Monday, August 30, 2010

The Facts About Business Internet Costs

The whole thing about internet pricing does not make any sense to most businesses. That too often includes those who should understand it the best. The computer support staff, in house "computer guy", or IT cadre. But the key person needing an education is the decision maker. That person who will ultimately decide what solution your company will choose. This is for "them".

Remember that complex network services are like a Trojan horse. If the boss lets a "solution" in because the price looks good..... the staff is left to deal with the consequences.

Be careful... you're being tempted by the siren song of price. Woooooo ~~~ low price. Woooooo ~~~ higher speed. Uhhhh Ohhhh ~~~ long term contract. Uhhhh Ohhhh ~~~ bad service, support, maintenance and billing! And Uhhhh Ohhhh ~~~ time to update your resumé.

You understand for example that a T1 connection usually has a very stringent SLA (Service Level Agreement), one that cable and DSL does not. With the number of T1 circuits in existence and the number of years that they have been available, (and the number of abandoned smart jacks at customer sites), You're apt to be frustrated that it is significantly more expensive to install a T1 than it is to install a DSL circuit.

You might even believe that if the actual physical costs (barring any repeating for long distances) are basically the same as DSL, then if you relax the SLA, why can't T1 circuitry be used to deliver internet where DSL does not go?

You're also likely to be confused because you can get a business 15/3 circuit from a cable provider for about $150/mo and the same circuit at home is about $80. Therein is another trap. Don't get off track trying to compare a business grade line with a residential circuit. That's like comparing apples and watermelons.

Is the higher cost of a T1 circuit (or DS3 bandwidth and so on) a matter of state mandated tariffs? Is it a matter of the ISPs protecting their profits with an air of exclusivity?

No..... now you're buying into the conspiracy theory excuse.

This can be especially migraine inducing if you business is one of those bandwidth orphans, stuck out in Boonieville, Any State USA. You cannot use satellite without cutting down big trees. You cannot get reasonable cell phone coverage even if you are willing to live with the 5Gb limit. You have no WiFi and there is no DSL. All you have available is dialup at 45K. Now that would really suck.

We have been waiting for over three years for BPL (bandwidth over power lines) which apparently is still a work-in-progress. For example sake let's say you may have been quoted say $850 last year for a full T.... with some less competitive prices above $1000.

You may also that we are bouncing signals off of satellites, trying to run IP over high power electric lines and bouncing wireless signals off of multiple towers, when the answer to rural internet coverage may be sitting on a little circuit board in the Demarc room.

Now that's really reaching.... and too simple a argument. The facts just don't support that line of reasining.

I can see where you might also think that the problem with bandwidth in the boonies is of our own making.

But here's the "education" you need to get through all of that cloud cover. Facts.... not excuses and conspiracy theories.

DSL and cable are shared services. Bandwidth is shared in the residential neighborhoods, and is often oversold. Thus many customers are paying for a limited resource, and the low retail price is the result. Even the facility into your residential location is shared.... cable shares the TV connection, and DSL rides on an analog voice grade line.

The flip side is that T1 is a dedicated service (as is DS3 Bandwidth and Business Ethernet for example). The circuit is engineered as a digital circuit, special repeaters might be required if you're far from the central office, and you don't share your bandwidth with other subscribers.

If you want to talk about businesses getting thrown under the bus, simply talk to any independent bandwidth consultant who make a living rescuing frustrated DSL and cable customers with T1 service (or any other dedicated bandwidth solution). Certainly not every DSL and cable customer is disappointed, but there are enough of them to support a thriving industry.

You need to understand that the cost of the physical plant is irrelevant. Only the price to you is relevant. And the price to you for an internet T1 is almost always dependent ONLY on the distance from your central office to a carrier POP (Point Of Presence).... and almost never dependent on the distance from your location to the local central office.

DSL rides on an analog voice grade line. T1 is a dedicated service. The circuit is engineered as a digital circuit, special repeaters might be required if you're far from the central office. Irrespective of SLAs and oversold/dedicated upstream bandwidth, the wires for T1 and DSL are configured differently.

I can't speak for the ILECs costs to themselves when they sell a T1, but any CLEC is going to pay $X for an unconditioned copper pair for DSL, and $Y for a conditioned loop (or loops, depending on how it's delivered) for dedicated circuits.

On top of that, DSL gets terminated in a DSLAM which is, compared to traditional TDM "telco" equipment, way, way cheaper. Old school telco gear for terminating T1, T3 and OC circuits is an entirely different world with insane pricing, and one hopes, reliability. This stuff is built to meet certain standards and it's all for 5-9's reliability, which the DSL gear simply is not.

Then there's the install and maintenance, which involves possibly installing repeaters, picking the appropriate technology (e.g. traditional T1, DSL-based solutions - yes many T1s ride "DSL", but not the cheap stuff), circuit planning and possibly new construction, in some cases dropping a fiber Mux in the building.

Ongoing you are paying for the reliability of the line and a totally different tier of people to service it.

This is just the circuit itself, I'm not even getting into the handoff to the ISP and any oversubscription issues. Even Frame/ATM services over T1 where you are agreeing to go on a "shared" medium is going to be more than cable or DSL due to the underlying T1 line connecting you to the provider.

But one thing which is a HUGE factor in price is the fact that since it's a "business-grade" line, the provider's SLA's require their Techs to respond to outages "within x hours" (usually 4 hrs). Meaning if you run a business and your t1 goes out at 11pm, an ILEC tech will be on-site (or at the cross connect box) by 3am. ILEC's build that cost into the monthly price.... whereas shared/best effort services (e.g. DSL, cable) say "within 24-48 hrs" to fix it (if you're lucky), and you're on the same dispatch queue as the kid down the street who is complaining because his porn is downloading slow.

Keep in mind that the cost of copper and the equipment to support the digital circuit (Dedicated Bandwidth) is nothing compared to the cost of rolling a truck after-hours with a line tech to your location to fix the issue. AND, if it's a problem outside your Demarc (which is usually the case), you don't pay for the fix. It's the ILEC's issue.... meaning "someone* did pay that guy to go out there, just not you.

The bottom line is this.

If you're serious about your business internet needs and understand the importance of having top notch customer service to go with it, you need to go with a carrier with a reputation for great customer service. Dedicated Bandwidth is a very cost effective solution for any company who understands the difference from DSL and cable. Simply be aware that the lowest price rarely means the best service or quality. Because in the internet connection world, more often than not, you get what you pay for.

For quality Dedicated Bandwidth service, protect yourself and your investment by comparing amongst 30 first and top tier carriers where you have a Low Price Guarantee. For more information about Dedicated Bandwidth and finding your best deals and options, please visit DS3 Bandwidth

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3 Comments:

Blogger Falcon said...

Found this blog while searching in frustration for "t1 internet prices insane"... and it did little to justify spending $1,000-$1,500 a month on 3mbps service, when 20-50mbps service is available from a business class cable provider for $120/month (which already sounds on the high end, but not "completely batshit insane" like T1/T3/etc).

There's one critical thing that nullifies the "reliability" statement: the speed. None of these obscenely overpriced ISPs offer a compelling difference in order to charge such a completely market-blind price anymore. They claim "reliability" but in the center of a large city, the cable and DSL providers - especially combined with fail-over - the reliability is 95-99% as it is already (usually with only 5-30 minute outages once a month anyway), so we'd be paying a 1000% markup for an extra ~4% reliability boost... while at the SAME TIME, universally losing 75-80% of the possible speed. That's simply lost productivity and wasted time, waiting for downloads over a slow "reliable" connection, and paying out the arse for it. It's a lose-lose-lose situation.

So, again, where do these "reliable" business-standard ISPs get off charging a thousand bucks a month for their second-class service? We're moving our office from a T1-type service (Unwired Broadband) to a true broadband service (Comcast), still maintaining a voice/data T1 service as fail-over, and saving hundreds of dollars a month while getting amazing new speeds. I was dumbfounded when I heard of offers from AT&T of $1,100 a month for 10mbps fiber...

1:42 PM  
Blogger FreedomFire said...

This comment has been removed by the author.

3:47 PM  
Blogger FreedomFire said...

Falcon, check those prices again ... and the explanations of SLA, QoS, etc. Higher order Business grade internet (T1, DS3, ethernet, etc.) IS more cost effective and out performs DSL and cable hands down. Think dedicated vs shared for one thing. A business wants a guarantee of uptime that DSL and cable can't and won't provide. Also, the $1,000 you quoted for a T1 is WAY out of reality ... except MAYBE in extreme remote locations. You can find T1s for a few hundred easily. Use the link provided in the article for requesting free quotes comparing multiple providers to see what I mean.

3:50 PM  

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