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North American Transit Pricing From Major Providers Down 10%

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At the Content Delivery Summit held in New York in May, I released the latest North American transit pricing from data I collected directly from customers. This pricing is from major transit providers including AT&T, CenturyLink, Cogent, GTT, Hurricane Electric, Level 3 Communications, NTT Communications, Sprint, Verizon, and XO. It does not include pricing from Tata Communications, Telefonica, TeliaSonera, or other providers outside the U.S.

Some analysts who don’t follow the infrastructure market use the words “transit” and “peering” interchangeably, but they are not the same thing. In its simplest definition, transit is a network that passes traffic between networks in addition to carrying traffic for its own hosts. Transit is where one network agrees to carry traffic that flows between another network and all other networks connected to it. Peering, when two or more networks interconnect directly with each other to exchange traffic, is different from transit.

Based on the pricing I collected and released in 2015, it looks like North American transit pricing, on average, is down about 10 percent, year-over-year. Based on all of the pricing I have seen, AT&T is by far the most expensive, with the rest of the providers all typically within 10 percent to 15 percent of one another in major cities in the U.S.

It’s important to remember that from a business standpoint, there are many backbone and transit providers to choose from in a highly competitive market. Companies can buy full transit, partial transit, select routes, on-net routes, etc., and ISPs will create the service and pricing around the customer request. Customers have options based on price, performance, port speed, and so on, and I don’t see that changing anytime soon. I’ve also seen some vendors taking a very strong stand on IP pricing and implementing “walk away” pricing above certain levels, selling more into enterprise at higher rates.

I have a few notes on the numbers. The rates listed in the chart are usage rates and do not include any costs associated with also obtaining an access circuit. In addition, these pricing rates usually require multiple points of interconnect and at least a 12-month term. Since you cannot run a port at a theoretical 100 percent rate, the numbers below do not factor that in. With transit, many times the final pricing is based on your setup. For instance, a decision must be made between a border gateway protocol (BGP) or static routing configuration, whether to run multiple BGP sessions on one port, IPv6 native or dual stack, DDOS and other protections, link aggregation, etc., so required features will often determine the final price you pay.

If you are looking for transit pricing at volumes other than what I list, feel free to contact me, and I’ll see what data I have. And if you are looking for more background on transit, see the post, “How Transit Works, What It Costs & Why It’s So Important,” on my blog.

This article originally ran in the July/August 2016 issue of Streaming Media magazine as “North American Transit Pricing Down 10 percent.”

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