FPSTN Rates Decline by 50 Percent in One Year

Posted: 06/1999

FPSTN Rates Decline by 50 Percent in One Year

Forecasting RateXchange’s market indices for the first year, it is evident that
telephony rates for United States-Asia and United States-Europe will decline by more than
50 percent since the indices first were tracked at the beginning of June 1997. The
European index already has reached this mark and it is probable that the global index will
as well.

The RateXminute global index for public switched telephone network (PSTN) rates fell by
more than 18 percent. Regional indices showed much of the decline came from U.S.-to-Europe
routes as the European index fell more than 17 percent last month. The Americas index had
only fractional adjustments, even increasing in two separate weeks to settle at less than
1 percent down for the month. The Asia index caught up with the European index for the
first time in six months, declining at a steady pace to approximately 6 percent during the
last month.

Graph: RateXchange TeleCommodities Indices

The RateXmegabyte global index for bandwidth rates itself declined by 18 percent. This
decline can be attributed largely to new U.S. domestic private lines and rate adjustments
for U.S.-to-Asia international private-line offerings.

The RateXchange indices for PSTN transport and termination showed that major route
decreases might have been due to falling transport costs. The transport index fell less
than 3 percent while the termination index actually increased by 4 percent. This is
contrary to the previous month, and since this experimental index began tracking in
February termination decreases have yielded the most significant declines.

PSTN spot rates, the lowest available rates to a given country that identify
significant movement in non-indexed routes, have been particularly active. Among the
double-digit declines were China (-35 percent to 15 cents per minute), Costa Rica (-31
percent to 17 cents), Ukraine (-21 percent to 22 cents), Switzerland (-18 percent to 6
cents), Hong Kong (-16 percent to 5 cents) and Spain (-15 percent to 11 cents).

Voice over Internet protocol (VoIP) spot rates, a less liquid market, showed
double-digit declines for China (-27 percent to 18 cents) and the Dominican Republic (-10
percent to 9 cents).

Graph: Regional Indices

Watch the market next month for new indices and data from the Real-Time Bandwidth
eXchange (RTBX). The design of this switched-based market allows even more dynamic
price-setting of both PSTN and VoIP routes.The RateXminute is a composite index of all
available offering prices on RateXchange to carriers for the top 20 international voice
minute routes weighted by share of global volume as determined by Telegeography Inc. The
RateXmegabyte is a composite index of all available private lines more than 500 DS-0 miles
long weighed by DS-0 miles within the United States and international private lines (IPLs)
from selected routes to Europe and Asia weighted by share of global IPL volume.
RateXminute Regional Indexes are derived from selected countries within the top 20 routes
included in the RateXminute index. The indexes are updated and published every Tuesday at
www.ratexchange.com. Information is provided to the publisher by RateXchange and is
believed to be accurate. RateXchange nor PHONE+ assume any liability for inaccuracies or
decisions made by readers based on this information.