The Basics of a T1 Service and How it Can Save Your Company Money

It was not that long ago that copper wire was the single element that enabled the majority of business organizations to communicate with the world.

Growing businesses today require not only more bandwidth than traditional copper-wired phone systems deliver, they also need more control of how these systems are configured for optimal cost-savings.

The T1 (or T1 carrier) is a popular choice for many small and medium sized businesses. This type of broadband connection can provide the perfect solution as a company grows and its telecom voice and data needs change.

What it is and How it Works

In its most basic sense, a T1 connects your phone system to the digital world. Signals are digitally transmitted rather than by way of analog. Because of the nature of digitized transmission, it offers a much more robust and dynamic method of sending and receiving voice and data information. Typically, it will have a capacity of 1.544 Mbps making it a faster connection than many other methods.

Because this connection transmits signals digitally, lines can be broken into discrete channels (24 useable channels) each with a capacity of 64 kbps. Channels can be assigned and programmed to handle voice, data and even video traffic. The flexibility of channel assignment allows or service adjustments as business needs change.

Levels of Service

There are a variety of T1 service types available. At the most basic level, it can be used to handle either your voice or data needs. Others include:

Integrated

Provides voice and data on the same digital circuit. You can decide how many of the T1 connection's 24 channels will be reserved for voice calls, and what's left is used for data.

Fractional

Uses only a portion of the total bandwidth for a percentage of a full T1 rate.

Burstable

A "pay as you go" service, burstable T1 provides a set amount of bandwidth at all times, but also offers the ability to tap into much greater bandwidth during high traffic spikes.

Bonded

Offers the full bandwidth of multiple T1s at once for better speed and performance. Combining individual T1s into a single pipeline allows for more bandwidth than two separate T1 lines.

Individual business needs will determine the level of T1 service required.

How It Can Save Your Company Money

The obvious advantage of installing a T1 is the capability of the increased bandwidth and the ability to assign channels based voice and data traffic. There are more subtle advantages however.

Channel connections are only engaged for the duration of a phone conversation. Once the conversation ends, channels (or lines) are then placed back into the "pool" of lines allowing anyone to use them. This situation provides much greater efficiency throughout the system.

In this type of broadband environment, lines are not dedicated to specific phones or people but instead reside in a "group" to be used by anyone as needed. Because most businesses do not need a 1:1 ratio for lines to people or phones, this solution can be very cost-effective.

Even if your business is currently using less than 24 lines, the cost can be justified for a number of reasons. First, it can provide more bang for the buck. For example, say that your business uses 12 analog lines at a cost of $450 per month. The chances are good that a T1 would provide 24 channels (i.e. lines) at roughly the same monthly cost.

Another advantage is that the portion of the the channels your company uses for data are tax-exempt. Any amount of the circuit that is designed to carry data traffic is an automatic money saver. Federal, state and local telecom taxes can be as high as 35% in some cases. Over time, this cost-savings alone will make a big difference.

Disadvantages, Pricing and Contracts

The cost of T1 service may be the only drawback for employing the technology in your business. Service is very reliable, and you will love its speed and flexibility for voice and data - but you will pay for it.

Pricing can range anywhere from $250 to $1,000 per month. Keep in mind that there will be initial setup costs as well. Fractional connections run about $100-$200 per month. Due to increased competition in the marketplace, fractional connections have become less cost effective however. For example, a fractional connection of 768k carries only half of the bandwidth of a full connection, but usually saves only 5% to 15% of the price of a full T1.

Bonded connections are typically priced by the number of T1s in service. Most carriers will provide the routers, cable, pipes, etc. at no additional charge.

Contracts are usually the standard length of three years. Make certain that the contract you sign is comprehensive. As with any telecom contract negotiation, watch for little surprises and hidden fees. The contract should detail all costs, including length of service, service level agreements, setup fees, equipment rental, etc. If you plan on cancelling the contract before the specified time, plan on incurring hefty cancellation fees.

Versus DSL

If reliability is critical in your business, go with a T1 rather than DSL connection. They are more reliable and come with strong commitments from providers. Almost all carriers provide Service Level Agreements that guarantee reliability of your service.

Remember that DSL is distance sensitive as well. The farther you are from the source (i.e. the carrier's central office) the less reliable the DSL connection. T1 service is available whether it is 10, 20, 30, or even 60 plus miles or more. DSL services are almost useless beyond three miles from the central office.

If you are still unsure, contact a reputable telecom consultant. Good firms will be able to analyze your traffic needs and guide you to the best broadband solution.