Why is this possible? There are two major elements to the cost savings. First is competition. Time was that you could have any provider you wanted as long as it was the local telephone company. The last few decades have seen that landscape change as deregulation opened the door to other competitors. First to go was the telcos lock on long distance service. Then local service became competitive. Finally, new vendors built out regional and nationwide networks of their own to provide metro and wide area networking connections. Today, you can get competitive bids on even international circuits.
The second major driver of cost savings is new technology. Nearly all telecom networking standards were designed by the telephone companies for their own use. It was decades later that these services were released for use by general business. As communications has moved from telephone calls to computer networks, these solutions still work but require a protocol conversion from LAN to WAN to LAN. It’s no longer the most efficient way to transport data and rarely the least expensive.
What’s better? IP centric networks closely match the packet based networks that are almost universally used for company LANs. Ethernet, the most popular networking protocol, has been extended from the LAN to the WAN. An Ethernet WAN connection can directly connect your LANs at two locations and bridge them into one large network.
Consider lower speed telecom connections. T1 has been the standard for decades. It is now being challenged by Ethernet over Copper (EoC) in many areas. Both T1 and EoC use the same twisted pair telco wiring that runs from your building to the nearest central office. They use different modulation schemes to achieve data transport and have different characteristics. T1 is limited to 1.5 Mbps per T1 line, although multiple lines can be bonded to create higher bandwidths up to 10 or 12 Mbps. There is no distance limit for this service and it works even for rural businesses. Ethernet over Copper can achieve much higher bandwidths of 10, 20, 50 or even 100 Mbps. However, the farther you are from the central office, the slower the line speed.
Equally or even more important, EoC is much less expensive than T1. You can get 3 Mbps EoC service for about the price of a 1.5 Mbps T1 line. Upgrade to 10 Mbps EoC for just 2 or 3 times the cost. Need lots of bandwidth? Move up to Ethernet over Fiber (EoF). The most popular connections are 10 to 100 Mbps, although many companies now order Gigabit Ethernet (1000 Mbps) and even 10 GigE.
Is this affordable? The combination of competition from hungry new carriers and technology advancements have caused prices to plunge from where they were a few years ago. Don’t be surprised if you can save 50% on your telephone and WAN connection or dedicated Internet service bills. If you are paying month to month on a old expired T1, PRI, DS3 or SONET contract, the savings may be even more dramatic.
How do you cash in? Simple. Get competitive quotes on voice, data and cloud services and compare with what you are spending now. You can do this any time, but if you lock in the savings by the end of the year, you’ll get the full benefit for all of the new year. Can you think of a better New Year’s resolution than to pocket all of that savings?