We have had many years now with very much the same prices for back-haul.
It is worth trying to explain to my less technical readers... One of the key things with the services we sell is connecting things. This means that you get data from one place to another. This is the crux of the whole telecommunications industry. Ultimately the costs of connecting stuff is the cost of digging up the ground and putting things in ducts. This is what allows the monopolies and major carries in countries to sell their communications services.
There are many ways the make this work, and there are some shortcuts by way of radio microwave links, and even people considering balloons and satellites. But for a long time the underlying issue is stuff in the ground.
Now, the copper in the ground is one of the key issues with broadband. There is copper from exchange to home and office and that is used for broadband (ADSL). Getting closer to the home or office by running fibre to a cabinet and then using the copper from there with VDSL (FTTC) is faster. Ultimately there are moves to get new connectivity to people's homes and offices using fibre.
But whatever the "last mile" is, whether coax, copper pairs, fibre, hybrid, radio, or what, there is also the issue of "back-haul". This is where the data goes from exchanges and similar concentration points locally to ISPs connection points and on to the Internet.
As an ISP we are in the middle - on one side we connect to peering points and transit providers that connect to "the rest of the world", and on the other we use carriers like BT and Talk Talk to connect via "back-haul" to the various local exchanges and "last mile" connections such as broadband. We join the two together.
There are costs on both sides.
When connecting to the "world", there are transit providers that buy capacity on (or run their own) transatlantic fibre links, and national fibre links in many countries. For as little as £1/Mb/s/month (that is £1 per month for a megabit per second) I can buy transit that connects to thousands of connection points around the world using national and international fibre links.
When connecting to the "UK", I am using back-haul carriers. Now, these have a simpler job in many ways, they are all on land and connecting to several hundred telephone exchanges. The "last mile" from the exchange to homes and offices I pay for separately. So this back-haul is simpler and smaller than the challenges of "transit" to the world, but the cost is anything up to 50 times that of transit! And for no good reason than "It has always been so".
The good news is that there is competition. The good thing about fibre back-haul is that you can simply change the transceivers on the end of the fibre and go from a gigabit to 10 gigabit to a terabit. It is a cost for the technology on the fibres, but the real cost is digging up the road, and that is not needed to make more and more use of the fibre links.
The good news is OFCOM are trying to get BT to open up "dark fibre" links to other operators. This is a big step as the existing way to buy from BT is by link speed. If you buy dark fibre you can choose to invest in later transceivers and get more out of it. If you buy by the gigabit than you are stuck with that.
Third parties can do this themselves if they have the fibre and can upgrade, so we really hope back-haul will finally start to come down in price.
I really hope that it will get cheaper. We are starting to see some clues to this with some carriers. We may even be able to offer new services soon. But what we really need is the major carriers like BT lowering the back-haul pricing to something a tad closer to transit. After all, transit providers link to the world, and BT link to the UK - surely BT should be cheaper!!!
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