Asian Strength Boosts Global Rack Prices
Band-X survey shows 12 percent rise in worldwide average

May 2, 2001 -- The average cost of rack space in carrier-neutral colocation facilities worldwide has increased to almost $1,000, according to the latest survey by Band-X, the London-based online bandwidth exchange.
The increase was driven largely by pricing trends in the Asia-Pacific colocation market, while prices remained stable in the United States and Europe.
Worldwide rack prices have risen by over 30 percent since Band-X began monitoring prices in December 1999, including a 12 percent gain in the most recent quarter. The firm's quarterly price reports are based on customer activity on its exchange.
"While we are now seeing more stable pricing across North America and Europe than we have in the past, the growing number of facilities in the Asia-Pacific region is having a significant impact on the average price worldwide,'' said Tim Anker, vice president of colocation trading at Band-X.
Previously, Band-X had seen the price of colocation rise fairly steadily worldwide, Anker noted.
Rack space in the Asia-Pacific region is twice as expensive than in Europe, and 72 percent higher than the U.S.
"An element of this price difference can definitely be attributed to the variety of models across the three regions," said Anker. "The Asia-Pacific region has a large proportion of smaller high value-add, service-based offerings which cost more per rack than the larger, wholesale-based facilities available in Europe and the U.S.''
U.S. price rises have outstripped those in Europe over the past 15 months, with a rack now costing an average of $150 more in the US, according to Band-X.
The size of colocation projects may be a factor as well. European facilities remain about a third larger than those in the U.S., and two-thirds larger than Asia-Pacific facilities.
"We do expect this size gap to begin to close," said Anker. "As operators extend their networks and increase activity in tier two and three markets, as well as the local loop, we'll see an increase in smaller facilities being built to service these localized markets."
Band-X operates a virtual market for international wholesale telecom capacity. It has an international membership of over 15,000 and many large telecommunications carriers use its services.