The Covid pandemic has led to a significant increase in internet usage in 2020 due to lockdowns and home offices. According to TeleGeography cross-border internet traffic has increased by an average of 48 percent. The largest increase in traffic since 2013 has led to many submarine cables reaching their capacity limits. To counteract network congestion, some content providers have now reduced the bit rates of their streams.
According to market research company TeleGeography, prices in the global bandwidth market have fallen significantly despite higher demand. New 100 GBit/s submarine cable systems and the upgrading of existing connections are responsible for this. On the most important routes, prices have therefore fallen by an average of 14 percent (10 GBit/s port) and 23 percent (100 GBit/s port) per year since 2016.
It's often a race to get rid of wholesale capacity before a new generation of lower-cost offerings emerges.
Telegeography
Highest growth in Asia
According to the market study, the bandwidth demand has increased in all regions of the world in recent years and especially during the Covid pandemic. The strongest growth in the period from 2015 to 2019 was in Asia, with an annual average of 56 percent. In the already expanded markets in North America and Europe, growth rates were only slightly lower. The demand for bandwidth is thus very different from other markets, where growth generally declines sharply as the market matures.
Hyperscalers invest in their own cables
While in the short term it is primarily home offices that have increased the demand for bandwidth, TeleGeography sees the large hyperscalers as the biggest growth factor in the long term. It is therefore not surprising that Amazon, MicrosoftGoogle, and Facebook increasingly invest in its own submarine cables.
Currently, this expansion is focused on the US-Latin American, intra-Asian, transatlantic and transpacific routes. In the future, however, other routes will follow, as already shown by Google's Equiano cable, which is to connect Africa.
New submarine cables from India to Singapore and Europe are also planned. A forecast by the company concludes that submarine cables worth a total of 8.1 billion US dollars will be connected to the network by the end of 2020. A large part of this (2.3 billion US dollars) will be invested in transpacific cables.
