Why pricing for Leased Lines has fallen
A Leased line is a service contract existing between a customer and a provider wherein the latter agrees to provide telecommunications line that connects two or more locations. This is offered in exchange of monthly rent that customers must settle on a specified date. Leased lines are usually rented by offices and businesses for these guarantee bandwidth for traffic. However, prices of leased lines are falling dramatically, and this is being linked to the following reasons:
Optical Networking Improvements
The cost of operating and creating fibre networks are mostly owed to the effort of digging up on roads and pavements laying fibre cables on the ground. This also gives rise to enduring moments of losses while getting enough customers to pay for the cost of operating and maintaining a network. Once you have successfully done these, the price of bandwidth increase is somehow minor. You will no longer be required to dig up pavements again or consider fibre-optic cables replacement. All you have to do is to replace the equipment on the end of the fibre.
Affordable End-User Equipment
When you purchase leased lines, you do not just acquire a circuit, but you area also provided a router. This is responsible for connecting to bigger router that has the capacity to route several gigabits every second of data from each of the ports. These pieces of equipment turned out to be more powerful and cheaper. Advances in technology particularly in electronics allow manufacturers to stuff more memory and processing power in the same silicon amount with no cost increase. When put together with optical networking advances, changes allow providers of leased line to offer bandwidth at a cheaper cost as the network equipment is upgraded.
Way back in 2001, OFTEL forces BT to provide leased lines on wholesale rates to their competing operators. The competition that took place has caused the prices of leased line to fall. Privatization has also played its role and encouraged BT to lower its excessive manpower. It was in 1984 when BT was privatized employing about 235,000 individuals. It employs 100,000 recently while offering additional services to customers. Cable & Wireless is likewise forced of sharpening up following the BT privatization.
The boom of dot-com also makes the prices of leased lines fall further and new entrants like Colt Telecom strike in lowering the prices on major cities. Most of carriers, including Virgin Media, Cable & Wireless, BT, Colt and Verizon decided to provide services directly via in-house teams and indirectly through partners and resellers. The resellers have mostly driven down the prices of leased lines by persistently and proactively marketing desirable deals to Information Technology Managers.
Backhaul Investment Was Funded by Broadband Boom
The boom of the ADSL connections has forced local loop unbundlers in investing on backhaul capacity. This simply means that to install data circuits that are high capacity to linked equipment are housed in various UK phone exchanges to the own network of the provider. Virgin Media likewise installed links in coping with the demands being faced.