What Is Lowering Gigabit Ethernet Bandwidth Pricing?

If you have recently gone out for quotes on Gigabit Ethernet bandwidth, you may have been surprised by how much prices have dropped the last few years. That’s one pleasant surprise for organizations that need higher levels of business bandwidth for cloud computing access, e-commerce, medical image transmission, video distribution and the like. But is this for real and what is driving these prices lower?

Yes, it’s for real alright. In fact, bandwidth services across the board can be had for a fraction of what you may have paid when you signed your last service contract. That applies to everything from T1 lines to DS3 connections and on up through OCx SONET/SDH fiber optic bandwidth. It also includes competing services like Ethernet, Fast Ethernet, Gigabit Ethernet and 10 Gig E. Plus multi-location cloud networks like MPLS. They’ve all dropped in price. But the cost per Mbps is often most dramatic for Ethernet services.

What’s behind the lowered prices? Two factors can be credited. First is the move from traditional switched circuit transport technologies to packet switched IP networks and services. Second is new levels of competition.

Both legacy service providers, the telephone companies, and new competitive carriers have built-out extensive networks based on IP or a networking technology that embraces IP, such as MPLS or Multi-Protocol Label Switching. You can thank the Internet for that. The enormous volume of equipment and services to support near-universal demand access to the Internet has decreased the price of Ethernet and IP networking to a fraction of what it costs for competing technologies. The entire world is going to packet switched networks based on Internet Protocol.

When every LAN is running Ethernet, it just makes sense that the most efficient way to connect all those local area networks is with an Ethernet connection. Ethernet over Copper lets you do this from typically 3 Mbps on up to around 50 Mbps. Ethernet over Fiber is good for 100 Mbps Fast Ethernet, Gigabit Ethernet, and even 10 Gigabit Ethernet. Gigabit Ethernet is becoming a requirement for medium and large companies depending heavily on high productivity enterprise software or distributing media content, such as video. At the very highest levels, even 10 GigE is no longer out of the question.

The move from legacy telco technologies to IP based fiber optic networks has brought new players into the marketplace for WAN networking services. These competitive carriers have built their own regional or national fiber optic networks and established colocation facilities and points of presence in most major cities, even some mid-size cities. They can often bring their own fiber into business locations and bypass the telephone companies completely. Now instead of one option for service, you may have several or more even at the Gigabit Ethernet level. That spells competition and competition leads to lowered prices.

Could your organization benefit from the recent cost reductions in high bandwidth networks services? Don’t shake your head no until you check current prices and availability for Gigabit Ethernet bandwidth services and other bandwidth offerings. At the very least, your next service lease could cost you less than the one you have now.