According to a Telegeography report last week, it's been a rough year in the IP transit market. Pricing in both London and New York took more than a 50% hit between the second quarter of 2011 and 2012. I thought I'd look around to see if I could find it in recent numbers.
There are only a few public companies that offer any details about the IP transit business, and even there we must read between the lines more often than not. Two such companies have already reported Q2 earnings.
While Internap Network Services (NASDAQ:INAP, news, filings) is placing nearly all its effort on its colocation business these days, they still break out their IP revenues. Those revenues dropped 3% in Q2 over the same quarter last year "driven by per unit price declines in IP" according to the press release. Definitely a datapoint, but 3% is chickenfeed and this is not where Internap is looking for growth these days. It does suggest that demand very nearly kept up with with those pricing headwinds.
Level 3 Communications (NYSE:LVLT, news, filings) may operate the largest global IP transit backbone by most measures, but it's a small piece of their earnings. The pricing declines measured by Telegeography are on the upper end of the range they give qualitative guidance for each quarter, but what data they report doesn't show it's caused them any difficulty. Pro forma for the GLBC deal, IP/Data revenues rose to $499M from $467 since Q2 of last year. Obviously that includes more than IP transit and the growth engine was surely CDN, but if there was an IP transit pricing headwind then it only managed to hold them back to 6.4% growth in this category, which was better than any of transport/fiber, voice, or colo.
Two other major backbones for whom IP transit is a substantial part of their business will report Q2 earnings this coming week: Inteliquent (NASDAQ:IQNT, news, filings) on Tuesday, and Cogent Communications (NASDAQ:CCOI, news, filings) on Thursday.
Inteliquent hasn't been terribly specific about its IP transit revenues recently, but has mentioned pricing pressure over the past several quarters as slowing down its IP/Ethernet revenue growth. Cogent always offers detailed demand and pricing commentary, but they've also generally been at the vanguard of pricing declines for IP transit. Cogent's revenues took a hit in the MegaUpload flap, but beside that they've seen steady growth. Should be interesting to see what each has to say this week on the subject.
Other major backbones for which I would welcome any data (qualitative or quantitative) that others might have would include international public companies like NTT, TeliaSonera International Carrier, and Tata Communications, and privately held ones like Hurricane Electric. Then there's AboveNet, whose substantial IP transit backbone is now owned by Zayo which is known for the extreme detail it puts out. But not this quarter perhaps, as the deal closed at the end of Q2.