Leased Line Pricing

Leased Line Pricing

For this report, we asked vendors to price three scenarios with the option of either supplying Internet access through their MPLS cloud, or connecting it to the main IT office of an organisation. Each vendor was given the same site locations to quote for.
The following is extracted from the Research Report entitled:  The Falling Costs of Wide Area Networks- a Research Report.

In general, pricing for leased lines increases the further the location being provisioned is from a particular Service Provider’s Point-of-Presence (PoP). This is reflected in the price differences quoted by service providers for the same service. In this study, each service provider was asked to quote for the same postcode locations.

Dedicated leased lines have considerably higher installation costs than DSL.  Historically, we see about 60% of leased line contracts signed for 36 months, rather than just 12 months.  Install costs and upheaval are often cited by customers as reasons to commit to these longer contracts.   

The lowest installation cost in our study for a 2Mb line was over £1,800, but note that with some providers installation costs can often be amortised over the contract period.

Still, unlike DSL, leased lines do not face contention: 2Mb is 2Mb always and 10Mb is 10Mb always.  The 2Mb line offers a viable and cost-effective option with monthly costs ranging from just under £300 to just over £900, depending on location. 
There is considerable difference between cities, but in our study no clear pattern emerges.  Some vendors are competitive in some cities; others competitive elsewhere, often depending on their ‘on-net’ network. It pays to research the locations of a service provider’s PoPs and find out if they are ‘on’ or ‘off net’. Off net means the service provider has access to the PoP but these PoPs are owned by another party; so costs will be higher than their own ‘on-net’ PoPs.

10Mb lines do not offer much of a bandwidth discount, ranging in cost from £1,400 to £2,600 per month and costing between £4,000 to £7,500 to install. 
Update October 2011:
Leased line prices have dropped yet again in in 2011.  Leased line pricing is compared against alternative dedicated internet access technologies in  Compare DSL, Leased Line and Ethernet – Dedicated Internet Access Buyer's Guide  
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