Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from [Unknown Analyst] - J.P. Morgan.
Unknown Analyst - J.P. Morgan
A couple of questions for you. One, I just want to talk a little bit about the reiterated guidance. Obviously, we saw an FX impact in the fourth quarter. As we look into 2009 are we seeing kind of a combination of maybe continued expectations of pressure on the FX front offset by the nice traffic growth that you're see there that would give you the comfort to reiterate your numbers?
And then the second question, if I back out the FX impact, it looks as though ARPU is relative flat in the fourth quarter relative to the third quarter. I'm just wonder are we at the point now where maybe we're starting to stabilize despite the press reductions that you implemented last summer and maybe even could see a little bit of an uptick in ARPU going into '09?
David Schaeffer
In terms of FX, obviously we cannot predict the future. But we based our guidance on FX of about $1.30 for the euro. That has the most impact. The Canadian dollar has a little less impact. We're hovering slightly below that, but that slight strengthening of the dollar we don't think is material enough that it will appreciably change our guidance for the year.
And you are correct that our on-net ARPU if you netted out FX would be flat. Now we are seeing several things going on simultaneously on a non-FX basis. One, customers are taking larger connections; however, they also are signing up for both longer term contracts as well as greater volumes, so therefore availing themselves of the price discounts that we put in place.
If you look at since we have implemented the volume-based pricing program in June, our installed base of customers are at about $8 per megabit. The new sales since these volume-based programs have been put in place are at about $6 per megabit. We would expect to see some slight degradation in ARPU if the customers continued to have the same volumes, but because we are encouraged by the volume-based trends that we've seen and the fact that many existing customers have come back and increased both contract term - 4.3% increase in term, but also 140% increase in contract value - they're obviously taking larger connections.
I think we should see some stability in that ARPU. I don't think we'll see any material degradation from this point going forward.
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