications industry how do you feel bandwidth prices will be impacted?
The first thing we have to consider is that in the old model of telecom services, bandwidth prices, or more correctly, circuit prices, were fixed at the state level by the Public Service Commission. In the new era of telecom service, the free market determines the price of the connection (fiber) and the service (100MB, 2.5GB, 10GB). That being the case, a customer could find wildly different prices for similar connectivity and service market to market.
In general however, any time there are fewer competitors in a given market, prices rend to rise and we see no exception with the bandwidth market. Of course there are other factors affecting bandwidth prices as well. New services such as IPTV and mobile data and video create the need for greater bandwidth to connect centralized video headends to local distribution hubs and to connect wireless base transmission stations to switching stations.
Service providers also desire to be end-to-end carriers for their enterprise customers, even to out-of-market locations which require purchase of wholesale long-haul capacity. These services typically connect the major metropolitan areas so it is along these routes that we expect prices to climb first. But as one provider may be reaching capacity, another may be turning up new facilities. For this reason alone, it is important that a potential customer work with someone that has a detailed understanding of the dynamics in each market.
Conributed by Andy McCormick, Product Marketing Manager at Ciena Corp.
