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Senior Editor

Telecom pricing

Feb 05, 20032 mins
NetworkingTelecommunications Industry

* Your monthly telecom costs should be going down

Are your monthly telecom costs going down? They should be according to experts in our Special Focus story this week.  For example:

* “Prices have dropped 20% to 25% [for T-3, 45M bit/sec private-line services] in the last 12 months, which is small in relation to previous price declines,” says Ronnie Bailey, senior director of data services at WorldCom.

* WorldCom is not offering huge price cuts on its lower-speed private-line services, but its fractional T-1 and full T-1 services have come down 10% to 12% in the last year.

* From January 2001 to January 2002, dedicated OC-3, 155M bit/sec links between cities such as New York and Atlanta, and Boston and New York dropped by 60% to 65% according to researchers at TeleGeography.

* Since January 2002, prices dropped another 20% to 25% for the same bandwidth between the same cities.  TeleGeography looks at the five lowest prices and runs an index based on those averages. Prices on some of the most popular routes, such as those between New York and Miami, and New York and Los Angeles, have dropped only 10% to 15%, because these routes already were competitively low

* “Over the last three to four years we’ve seen frame relay price declines of 5% to 10% per year,” says Ron Kaplan, analyst at IDC. But carriers are slowing the rate of declines, because of the slow economy and the changing telecom market, he says.

* “The average cost for a 512K bit/sec port is about $425 per month, which is lower than it was 12 to 18 months ago,” says David Willis, analyst at Meta Group. This is based on late 2002 prices, he says. In 2001, the average cost for a 512K bit/sec port was $495 per month. That translates to $7,000 per month or $84,000 per year that a customer with a 100-node frame relay network would save.

Of course not all telecom vendors are on board with rolling back prices; for example, AT&T says its listed prices are creeping up. Fractional T-1 and full T-1 prices have gone up 2% to 5% and 1% to 2% respectively over the past 12 months, the company says.  Sprint wouldn’t comment on this story.

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