Insight: IP broadband could cut private
line prices
By Nancy Weil
IDG News Service, 8/21/98
Demand for broadband services based on IP 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 T-1, T-3 and
DS-O, are still likely to see revenue growth of 8.8% 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 Communications and Qwest
Communications International put competitive pressure on traditional carriers
such as AT&T and MCI, the study says.
IP-based networks for long distance and xDSL 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 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.
Packet-switched services such as ATM 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. |
