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Why is bandwidth so cheap in Europe?
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Why is bandwidth so cheap in Europe?

Everywhere I look it seems bandwidth is dirt cheap with European providers yet if you look at Australia, Asia, it's insanely expensive by comparison. Any reason for that?

Comments

  • ViridWebViridWeb Member, Provider
    edited January 14

    @Atropine said:
    Everywhere I look it seems bandwidth is dirt cheap with European providers yet if you look at Australia, Asia, it's insanely expensive by comparison. Any reason for that?

    Lack of Competition, monopoly, etc....

  • HalfEatenPieHalfEatenPie Member
    edited January 14

    I hope people don't mind if I post this. But I basically wrote an entire post as to why bandwidth in APAC is more expensive than Europe or the US and I always link to it whenever anyone asks (as it's such a common topic): https://hostedtalk.net/t/why-are-asia-servers-expensive/1657/10

    TLDR: Physical and Geopolitical boundaries. Cost of building and maintaining networked infrastructure is significantly higher in Asia due to physical boundaries (aka they're all islands) and geopolitical tension (they're not friends with their neighbors so they don't want to build overland network infrastructure).

    Cost varies widely between overland and overseas. But I think the rule of thumb (I am not an expert in building, laying, or whatever with submarine cables so others who are more knowledgable feel free to chip in. I'm an expert in built non-tech infrastructure.) is that it costs about 5x or so. It's a lot harder to estimate actual cost though as there's so many variables in play. But you're basically working with more people (in APAC anyways) trying to access a smaller pipe (submarine cable capacities). Rules of Economics (Supply and Demand) means that supply is low, demand is high, the unit cost of the product is going to be high.

    You have similar problems in Africa as well.

    While there are many factors at play, I think the biggest cost of operating a network is based on geopolitical stability of a region. In places with more stable and friendly borders, you have governments willing to partner and peer with their counterparts, reducing the cost of building and operating these networks. Everybody wins. In places with less stability/funding/politics, it's a bit more difficult to get cooperation to build it out.

  • elliotcelliotc Member
    edited January 14
    1. Just open the map, distance.
    2. A guess: Developing countries have funding from EU for infrastructure. Politically different countries can also negotiate through EU. No one funds those asia contries, unless they sell ports to other countries for 100 years.

    Edit: pie is described in more detail above, I would like to point out another point, India and other Southeast Asia countries are also facing more complex ocean problem of the "Strait of Hormuz".

    Thanked by 1yoursunny
  • NyrNyr Member

    It is a combination of factors:

    • Lots of peering
    • Lots of competition
    • In some cases, government subsidies
    • Intracontinental connections do not require expensive submarine cables
    • European countries get along kind of ok (no big geopolitical tensions) so cables can pass through neighbors using the most efficient route.
  • bshbsh Member

    ... and:

    • dictations
  • In many asian countries the internet is viewed as a political threat, dictatorships fear free information and as such it has to be a commodity not accessible to the majority of the people, however that is changing and prices go down anyway. Cuba does a similar experiment, there it is easier as all communications are in the hands of the regime so the prices remain set by the government.
    While the infrastructure and neighbouring relations are a serious factor in the expensiveness of the data infrastructure, the infrastructure per se is not the problem, where it is legally allowed, private communication companies find ways to reduce the cost and build their own, cellular data is less and less expensive, congestion is less and less of a problem, but the monopolies and the state support for them are still chocking the competition and manage to keep profits and prices high.
    EU forced the Romanian government to free the telecom market which was a state monopoly in and as a result the thousands of small neighbourhood networks illegally sharing one 4K leased line from RomTelecom could interconnect and link internationally completely bypassing the state company and as a result the prices dropped to levels that are practically free. Same thing happened with mobile providers (market liberalized in mid-nineties) but the fixed lines were still monopoly so the state company was leeching from the mobile operators charging them more than for international calls (which were expensive back then). As a result, everyone bought a mobile phone, even bin grade ones just to bypass the state monopoly and talk for free within the network or 20 times cheaper.
    Today Romtelecom is dead, bought by OTE, then by Telekom, now by Orange, they still send me bills for a contract i closed 3 months ago and although I have given them all the gear back (rented) they still bill me for services and send every bill to the collectors.
    When the market forces work, unless the government has a superstrong mesh of laws to catch all private intiative (and now even harder with StarLink, OneWeb etc) the prices will go down.

  • @Atropine said:
    Everywhere I look it seems bandwidth is dirt cheap with European providers yet if you look at Australia, Asia, it's insanely expensive by comparison. Any reason for that?

    Here's pretty good answer to your question.
    https://op.europa.eu/webpub/eca/special-reports/broadband-12-2018/en/

  • MaouniqueMaounique Member
    edited January 15

    https://ec.europa.eu/newsroom/dae/redirection/document/80552
    This is more recent.
    But we can't really compare EU, which acts more like a loose federation rather than individual countries and has a coordinated policy at central level about broadband, with the diverse and not so friendly regimes in many asian countries.
    Of course it would be way worse in Asia, not only because of the lack of a centralized policy, but also because people are generally poorer, live in oppressive societies and in many places the internet is regarded as subversive and heavily regulated or even censored.
    That being said, global communication companies cannot afford to disregard Asia, especially South and South-East Asia and Australia.
    The submarine cables network (https://qz.com/india/2014815/why-is-ambanis-reliance-building-a-submarine-cable-network/ https://developingtelecoms.com/telecom-technology/optical-fixed-networks/11140-brazil-joins-chile-s-trans-pacific-cable-project-to-link-with-asia-oceania.html https://www.abc.net.au/news/2021-12-12/new-undersea-cable-internet-pacific-australia-us-japan/100694212) is growing and, while this will not drop the broadband price much alone, it will create the basis for the industry to build upon. There is significant money to be made there and the free countries will build up the infrastructure which will push down prices in most neighbouring ones.

    Thanked by 1devp
  • dosaidosai Member

    Just wanted to add fiber broadband is cheap af in India (at least in South India).

  • EU is smaller than india, austrailia, ... and no sea, lot of plains, many carriers from foreign.

  • shellshell Member

    for example indonesia, more than 17000 island.
    it's not cheap to built internet infrastructure to cover all area.

    also mostly international traffic transit via singapore.

  • Globalization has helped keep broadband costs low in Europe. But in addition, each European nation has its own baggage and challenges. Power is scarce in certain Asian regions. Due to space constraints, electricity generation is quite costly. Due to climate change and infrastructural capacity, several Asian nations and large cities (Seoul, Kyoto, etc.) are suffering electricity shortages. Even if you have the bandwidth and space, your monthly power price will be exorbitant, and your power commitments will be fewer than in the US or Europe.

    These issues result in greater operating costs in Asia than in the US or Europe. That's why bandwidth commitments in Asia are so limited unless you have the cash. The price per unit is more than normal. Power is also costly. Most of these locales are mega-cities, thus salaries and operating costs are comparable to any first-world/developed country.
    There are so many variables to consider that comparing the US, Asia and European operations is impossible.

  • MaouniqueMaounique Member
    edited January 15

    @shell said: for example indonesia, more than 17000 island.

    True but they are not that far from each other and the sea inbetween is rarely deep. Putting a transpacific cable of 14k KM is a totally different thing regarding costs per KM than one spanning 10 KM. Also, much less than 17k are actually inhabited and many of those inhabited have only a few people, therefore the proportional equivalent of, say, the population of an EU country which does not have mobile coverage (less than 1%).

    @webhostingworld said: There are so many variables to consider that comparing the US, Asia and European operations is impossible.

    An Excellent TL;DR.

  • ezethezeth Member, Provider
    edited January 15

    I know right. My terra host Ryzen server has a 10 Gbps link with 100TB bandwidth, and it costs 60 USD. It's crazy compared to the states

  • yoursunnyyoursunny Member, IPv6 Advocate

    4G LTE bandwidth

  • dosaidosai Member
    edited January 15

    @yoursunny said:

    4G LTE bandwidth

    Add,

    Thanked by 1webcraft
  • webcraftwebcraft Member
    edited January 15

    @yoursunny said:

    4G LTE bandwidth

    This isn't a good comparison imo. When you buy a plan in the US you can use it nation-wide within every state unlimited. When you buy the UK plan you mentioned, it's only valid in UK. This covers a lot smaller geographical area and covering big areas can be expensive for mobile networking (more hardware, more power required etc.). You get more choice and usable places.

  • yoursunnyyoursunny Member, IPv6 Advocate

    @webcraft said:

    @yoursunny said:

    4G LTE bandwidth

    This isn't a good comparison imo. When you buy a plan in the US you can use it nation-wide within every state unlimited. When you buy the UK plan you mentioned, it's only valid in UK. This covers a lot smaller geographical area and covering big areas can be expensive for mobile networking (more hardware, more power required etc.).

    Europe, China, and USA have similar total geographical area, ±10%.
    Network coverage may vary though.

    The Lycamobile UK plan I quoted offers 50GB in UK, in which 20GB is available for Europe roaming.
    It's calculated for 20GB only, so it's a fair comparison.

  • webcraftwebcraft Member
    edited January 15

    @yoursunny said:

    @webcraft said:

    @yoursunny said:

    4G LTE bandwidth

    This isn't a good comparison imo. When you buy a plan in the US you can use it nation-wide within every state unlimited. When you buy the UK plan you mentioned, it's only valid in UK. This covers a lot smaller geographical area and covering big areas can be expensive for mobile networking (more hardware, more power required etc.).

    Europe, China, and USA have similar total geographical area, ±10%.
    Network coverage may vary though.

    The Lycamobile UK plan I quoted offers 50GB in UK, in which 20GB is available for Europe roaming.
    It's calculated for 20GB only, so it's a fair comparison.

    You cannot roam 100% (of the 20GB) all time though. I think they call it travel policy. And you're only getting access to basic 4G when roaming, no 5G and any faster 4G/4G+, while you get this everywhere with the US plan for instance.

    Thanked by 1yoursunny
  • nvmenvme Member

    @dosai said:

    @yoursunny said:

    4G LTE bandwidth

    Add,

    Meanwhile, spectrum is ~9 times costly than US and ~5 times costly than UK in India, in spite of having cheapest data rates.

    https://www.financialexpress.com/industry/telecom-disparity-us-spectrum-9-times-cheaper-than-india-even-though-auction-revenue-was-double/651614/

    https://www.businesstoday.in/industry/telecom/story/rs-70-crore-in-uk-vs-rs-492-crore-in-india-why-5g-spectrum-prices-need-revision-287303-2021-02-11

    And there is AGR in addition to this.

  • HalfEatenPieHalfEatenPie Member
    edited January 15

    @yoursunny said:

    4G LTE bandwidth

    Funny thing is when I was visiting Tanzania they had pretty solid wireless network infrastructure. Everyone has mobile phones with a data plan. They definitely don't have as much built network infrastructure as you find in Europe or the Americas. However, Tanzania also has a GDP per capita of 1,076.47 USD (2020 numbers).

    Economics states there are realistically 3 ways of setting price:

    1. Cost oriented (calculate all the costs you have up then a markup multiplier. E.g.
      ΣCosts × Markup Multiplier, markup multiplier ranges from 1 to ∞)
    2. Competition-oriented (based on how your competitors are pricing their similar products)
    3. Demand-oriented (based on consumer demand)

    So I don't think comparing the final $/GB cost will be a good metric to compare the cost of operations between regions, but I do think it's a great place to maybe start and back-calculate. Honestly I'm not too versed in the economic literature here to really outline the different methodologies but I think this would be the easiest route for a meta analysis.

    @webhostingworld said: There are so many variables to consider that comparing the US, Asia and European operations is impossible.

    I understand where you're coming from but I don't believe that it's impossible. I think it'll just take a bit more time than a few people on an internet forum, maybe a week to really hone in the comparison. I mean the World Bank or the local regional's development banks needs to perform these kinds of assessments in order to fund ODA projects. What the real question is where should be pin the datum and to what level of resolution is necessary.

    Realistically, you can probably hire a management consulting firm for like a few days to do this analysis.

  • jsgjsg Member, Resident Benchmarker

    Funny how many think it's working.
    For a start "Laying (sub)-marine cable is much more expensive!". Well, actually, no, it usually isn't. The two major cost factors are not the cable but (a) putting it down in a way so as to keep it reasonably safe, and (b) right of way - which is very complex and costly in diverse regards, starting with the need to talk and negotiate with many parties and usually also involving some kind of compensation.
    Now let me introduce a simple but enlightening example, and actually one significant part of the answer to OP: railways. Pretty much all of Europe has plenty railway lines -> only one party to address and negotiate with plus more often than not that party is owned and controlled by the state at least in part -> cheap and easy way to (back then) create a nice backbone across the countries.
    The other major factor may sound a bit vulgar to democracy believers: corporations, typically large multinational ones, and the way they tick. You see putting international and/or long distance cables is very costly, costly as in 9 digit dollar numbers and the real basic deal is "we investors give you a ton of money and we want to see profits" which for the CEO translates to number and density of potential customer population. So, Europe (relatively high population density, urbanisation, and purchase power) is an attractive target while, e.g. Kasachstan is not.
    And the same game usually usually repeats on the next lower, the national level. big cities = high population density and purchase power ~ quick and good profits get better internet, fatter pipes, and likely a MAN too. Smaller towns ... well, not so much, especially if they are distant. Etc.

    So, it's quite simple (albeit smelly): USA (plus neighbours) and EU-rope have fat pipes and usually lower cost, while major parts of Asia and especially outside the really big cities get thinner pipes and higher cost. Dear Ozzies, sorry, but 20 or 30 mio. people that are far, far away just aren't attractive enough and sadly, unlike e.g. Singapore, you are not on a very major route (like EU-ME-(IN)-AS-EA) anyway, plus, so I hear, you are not blessed with a decent telecom. Sorry.

    Thanked by 2default devp
  • MaouniqueMaounique Member
    edited January 16

    @jsg said: "Laying (sub)-marine cable is much more expensive!". Well, actually, no, it usually isn't. The two major cost factors are not the cable but (a) putting it down in a way so as to keep it reasonably safe, and (b) right of way - which is very complex and costly in diverse regards, starting with the need to talk and negotiate with many parties and usually also involving some kind of compensation.

    So it actually is, because LAYING involves all of those aspects, not only the cost of the cable. Yes, repairing a broken cable 4 KM down is more costly than probably the cable, if not extremely long, but the whole operation of putting it in place, no.
    My plan here in Romania (I have 2, just in case) for mobile:
    2 Eur for:
    200 minutes of voice, 200 SMS nationally and internationally (other networks, free in their own), 5 GB 3G, 50 GB 4G, 80 GB 5G. after that is slower to 512k, i think.
    https://www-digi-ro.translate.goog/servicii/telefonie-mobila/optim/digi-mobil-optim-2?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=ro&_x_tr_pto=wapp
    It works in EU too.
    Oh, it also comes with free TV on the phone through their app and up to 5 devices, not necessarily in their network.
    Also, it was a surprise to me that in US data is not available through the hotspot, you can only use on the phone or you purchase an "add-on" separately. We never had this issue, I had to help an US friend with connecting and we found out it is crippled by the carrier.

  • Not sure if this has been mentioned (I'm lazy didn't read everything) but one reason is that in Asia, often ISPs shift the bandwidth cost from the consumer to service providers.

    China might be a special example, but in general residential bandwidth in the country is extremely cheap (something like equivalent to 100 USD per year for 75mbps) while pricing for server bandwidth is like 10-15 USD per megabit per month. Of course all the telecom companies oversell significantly, but it's still a good comparison.

    In many south east Asian companies, mobile data is often incredibly cheap as well. Doing a tiny bit of googling, data in Indonesia costs something like $0.4/GB while server bandwidth costs are significantly higher.

    Asian companies believe that peering is something that should cost money unlike the popular belief in North America and Europe, which is that peering should be open and free.

  • @ehhthing said: peering is something that should cost money

    This happened here too, it comes from the old Telco belief that everyone should charge the others for interconnectivity. In the past the former romanian monopoly charged the new mobile operators more than for international calls. It was actually cheaper to call from GSM to US than your neighbour on his fixed line. There also free plans on which you could receive calls only and they even paid you if it was more than a certain amount a month. That kind of distortion is gone. It will be gone in newer markets too.

  • yoursunnyyoursunny Member, IPv6 Advocate

    @Maounique said:
    Also, it was a surprise to me that in US data is not available through the hotspot, you can only use on the phone or you purchase an "add-on" separately. We never had this issue, I had to help an US friend with connecting and we found out it is crippled by the carrier.

    Most MVNO SIM cards in USA offer hotspot for free.
    You can only use 4G quota for hotspot.
    Once you run out of 4G quota and start using unlimited 128Kbps cellular data, hotspot will no longer work.

    There are many limitations in what phones can use hotspot.
    For example, Red Pocket Mobile on Verizon network only allows hotspot with iPhones and standalone hotspot equipment, but not Android phones.

    So, pick your preference:

    • Major carriers: free new phone, better roaming, higher prices, hotspot costs extras
    • MVNO: buy phone, no roaming, lower prices, hotspot included
  • EU router is best for CN users. Not in my list.

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