PacMan,
I think that Steve Bergman (?) explained some of this last week and I would like to add a bit myself. Joe Med, correct me if I am wrong, but the deal gives us co-location rights (IXC will let us put a switch in the same building) and full access to several E1 links. Don't know the OD (Origination/Destination) pairings on these, but I assume they are between the US/UK, UK/Spain and maybe between US/Latin America.
As Steve said in his previous post a E1 has 30 voice channels (actually 32, but channels 16 and 32 are used for signalling) compared to a US T1 having 24 (the E1 is the european version of the US standard T1 and the T1 has 1.54 Mps transmission capacity or 64Kps per channel whereas the E1 is 2.05 Mps).
Be aware that each channel of a E1/T1 is dedicated to a call for the duration that it lasts. So for a E1, there can only be 30 simultaneous calls up at the same time. To take this a little further, if you also assume that the mean holding time of each call is 3 mins., each channel has a maximum busy hour call attempts of 20 calls or for the entire E1, 600 calls per hour.
Taking this even further, we can start to calculate revenues per E1 based on international calling rates. I believe the current rate to the UK is 15CPM and to Spain is 40CPM. Let's take an average of 20CPM and assume most calls will go to the UK. If the link is busy 75% of the time we can calculate this out:
3 (min call) * $.20 (per min) * 20 (call/hr) * 24 (hrs) * 30 (days/month) * .75 (usage) = $6,480 / E1 Channel per month
$6,480 * 30 (channels) = $194,400 per E1 per month
I know that calling from Europe to the US can be 2-3 times more expensive. I we are offering calling services to the US from Europe that means we will have calls from both directions and maybe we can increase the per minute charge from 20CPM to 30CPM and our revenues per E1 increases to $291,600.
This of course is all guesstimates and assumptions. Some questions I would like answers to: If we have E1 access between any two points, I'd like to know what happens to our overflow when the E1 is full? Does the call get killed, or does it get routed over the IXC network at wholesale cost? How long is the term? For how many E1s?
If the deal is for 3 E1s for 5 years, this might be a pretty good deal (assuming that my revenue picture from above is correct).
$18M / 5 yrs / 3 E1s = $1.2M / 12 months = $100K cost per E1 per month
If we can actually generate over $250K per E1 per month, we can make a whole lot of money.
Need to know more details!
Brian Walker
Engineer for Big 3 LD firm |
