IP Broadband Could Cut Private Line Prices, Study Says
thestandard.com
August 20, 1998
By Nancy Weil
Demand for broadband services based on IP (Internet
protocol) could force down the prices of high-speed
private leased lines, creating an unpredictable
competitive landscape, according to a new study from
Insight Research.
Telecommunications carriers offering private lines
such as T1, T3 and DS-O, are still likely to see revenue
growth of 8.8 percent annually through 2002 in that
market, since the lower prices will probably spur
demand, the report said. Insight analysts predict
marketing and technology battles between fast packet
or IP-based services and circuit-based private lines in
the coming years, the company said in a statement
outlining the study, "Private Line Services 1998-2003."
For corporate users, that could mean lower prices as
new IP-based broadband carriers such as Level 3 and
Qwest put competitive pressure on traditional carriers
such as AT&T and MCI, the study says.
IP-based networks for long distance and xDSL (digital
subscriber lines) and cable modems for local services
are threatening the private-line market, which could
force price cuts to keep private lines alive.
"Private line was put on the critical list in the
mid-1980s when virtual private networking gave
corporations an alternative to nailed-up circuits to tie
their locations together," said Robert Rosenberg,
Insight president, in the statement.
"Commercialization of the Internet in the mid-1990s
breathed new life into the private-line market as
companies rushed to create intranets, but the
emerging technology alternatives to PL (private line)
means we've got to put the patient on the
touch-and-go list again," said Rosenberg, who was
not available for additional comment today.
Packet-switched services such as ATM
(asynchronous transfer mode) and frame relay make
T-carrier private lines less advantageous. T-carrier
lines use traditional circuit switching - a more
cumbersome telecom method than packet switching,
which sends packets of digital data for a number of
customers at different times over the same circuit.
But the emergence of companies such as Level 3 and
Qwest, with their plans to offer private-line services at
far lower prices than traditional telcos, shows
"promise to significantly alter the markets for private
line services," according to an executive summary of
the report.
Nancy Weil writes for the IDG News Service in
Boston.
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