Nov. 6, 2001 -- Reflecting anecdotal reports of price cutting by colocation providers, the Band-X quarterly survey of its customers found monthly rack prices in North America slipped in the third quarter.
Band-X said the average rack price in North America in the quarter ended Sept. 30 was $911 a month, down 5 percent from $955 in the second quarter of the year. The data is based upon third-quarter postings made by suppliers on Band-X's online exchange.
While the new numbers present a snap shot of the colocation market, they also are based upon activity on a single company's trading operation. Nonetheless, with a limited amount of aggregate market data available, the Band-X numbers have offered a measure of trends within the colocation sector.
Many marketplace reports suggest even more aggressive discounting has been taking place in recent months in the U.S. While some may differ about the extent of the price-cutting, there's no debating that after years of steadily increasing prices, it's now a buyer's market,
"We are certainly seeing a period of price stability now,'' said Tim Anker, vice president of Band-X Colocation. "This can only be good news for buyers who in the past often had little choice than to accept the terms offered for any suitable available space. As we said in last quarter's report, price is only one component of the overall buying process. Discounting may still happen to try and generate demand, but so far prices remain level.''
Meanwhile, the consolidation of Europe's colocation industry has forced some providers with largest facilities to shelve those projects, according to Band-X. As a result, North American carrier neutral colocation facilities are on average, for the first time, bigger than their European counterparts.
Suppliers on Band-X's trading floor shows that US facilities offered on the exchange average at 35,262 square feet (3,276 square meters), compared to the European average of 32,227 square feet (2,994 square meters).
According to Band-X, the industry consolidation now taking place in Europe has seen a number of larger than average facilities leaving the marketplace over the last quarter thus bringing down the average size of European facilities. In addition, several larger American facilities have begun listing on the Band-X exchange.
This marks a substantial change from a year ago, when the average European facility listed on Band-X was around four times larger that those in North America.
Band-X launched the first independent platform for trading bandwidth in 1997. Today the company has operations in China, India, the UK and the US, and has an international membership of over 15,000 individuals and a customer list that includes a range of leading telecommunications infrastructure and service providers.