25354 Compare DSL Leased Line and Ethernet Dedicated Internet Access Buyers Guide

Dedicated Internet Access Buyer’s Guide

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Compare DSL, Leased Line and Ethernet - Dedicated Internet Access Buyer’s Guide

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Contents

Contents ............................................................................................................................... 2

Executive Summary ........................................................................................................ 3

Dedicated Internet Access Services Overview .................................................. 4

Key Features and Analysis of Dedicated Access Technologies ................. 6

Leased Line ......................................................................................................................... 6

Bonded DSL ........................................................................................................................ 7

Ethernet Circuit ................................................................................................................ 8

Market Overview ............................................................................................................. 9

Cost of Dedicated Internet Access Services ..................................................... 10

Checklist: What to Ask Before You Decide ....................................................... 12

Conclusion ....................................................................................................................... 14

About OneStopClick..................................................................................................... 14

Sources .............................................................................................................................. 15



Executive Summary

When deciding on a business connectivity solution, there are many different options available. Choosing which type of dedicated internet access service is the best fit for your organisation depends upon your budget, your organisation’s connectivity and bandwidth needs, the type of network applications which are most typically used and the future plans of your organisation. Traditional leased lines remain the top choice amongst larger corporations, but their market share continues to erode thanks to the availability of inexpensive alternative solutions such as bonded DSL and Ethernet circuits. These options offer similar performance at a greatly reduced cost and with a simplified infrastructure installation.

This white paper explores the benefits and drawbacks of each of these three dedicated internet access solutions, along with providing an overview of their costs and installation requirements. The goal of this document is to provide a baseline upon which to further explore the specific dedicated solution that is the most beneficial to your organisation.



Dedicated Internet Access Services Overview

Businesses are fortunate to have a fairly wide range of options when it comes to choosing a dedicated internet access solution. Of course, each potential service poses its own particular set of technological challenges, key features and costs. As in many other areas of the information technology sector, traditional higher-priced dedicated internet access services have recently been challenged by lower cost, technologically innovative alternatives which are gaining serious ground in the UK market.

The gold standard of business connectivity has for many years been the dedicated leased line1. A leased line (also known as an E1, E3, Frame Relay or OC line), is a permanent connection established between two distinct geographical points, such as two offices of the same company, or a bank and a remote financial institution. This connection is not shared with any other users on the telecommunications company’s network, and as such it guarantees stable bandwidth and excellent data security. It is an ‘always on’ proposition and is one of the most reliable ways for a business to either transfer data or access the internet. Leased lines can be configured to handle a variety of different transfer speeds, and usually feature excellent support and Service Level Agreements (SLA) from the provider. A leased line can also be part of a Wide Area Network access solution, which allows a Local Area Network (LAN) to connect to other LAN’s and the internet at large.

Unfortunately, the costs associated with leased lines are some of the most expensive in the industry. The installation lead-in times, cost of installation and the maintenance and access fees imposed upon the line subscriber can be daunting for many small businesses. The distance between the business, the provider, and the sites that are to be linked together also play a significant role in increasing the price of a leased line. These factors, combined with recent innovations in connectivity technology, have allowed for several viable leased line alternatives to make their way to the fore.

Digital Subscriber Lines (also known as DSL, ADSL, SDSL, and ADSL Max) have long been avoided by companies seeking quick and reliable internet access and data transfer. Originally positioned as a consumer technology, DSL is based on a switching data connection technology that shares its bandwidth with a host of other customers accessing the provider’s network. However, Bonded ADSL uses multiple DSL circuits working together as one in order to get around many of the traffic congestion issues typically associated with this type of connection. Bonded ADSL is

As in many other areas of the information technology sector, traditional higher-priced dedicated internet access services have recently been challenged by lower cost, technologically innovative alternatives which are gaining serious ground in the UK market.

Unfortunately, the costs associated with leased lines are some of the most expensive in the industry. The installation lead-in times, cost of installation and the maintenance and access fees imposed upon the line subscriber can be daunting for many small businesses.

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now offered with the robust SLA that businesses require, as well as excellent transfer speeds. Installation is also quicker and more flexible than that of a leased line. In addition, costs are significantly lower when compared to standard leased lines. The recent infrastructure upgrades made as a result of Local Loop Unbundling (LLU) and the emergence of next generation ADSL services such as Annex M DSL means that bonded DSL will continue to improve in terms of bandwidth and availability.

Ethernet circuits are another less expensive option for those who seek a high bandwidth corporate connectivity solution. These Virtual Private Networks (VPNs) are built over Ethernet links forged from point-to-point on either a city, regional or national scale. The primary advantage of a VPN is that it enables a company to offer the same level of broadband connectivity to as many offices and remote workers as necessary, as well as provide access to geographically-specific resources from anywhere within the network – including internet access. Bandwidth over this type of connection can be scaled up to a very high level, and it mimics a LAN in terms of functionality. The single connection point design also decreases connection and installation costs.

Ethernet circuits are another less expensive option for those who seek a high bandwidth corporate connectivity solution.



Key Features and Analysis of Dedicated Access Technologies

Leased Line

The appeal of a leased line access solution is easy to understand. The bandwidth that has been allocated to the company leasing the line is used exclusively by that company, which means not only excellent throughput but also an added layer of security. There is no switching involved – the direct connection facilitates the maintenance of a constant line of communication between the two points. Their design enables providers to offer SLA’s of up to 99.999% or in some cases even 100%, which can be a key deciding factor for many operations who cannot afford to have their data link interrupted for any reason. Most leased lines feature automatic switchover to backup connections which can step in should any problems arise. With recent price drops, these resilient backup connections are increasingly found in the form of dual leased lines, with each connected to a geographically separate Point of Presence (POP) through a different provider. However, they are more often implemented as an inexpensive bonded DSL solution.

Leased lines are also ideally suited for businesses which require the lowest possible latency times when transmitting data. Latency refers to the time delay between initiating communication and that communication reaching its intended recipient. Those who benefit the most from low latency times include companies which deal extensively in online video, teleconferencing or live data processing such as financial transactions. Online reporting regarding the status of the connection, along with full provider management and replacement of all associated hardware are also hallmarks of leased line use.

In the UK, the speed of a leased line typically ranges from 2 Mbps up to 10 Gbs. Line speed generally increases in specific bandwidth increments or ‘channels’. Leased lines can also be configured as ‘burstable’, which means that they can exceed their allocated bandwidth up to a certain limit if needed. This enables a business to pay for a low rate of transfer speed on a monthly basis and occasionally absorb the cost of their extra bandwidth needs.

Leased lines are fast, stable, and come with a very high level of service and uptime guaranteed by their associated service provider. However, there is a steep price to pay for these benefits. To begin with, scheduling an installation for a leased line can

Their design enables providers to offer SLA’s of up to 99.999% or in some cases even 100%, which can be a key deciding factor for many operations who cannot afford to have their data link interrupted for any reason

Leased lines are also ideally suited for businesses which require the lowest possible latency times when transmitting data. Latency refers to the time delay between initiating communication and that communication reaching its intended recipient



take up to 90 days, depending upon the schedule of your telecom provider. Longer lines, or lines that are located far from the provider’s POP are also more costly. The built-in usage costs associated with leased lines are also amongst the highest in the business. Finally, when considering the needs of larger or growing operations, leased lines do not scale well, as a leased line essentially connects two points and cannot serve as a hub for multiple remote users in other offices or in the field. It is also costly to move should operations change locations.

Bonded DSL

The explosion of high broadband internet speeds available to consumers in recent years has been harnessed for business use in the form of bonded DSL. ‘Bonded’ refers to the practice of combining several standard DSL lines into one connection. For example, an 8 Mbps bonded DSL line could be formed out of two 4 Mbps DSL lines, or even four 2 Mbps DSL lines. Bonded lines effectively increase the bandwidth of a particular access solution exponentially, and remove many of the latency issues and traffic jams that occur on standard DSL lines. They also help to improve redundancy when routing traffic – if one line is disabled, then the other bonded DSL lines can instantly take over.

In addition to offering excellent data transfer speeds and good reliability – some SLA’s are in the 99.99% range – bonded DSL is also inexpensive. Costs for the service are far lower than even the least expensive leased line, both in terms of use and installation. Bonded DSL also has the advantage of rapid implementation times, which makes it a more flexible solution for businesses. Hardware costs associated with implementing this form of dedicated access are extremely reasonable.

Businesses can opt for a managed bonded DSL solution wherein their service provider handles all configuration and support issues stemming from the combination of different DSL lines, or they can choose to self-manage and lower their costs even further. In the latter case, service providers will usually charge the business only the cost associated with each of the individual lines being used in the bonded connectivity solution. Self-managed solutions are also typically remotely accessible by system administrators.

The downsides to bonded DSL include a lower level of data security, lower overall maximum connection speeds, and greater risk of congestion when compared to a dedicated leased line. Some providers will not offer an SLA attached to their bonded DSL service, although these organisations are in the minority.

The explosion of high broadband internet speeds available to consumers in recent years has been harnessed for business use in the form of bonded DSL.

In addition to offering excellent data transfer speeds and good reliability – some SLA’s are in the 99.99% range – bonded DSL is also inexpensive

The downsides to bonded DSL include a lower level of data security, lower overall maximum connection speeds, and greater risk of congestion when compared to a dedicated leased line.



Ethernet Circuit

Ethernet circuits, or extensions can enable a company to build a robust VPN featuring maximum speeds similar to that of a leased line. One of the key differences between Ethernet circuits and other access solutions is that not only can they serve as a point-to-point data link like a leased line, but they also possess the ability to link multiple sites together over the same connection, functioning as sort of central hub. This helps to make them an excellent option for companies with multiple field offices or remote workers who regularly access the company’s network from home. By the same token, it is easy to scale up access should operations require increased bandwidth.

It helps to think of an Ethernet circuit as the extension of a company’s LAN. It can offer LAN functionality over an area the size of the UK, or be scaled down to work within the city limits of where a company is located. This means data can be transferred from Ethernet port to Ethernet port by users in an intuitive manner2. Configuration and installation is simple and inexpensive, as are usage fees. Individual Ethernet circuits must be constructed within a 25 kilometre radius of the POP (Extended Ethernet within 35 kilometres), which means larger networks are built by linking multiple Ethernet circuits together over a broader geographical area.

As with all VPN’s, Ethernet circuits pose security issues as a result of the gateways into a company’s LAN which much exist in order for the circuit to function. Since an Ethernet circuit shares the same switched network access as DSL, there is also the potential for slowdowns due to increased network traffic. Unlike a leased line, the technology does not allow for bursts of extra bandwidth during peak hours or extreme usage scenarios, and depending upon local providers, Ethernet circuits can sometimes take up to 65 days to install3. This makes them less flexible than bonded DSL from an infrastructure perspective.

One of the key differences between Ethernet circuits and other access solutions is that not only can they serve as a point-to-point data link like a leased line, but they also possess the ability to link multiple sites together over the same connection, functioning as sort of central hub.

Individual Ethernet circuits must be constructed within a 25 kilometre radius of the POP (Extended Ethernet within 35 kilometres), which means larger networks are built by linking multiple Ethernet circuits together over a broader geographical area



Market Overview

It is no surprise that the advent of inexpensive alternatives to digital leased lines has contributed to the decline in use of this once stalwart technology. Leased lines still hold onto a substantial section of the market, with their estimated UK retail sales nudging the £1bn per year mark1. This does not even include the healthy wholesale market for leased lines, and taken all together leased lines account for the majority of business connectivity in the UK4. However, Western Europe has seen a pronounced reduction in new leased line installations, a situation which is expected to not only continue, but also to accelerate as time goes on5. In fact, between 2005 and 2010 market analysts predict that the market for leased lines will see a compound annual growth rate of -8%5. Total market value is forecast to drop by 50% within the same period of time5.

There are several reasons as to why bonded DSL, Ethernet circuits and other connectivity solutions have eroded the market share of leased lines in Europe, and of these, cost is the single largest factor. The far lower usage and installation costs of these technologies has enabled a larger number of small and medium-sized businesses to employ efficient networks and challenge their competitors to reduce their own IT and connectivity-related expenses. This has lead to a snowball effect wherein companies that previously employed pricy leased lines are abandoning them in favour of the increased savings found in bonded DSL and Ethernet5.

Small businesses also prefer to take advantage of the flexibility offered by these technologies5. With more and more jobs being outsourced and with a larger percentage of employees electing to work from home, the need for a network solution which can accommodate a number of geographically diverse users is greater than ever. Smaller companies also tend to plan for the shorter term and respond more quickly to changes in the market than larger ones, which means that the reduced installation lead times and easy expansion capabilities of these alternative access solutions become far more attractive.

Leased lines do remain popular amongst large corporations who appreciate their ability to handle voice, video and data connections between their sizable centrally-located offices and data centres5. However, greater numbers are defecting to alternatives despite pricing incentives designed to keep current users of this type of digital connection from switching to a different type of service4. The costs of leased lines are almost 1/3 of what they were at the beginning of the 1990’s, but the differential has not been enough to stave off the drain of business customers4.

There are several reasons as to why bonded DSL, Ethernet circuits and other connectivity solutions have eroded the market share of leased lines in Europe, and of these, cost is the single largest factor

Leased lines do remain popular amongst large corporations who appreciate their ability to handle voice, video and data connections between their sizable centrally-located offices and data centres



Cost of Dedicated Internet Access Services

So far, this document has made several references to the high cost of leased lines. How expensive is this type of dedicated network access? Even at lower data speeds, the figures can be formidable. In 2008, the least expensive 2 Mbps leased line in the UK cost on average £1,800 to install and between £300 and £900 per month in terms of monthly fees4. Moving up the scale, a 10 Mbps typically cost between £4,000 and £7,500 to put in, depending upon the provider, and up to £2,600 per month to use4.

The top tier leased lines – those which can handle 1 Gbs to 10 Gbs of data – have costs which can vary greatly depending upon whether the installation is being performed in a major city or across a more rural area. In London, the cost to install a 1 Gbs line across town would run £13,000, while the same line connecting an office in one city to that in another averages £25,000 to install4. Monthly costs range between £2,000 per month for a metropolitan connection and £7,000 per month between cities4. A 10 Gbs line cost £10,000 more to install and £1,000 more per month in usage fees4. UK pricing for leased line installation and rental is significantly less expensive in London versus purchasing the same services outside of the city’s boundaries.

It is important to keep in mind that amortisation of installation costs over a multi-year contract with a service provider, along with the monthly discounts associated with longer term contracts can reduce or otherwise alter leased line costs. These multi-year contracts are popular amongst corporate clients looking to lock-in favourable pricing and maintain a stable internet provider. 2009 has also seen substantial discounts for leased line installation (averaging a 30% decrease versus 2008) and rental (ranging between 10% and 20% decrease per month versus 2008) as providers scramble to remain competitive6.

Ethernet circuits represent the next tier down when it comes to installation fees and service charges. A basic 10 Mbps Ethernet circuit incurs an installation charge in the neighbourhood of £1,200, with monthly fees of £1757. Interestingly, while the cost for installing a 100 Mbps circuit is more than double that of a 10 Mbps (£2,750), monthly rental is only £2307, an almost negligible difference. The highest bandwidth Ethernet circuits, those capable of handling 10 Gbs, cost £14,000 to install and approximately £1090 per month for access fees – a mere fraction of the costs of a leased line7.

The top tier leased lines – those which can handle 1 Gbs to 10 Gbs of data – have costs which can vary greatly depending upon whether the installation is being performed in a major city or across a more rural area



In comparison to Ethernet and leased lines, the pricing for bonded DSL is dramatically lower. An unmanaged solution can start at £50 per month for a 40 Mbps up / 6.4 Mbps down connection, all the way up to £300 per month for a steady managed 16 Mbps up / down connection8. These options are free of traffic shaping or throttling. Installation fees can even be as low as £3359.



Checklist: What to Ask Before You Decide

Deciding on which dedicated network or internet access solution is the best match for your company is entirely dependent upon not only the present needs of your company and your budget, but also what you foresee being required in the next 3 to 5 years. It is important to plan for growth and change when choosing to adopt a new technology. In order to do so, it is necessary to ask the right questions about your organisation’s operations and the technological needs that will help you to reach your future goals.

The questions below are designed to help guide you towards choosing a dedicated internet access solution that is the best possible fit for your needs and planned IT spending. They can also help you to select between the different connectivity plans that you will encounter from the service providers who tender offers to you.

• Are low monthly bandwidth costs a priority?

• Is data security more important than any other concern?

• Does my company need the highest tier of bandwidth available?

• Does my company need a low latency connection?

• Does my company need an SLA that approaches 100%?

• Are the data needs of my company static, or is there a projected call for expansion in the future?

• Will my company’s needs be met with steady bandwidth or does it require the ability to access extra bandwidth during peak hours?

• Is my company’s IT staff capable of managing a network solution or is external management required?

• Does my company require a network solution immediately, or can the implementation date be as long as 3 months away from the decision date?

• Will my company be in the same location in 3 years? In 5 years? Will the site we are connecting to also remain in the same location for the same period of time?



• Can my company afford to amortise installation costs over a multi-year period?

• Can my company afford to absorb installation costs should a move be required?

• Does my company require multiple external connections to field offices or home workers?

• Does my company require a VPN?

• Will my company need constant monitoring and reporting on connection status?

• Do the service provider representatives I have talked to understand my business needs as I have communicated them?

• Do the service providers I have been in contact with have a good reputation in my area?

• Have I short-listed potential service providers that meet our requirements?



Conclusion

IT planning decisions are never easy, particularly given the uncertainty surrounding issues such as business expansion and the changing labour market. However, it is clear that on the whole, not only are small and medium-sized businesses moving away from the type of centralised work locations that favour leased line installations, but so are large corporations. The projected decline of leased line installations is not necessarily a judgement on their utility, but rather a reflection of the changing state of the business world and the renewed focus on flexible and cost-effective solutions.

Bonded DSL and Ethernet circuits offer almost identical levels of bandwidth when compared to traditional leased lines, and they do so at a greatly reduced cost and a reduced installation lead time. While the details of the technologies might not match up point for point – particularly with regards to security or latency – the flexibility and expandability of these two dedicated internet access solutions make them a better match for today’s business climate. Bonded DSL and Ethernet circuits provide the features, bandwidth, adaptability and cost savings that can give your company an edge in a very competitive market.

About OneStopClick

OneStopClick delivers white papers and technology-related research helping IT professionals and business executives achieve better business outcomes. Since 2003, our content and Solution Advisers have helped thousands of professionals educate themselves on technology related solutions as well as evaluate and qualify suitable providers.

For advice, quotes and vendor comparisons on DSL, Leased lines or Ethernet services contact us on 0844 243 5669 (local call rate) and ask to speak with a Solutions Adviser or visit www.onestopclick.com

..however, it is clear that on the whole, not only are small and medium-sized businesses moving away from the type of centralised work locations that favour leased line installations, but so are large corporations



Sources

1 Ofcom 2008. Leased Lines Charge Control. Retrieved June 15, 2009 from http://www.ofcom.org.uk/consult/condocs/llcc/leasedlines.pdf. 2 British Telecommunications plc 2005. MegaStream Ethernet and BT Enterprise Ethernet. Retrieved June 16, 2009 from http://www.productsandservices.bt.com/btbusiness/btbusinessProducts/pdfs/PRD200484_fact.pdf. 3 Netservices n.d. Ethernet Technical Data Sheet. Retrieved June 17, 2009 from http://www.netservicesplc.com/pdf_files/datasheets/Ethernet%20Tech%20Sheet.pdf. 4 OneStopClick 2008. The Falling Costs of Wide Area Networks. Retrieved June 15, 2009 from http://networking.onestopclick.com/white-papers/28/the-falling-costs-of-wide-area-networks.html 5 TF Market Research 2008. Western Europe Retail Digital Leased-Line Forecast and Analysis, 2005-2010. Retrieved June 15, 2009 from http://www.marketresearch.com/product/display.asp?productid=1867357&SID=89705875-443394317-523592862&kw=leased%09line. 6 Empirical evidence from data collected by OneStopClick from ISPs between January to June 2009.

7 British Telecommunications plc Openreach Price List. http://www.openreach.co.uk/orpg/pricing/wes/downloads/ORPL_WBB_WES.htm. [accessed June 17, 2009]. 8 CCS Leeds UK Leased Lines. http://www.ccsleeds.co.uk/uk-leased-lines.html. [accessed June 16, 2009]. 9 Charges Schedule for BT Bonded ADSL Service. http://business.bt.com/bondedadsl/pricing. [accessed June 16, 2009].

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25354 Compare DSL Leased Line and Ethernet Dedicated Internet Access Buyers Guide