Will You Save With Fractional Line Services?

If you need and want professional-grade telecom line services but don’t need the full line rates, can you save by ordering fractional rates? Conventional wisdom says yes. Reality may be different.

The idea behind fractional bandwidth is that it ought to be cheaper to buy less than the full line rated bandwidth. For instance, the smallest line service you can generally get with dedicated bandwidth and a service level agreement is the T1 line. These used to be very expensive and cost over $1,000 even in metro areas. At the same time, bandwidth demands in many smaller companies weren’t all that high. Something like 500 or 750 Kbps was plenty for email and text file transfers. Seemed a shame to have to pay for 1.5 Mbps and not make full use of it.

That’s where the idea of fractional T1 lines came from. If you don’t need and can’t afford 1.5 Mbps, then why not order a T1 line but only have it deliver a fraction of the full bandwidth? There should be a cost savings, since the service provider didn’t need as large a backbone network to serve many customers who are only running fractional T1 lines.

Well, yes and no. It’s true that Internet access has a port cost of so much per Mbps. But what about point to point dedicated lines? Is there really any savings to throttling back a line that’s used for only one customer? Plus there is the basic cost of the line itself. A T1 line runs synchronously at 1.544 Mbps whether it is carrying any traffic or not. That’s the basic technology. The pipe, if you will, has a certain diameter regardless of how much is flowing through it.

At any rate, many telecom service providers have offered fractional T1 lines and fractional DS3 service to accommodate customers who can’t pony up the cost of full line speed. This may have as much to do with marketing as anything else. The cost has never been scaled as much as the fraction of maximum rate. In other words, you can order a half-speed fractional T1 line but pay three-fourths or more of the price for a full T1 line.

Now it’s becoming more expensive in some areas to get fractional line speeds as it is to simply order a full T1 line. Why? It’s because a T1 line is a standard product and the fractional service is a special order that needs additional engineering. In that case, you might as well order the full T1 line and just not use all the capacity. It’s cheaper.

Traditional switched circuit telecom services such as T1 lines, DS3 connections, OC3 fiber optic service and the like never were very scalable. They were designed as a technology family with large standard increments between the service levels. But there is a newer service that may be just what you are look for in the way of bandwidth scalability. That’s Carrier Ethernet.

Carrier Ethernet, also called Metro Ethernet, was designed from the beginning to be highly scalable. There are standard network speeds, such as 10 Mbps, 100 Mbps and 1000 Mbps, but there are a plethora of in-between bandwidth levels available. Popular Ethernet service levels are 2 Mbps, 5 Mbps, 10 Mbps, 20 Mbps, 50 Mbps, 100 Mbps and above.

What’s important with Ethernet is to have a port installed that can handle the maximum speed you expect to want. Then buy just the bandwidth you need right now and upgrade later. If you’ve got the right port in place, you can often upgrade your bandwidth quickly and easily with just a phone call to your service provider.

Are you looking to get just the bandwidth you need and not pay extra for unused capacity? Compare pricing for fractional T1, DS3 and OC3 services with Ethernet over Copper and Ethernet over Fiber and see what is most cost effective for your applications. Prices will vary with location, so you need a specific quote for your business address.



Note: Image of fraction dice courtesy of Arjan on Wikimedia Commons.

Price Your Telecom Lines Before You Move

If you are in the process of relocating your business or starting up a new venture, you’ll be in the market for new telecommunications services. That could be telephone, data, video streaming or some combination of these. You’re probably aware that the lease price for professional telecom services is not a standard price, but varies with your business location. So it stands to reason that you should pick your business location to minimize telecom expenses.

What? Nobody chooses their business address based on what bandwidth services cost... do they?

Well, if they don’t they should. Of course, other considerations such as the amount of drive by and foot traffic are probably more important to a retail location than how much the Internet connection costs. But even the price of a simple T1 line can more than double if you decide to locate in some picturesque locale that has no infrastructure.

If we’re only talking few hundred dollars a month, line lease costs will probably take a back seat to other factors. But, still, if you have a couple of suitable locations in mind and are looking for some tie-breaker to help you choose, why not price out your telecom services and see if the difference is significant?

Where you really get into the big bucks is when you are going to lease major amounts of bandwidth. Perhaps you are building a new data center or developing content for motion picture companies. You can easily be looking as DS3 (45 Mbps), OC3 (155 Mbps), or even Gigabit Ethernet (1000 Mbps). These are pricey bandwidth services that may cost as much as your monthly rent... or more. It’s definitely worth the trouble of comparing costs for each address you are considering.

Even more importantly, you may find that many out-of-the-way locations are really bandwidth limited. You can likely get T1 service (1.5 Mbps) at any business location. You may even be able to bond T1 lines to double or triple that. But if you are looking for 10, 45, 100 or more Mbps, where you are located may well determine if you can even get service.

The higher bandwidths require fiber optic connections, which are common in major metropolitan areas and less available as you leave the suburbs. Even in the city, you want to be in or near a building that is already lit for fiber. If not, you may have to budget some serious construction costs to have the fiber cable trenched into your location. Downtown, you may be lucky enough to get EoC or Ethernet over Copper if you are near a carrier office. That can get you up to 45 Mbps without fiber construction costs.

Do you have a need for high bandwidth voice, data or video telecom services? Let our Telarus expert consultants run some numbers on the locations you have in mind so you can compare costs and factor that into your decision. It a complementary service for serious business users.