Asian IP transit is pricey but increasingly competitive

ip transit asian
Image by mast3r | Bigstockphoto

ITEM: Asia’s IP transit market is becoming increasingly competitive, with intra-Asian internet bandwidth having grown steadily over the last decade – and apparently at the expense of trans-Pacific bandwidth to and from North America.

According to TeleGeography’s latest Global Internet Geography research, intra-Asian internet bandwidth has increased from 36% in 2012 to 60% in 2022.

During the same time period, the share of bandwidth connecting Asia to the US & Canada has dropped from 49% to just 20%.

Asian IP transit pricey yet competitive

International internet bandwidth growth remains strong throughout the Asia-Pacific region. In the last three years, 100 GigE IP transit port prices across Hong Kong, Singapore, and Tokyo (all of which account for most of Asia’s traffic exchange and content hosting) decreased by 24% compounded annually.

In Q2 2022, weighted median 100 GigE port prices in Hong Kong and Tokyo were $0.55 and $0.58 per Mbps. In Singapore, the 100 GigE price was just $0.45 per Mbps after dropping 27% between 2019 and 2022.

Despite those price drops, Asia remains a more expensive IP transit option compared to the US and Europe, says Brianna Boudreau, senior research manager at TeleGeography.

“In Q2 2022, the weighted median price for a 100 GigE port in Singapore was 3.5 times that of a comparable port in London and three times that in New York,” she says. “Similarly, a 100 GigE port in Hong Kong was 4.2 times that of London and 3.7 times that in New York.”

That said, however, Singapore, Hong Kong, and Tokyo remain competitive hubs for Asia despite the price gaps, Boudreau adds. “It’s a reminder that there’s more to becoming an internet hub than price disparity narrowing.”

Thank the hyperscalers

Of the three established hubs, Singapore is the biggest player, with over 100 Tbps of international internet bandwidth at a CAGR of 42% over the past five years. With those figures, Singapore is outpacing Japan and China (including Hong Kong) in terms of absolute bandwidth and growth rates.

As for what’s driving the shift in IP transit demand to intra-Asia, a key factor is hyperscalers like Google and Meta looking to reduce latency to improve the user experience for their growing regional user base, says TeleGeography research analyst Marvin Tan.

“To do so, they push their content across the Pacific on their private networks to host it in established Asian hubs. This places content closer to end users, hence reducing latency,” Tan explains “As a result, the demand growth to deploy high-capacity links from Asia to North America have begun to slow in comparison to demand growth from intra-Asia capacity.”

Philippine incumbent telco PLDT has been making moves to cash in on this trend and position the archipelago as the next major hyperscaler hub in Asia-Pacific.

Cloud service providers keep expanding

Meanwhile, TeleGeography research also shows that cloud service providers continue to expand rapidly in Asia, driven by the significant growth in internet and cloud service demand.

TeleGeography counts over 70 existing cloud regions in Asia with many more in the pipeline. Asia is home to the most in-service cloud zones with a total count of over 200 zones. (For example, Amazon Web Services announced plans this week to build a new Asia Pacific Region in Bangkok. It’s also building a new one in Indonesia.)

For comparison, the United States and Canada combined have an estimated 120 zones. 

The executive summary of TeleGeography’s Global Internet Geography research is here.

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