CLECs as ISPs – The Dedicated Connection

January 3, 2000 – In recent articles, we have discussed a variety of Internet connectivity services as potential offerings for CLECs. In today’s discussion, we will cover leased lines, also known as dedicated access. 

A Brief History Of Dedicated Internet Access
Dedicated Internet connections have been around a long time. In fact, dedicated connections of various bandwidths still are the basic network building blocks of the Internet.

During the early 1980’s, the US government sponsored the creation of the National Supercomputing Center initiative to stimulate research. As a part of this, it was thought necessary to link the five national supercomputing centers with each other and with researchers throughout the nation. Thus, the first National Science Foundation Network (NSFNET) was born and managed from the University of Illinois-Urbana/Champaign. The connection speed was 56 kbps, and shortly after being turned on, it collapsed from overuse.

This led to the next NSFNET iteration, won by the joint study partnership of IBM, MCI, and Merit (the Michigan state research network) in 1987. These pipes were at T-1 (1.5 mbps) speeds and lasted a bit more than two years. In 1990, the NSF allowed the creation of Advanced Network & Services (ANS) as a spin-off of the NSFNET joint study partnership, and in 1991, the first T-3 (45 mbps) connections were deployed.

To gain access to these backbone services, businesses and universities had to install dedicated connections from their regional or local area networks into the backbone.

Dedicated Pipes Today
The major Internet backbones of today (and successors to the NSFNET) – PSINet, UUNET, Qwest, Level 3, Sprint, and many others – continue to offer dedicated connectivity to their networks. Every CLEC must either have a direct connection to one or more of these "backbones" or establish “peering” relationships with them.

Peering, using Border Gateway Protocol (BGP), can occur at public peering points like MAE-East, the Chicago Network Access Point (NAP), or hundreds of similar sites around the world. It can also occur in private peering arrangements where two networks arrange to jointly terminate in a common router and exchange their packets directly with one another.

CLEC/ISPs, in turn, can offer dedicated connections to their customers. This consists of a connection to a port in your router and a port in a customer premise router. You can choose to offer the router as part of your service and therefore be responsible for managing the customer premise connection.  Or, you can connect to a customer-provider router that meets your specifications.

Connectivity is normally offered in the following bandwidth configurations: fractional T-1 (56 kbps, 128 kbps, 256 kbps, 512 kbps, 764 kbps, and occasionally others), T-1 (1.544 mbps), and T-3 (44.736 mbps). Other variations can include burstable T-1 or T-3 services. These, however, are technically full bandwidth with modified pricing considerations.

Dedicated connections allow a full two-way pipe for movement of information. For larger organizations or those needing high bandwidth for big files, dedicated access is critical.

From the CLEC/ISP perspective, managing dedicated connections is normally easier that managing dial-up services. There are no modem pools to contend with and the major challenges generally involve domain name service or routing problems.

From an opportunity standpoint, no dedicated connection – in my opinion – should be without a firewall and a well-articulated network security policy and plan. CLEC/ISPs are in a position to offer firewalls and other similar security services as part of their dedicated connectivity offerings. We will cover these in more detail in later articles.

Dedicated connections normally are priced as a flat rate port charge plus any local loop fees. For example, a T-l may cost $750 per month plus $300 to a CLEC or the ILEC. CLEC/ISPs are in a position to offer a complete price to customers within their service area.  Some quick market research will tell you what your competitors charge and allow you to set prices accordingly. When calculating your cost of goods sold, keep in mind that dedicated connections tie up a port in your router. Additionally, you may need skilled engineers to assist in both installation and customer support. These people are more expensive than dial-up help desk personnel, but you should need fewer of them.

Can You Offer Dedicated Connections Only?
Some of the early Internet backbone providers, including ANS and Sprint, were interested in offering solely dedicated access services and not dial-up. This was a tremendous miscalculation in this day of bundled service offerings. After all, businesses may use dedicated access, but their employees also need dial-up and a variety of other types of services.  Instead, consider dedicated connections as part of a complete suite of offerings.

In our next installment, we'll cover cover wireless services for Internet access.

Joel Maloff is founder of Maloff Group International, an Internet business consulting organization. Maloff has been an executive in local exchange and interexchange telecommunications since 1973, and has been involved in various aspects of the Internet since 1987. Maloff is the author of four books and hundreds of articles regarding Internet.