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Kate Gerwig, Editorial Director
This is a two-sided question. The first depends entirely on competition. The second depends on how long the infrastructure has been in place and whether it has "paid" for itself yet or not. In a private line network, the lines have been in existence for quite some time (although in some areas, if a new line must be run, it will be at a premium as the cost of the contract will cover the installation of the line, generally). I had to have a 9600 baud line about 5 years ago for monitoring run to a video headend in the middle of nowhere. The cost was astronomical. It is also possible that the private line network is part of a virtual circuit which is provisioned out of a larger network. If you can imagine TV channels, for instance, where all of them are carried over a single cable, but one will not interfere with another. It is basically the same principle. A company can provision unused bandwidth. This can lower costs and is dependent on the central office capabilities. But the thought process is that if a company purchases a T-1, they will rarely fill it, so circuits can be over provisioned allowing for use of the "extra." Like the airlines do with bookings. If the circuit begins to fill on a regular basis, another may be added and provisioned out.
Not too long ago, several state public service commissions ordered upgrades to facilities and some phone companies did them voluntarily. The ATM equipment is more expensive and if it is a new expense, it is much like a new technology hitting the streets where R&D costs are included in the first iterations until competition brings down the prices for all manufacturers as components become more readily available for lower costs.
The newer trend is for carriers to offer Ethernet services through less expensive routers and switches than their ATM counterparts and some are encapsulated versions but with the same functionality. In some areas of the country it is possible to have 10 Mb or higher links that run over the same routers (just beefed up) that you would see in an office building. They can be provisioned with bandwidth managers. Some office buildings now offer Ethernet services to their customers through a single line that is brought into the building and then provisioned out for tenants.
Check out our recent article on how VoIP is changing telecommunications for a look at other competition for your voice traffic.
This was first published in November 2004