T1 to the Home — The Next Big Thing for SMBs?

Chances are you worked from home recently.

Whether it’s working out of a home office occasionally or running a “virtual” business headquarters fulltime from a home office, an increasing number of us are doing business over consumer-grade Internet connections — and probably experiencing some degree or another of frustration.

For example, maybe you’d like to cut the Microsoft Office cord and use on-demand office applications. Now, your experience may be different from mine, but I’ve found trying to create or edit a Web-based spreadsheet, for example, was so slow that I could get a cup of coffee between keystrokes. Imagine editing a document with the same response as filling in an online form and you’ll get the picture.

Of course, I’m not the first person to notice this. Broadband service providers have been paying attention and looking for ways to bring business-class connections to the work-at-home masses — and realize heftier profit margins into the bargain.

A while back, Covad, as part of its blogger relations program, made me an offer I couldn’t refuse: a T1 connection to my home office. I’ve been using it for about three months. (More about my experience later).

This got me interested in whether T1 to the home was going to be the Next Big Thing. After all, Covad was one of the first to offer broadband service.

“Covad was a broadband pioneer in the 1990s,” comments Infonetics Research Principal Analyst Stephane Teral. “They have been on the cutting edge for a long time.”

“There are a lot of Silicon Valley execs worrying that Silicon Valley is losing its edge. In other parts of the world you can get 10 megabits for what you pay for one megabit here. So this is part of saying, ‘We got the message and now we’re doing something about it.'”

The advantage of T1 isn’t strictly speaking speed. Cable download speeds are much faster. The advantage of the T1 is on the upload — 1.5 megabits, twice as fast as DSL and about four times as fast as cable &mash; and guaranteed bandwidth and uptime. Plus, T1 service isn’t distance-sensitive like DSL — something Comcast’s reptilian Slowskys keep reminding us about.

While the price for T1 service has dropped by about 75 percent in the last 15 years, at $300 to $400 a month for entry level service, T1 to the home probably isn’t going to appeal to consumers, other than perhaps the most hardcore gamers.

It’s the business market that providers are aiming for.

“There are something like 11 million small businesses in the U.S. and the majority are fairly small,” explains Jake Soder, Speakeasy’s Director of Product Management. “They don’t have a huge opex budget, but they’re looking for something more than just some Internet bandwidth.

“More and more people are saying, ‘I can’t afford downtime,” he continues, ” and the answer to that is a T1.”

That’s because increasingly the Internet is the basic enabler of business operations, the way the telephone used to be. That brings the dependability of the bandwidth to the fore, and that’s another place where T1 cleans DSL’s and cable’s clocks with service level agreements guaranteeing mean time to repair in minutes and hours instead of hours and days.

“They’ve become more interested with the advent of video, Skype,” says Simon McIver, Covad’s Director of Marketing. “They want a high quality service, [with bandwidth] locked. With DSL, the moment school gets out, the DSL slows down.”

Converged communications and VoIP are other drivers.

“SMBs are prime candidates for the cost-savings of VoIP,” says Speakeasy’s Soder. “When you put a couple of phone calls on 384 kilobits [cable’s upload speed] you’ve started to choked your upload, or you end up with dead spots.”

Other good candidates are businesses with high throughput requirements; for example, law offices sending large PDF files, video and audio production companies, VPNs, hosting websites, and of course, duplicating the desktop experience for those on-demand office applications.

And the potential market is growing beyond the usual suspects.

“We have non-traditional users entering this space that we didn’t see two or three years ago,” reports Covad’s McIver. “Businesses you would normally not expect [to be bandwidth dependent]. Auto body shops have applications where you look up parts and schematics online.” If the system is down, they’re not working.

While prices have come down dramatically, don’t expect to see $24.99-a-month T1 services anytime soon. “Our goal is not to get into the death spiral price war,” says McIver.

Instead, providers are looking to compete with value-added services.

“It’s a platform for managed services and VoIP products,” explains Speakeasy’s Soder. “It continues to be our preferred method for our VoIP product. We’d prefer to have everyone on a T1 to have the guaranteed uptime for phone service.”

“As a broadband provider we can provide value-added applications like security, email, web hosting,” says Covad’s McIver. “At the end of the day it’s not about speed — its consistency and dedicated bandwidth.”

So how is my T1 connection working? Here’s the report so far.

First, I haven’t needed any of the premium service that comes with the premium connection. It’s been a no-brainer from that perspective. Which is good because of item number two: it’s not easy to set up. I had to call out my telecom engineer friend to reconfigure my router to get the whole set-up to work.

The Schuk MMOG lab reports that the performance is “like, incredible” in a series of high throughput tests including Counterstrike and World of Warcraft, conducted daily from about 10:00 p.m. until the wee hours of the morning.

But how are your VoIP calls, you’re asking. Because the online gaming isn’t usually going on when I’m on the phone, there wasn’t a noticeable difference. However, if you’re uploading large files — video or audio, for example — the performance improvement is significant.

Covad is working on the user experience, according to McIver. “Our goal is to make this easy to buy, easy to set up and easy to get support.”

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  • humba3

    I guess it comes down on where you live. In larger German cities for instance, you can get a 50/5 mbit VDSL line for quite a low price. In Sweden, Korea or Japan, you get a symmetric 100mbit line for a price that gives the rest of the world the weepies.
    Even where I live, in rural areas you can still get 10/1mbit for $50 a month. If you combine that with a lower speed backup line and a multihomed router (which also are not quite that expensive today.. you could even set up a home router with dd-wrt to get to the same effect), you could have high bandwidth, high availability and even redundancy for less than $100 a month. And when the next round of bandwith fighting breaks out between telcos and cable companies, we might just get that 1.5mbit uplink as well, but with the advantage of having higher download speeds – even if you need to send large files every now and then, traffic still often is asymmetric and if you are in a business where access to large files matters (pick one close to home.. you sell and install PBXes and need to download hundreds of MBs worth of patches), the 1.5mbit downlink will be quickly saturated.
    As far as email concerned, there are ways to make the user not see how fast or slow his/her emails travel.. as soon as you have an mta/mail server in place, your outbox becomes empty as soon as the mail server received that huge PDF.. what happens afterwards is of less concern.

  • packetvoice

    Dual-WAN routers, as the previous comment suggests, may be a better answer than T1. Several home router vendors – including D-Link and Linksys – have introduced such routers in the $150-$300 price range. And they are becoming as easy to set up as home routers. Other vendors include Draytek and PepLink.

    The idea is to get two (or more) “independent” Internet access connections – say one DSL and one cable. The probability of both failing at the same time is very very small. When both connections are up, you get “double” the bandwidth – combined bandwidth of both connections. If one fails, it automatically switches over the entire traffic to the other.

    “Multi-WAN routers combine Internet connections, such as DSL/Cable/Wi-Fi, from multiple ISPs easily.

    The addition of a multi-WAN router to your network will instantly increase bandwidth, uptime, reliability, and accelerate speed while reducing the cost of having a T1 – and protect business continuity.”

    Their marketing pitch is an alternative to T1 with more bandwidth and higher availability and is directed squarely at SOHO/SMBs. What’s more, these routers come with some business class features such load balancing, automatic failover, and QoS for VoIP.

    The math is simple. Say DSL for $50 and cable for $50 will cost you $100 per month. That is at least $200 per month less compared to the lowest cost T1 at $300 month. So, even if you pay $300 for such a Dual-WAN router, your payback is less than 2 months. PepLink has simple “ROI calucaltor” on their website:
    http://www.peplink.com/solutions/internet-load-balancing/

  • DracoFelis

    T1s do have some reliability advantages. And in some cases (mostly upload speeds) they also have speed advantages. So in some cases, they might be the right choice. And the fact that prices for T1s have gone down recently, makes this a less painful choice than it used to be.

    However, T1s still have a considerable price premium over many other broadband options, even after the recent drops in T1 prices. For example, I can get a 10meg/768k DSL connection + a phone line for less than $100/month for the bundle. Compare that with a few hundred for a T1 (which is only 1.5meg/1.5meg, and doesn’t include a phone line) and you see that you pay a lot more for the T1 (which actually has noticeably WORSE performance, in all areas except the upload speed and total uptime). Yes, the upload for the T1 is twice that of my DSL line, and the T1 might be a little more reliable, but you really pay a lot for those marginal T1 benefits.

    And as others have pointed out already, you even have cheaper options that nibble away at the few advantages the T1 actually has (such as upload speed, and reliability). For example, many areas have more than one broadband ISP option. When multiple ISPs are in the area, there is nothing preventing you from signing up for multiple accounts/services with multiple ISPs. Yes, you have to pay for each ISP/account, but in many cases those multiple accounts/ISPs are still cheaper per month total (for all the accounts) than a single T1 costs (for just a single account). And with the proper customer router/equipment (which isn’t that costly to buy these days), you can (for many purposes) combine the speeds of the two ISPs (to get more speed than a single ISP, when all of them are up), and also use each ISP as a “backup” of the other (so you don’t totally lose internet, until all your ISPs go down). In many cases, this approach will be noticeably cheaper than a T1, give the small (home) business user considerably more download speed than the T1, give them almost as much upload speed as the T1, and be almost as reliable (as it’s unusual for independent ISPs to all go down at the same time).

    Of course, this is all about “running the numbers”. If T1 prices were to fall even further, to say only twice the price of a “business DSL line”, than the cost/benefit analysis for “reliable internet” (with decent “upload”) might shift back to the T1 in some cases. However, with the current economic situation (where you can actually hook up 2 or more broadband ISPs for still less than 1/2 of the cost of a single T1), the T1 comes accross as the expensive way to do things. There are still situations where the T1 is the better solution (especially if you just “have to have” the intrinsic reliability and assured bandwidth of the T1), but for many (home) small businesses the T1 is just the more costly way of doing things.

  • brianpconnelly

    The high cost but more importantly un-reliability of T1 in my area is why I have moved to a combination of Cable and DSL or FIOS. With a SMB server from Net Integration Technologies ($800) I can run 3 different connections and the server will do load balancing and failover. The built in firewall is VoIP friendly and setup is designed for non technical (office manager) type.

    When I had a T1 in my business I was constantly caught in the finger pointing game between the supplier the last mile manager and anybody else who they could blame. Often the problem came down to Verizon’s local loop but I was not able to call them directly I had to go through channels. With an outage lasting from an hour to a few days every few months I needed a better way.

    Since switching to Nitix I have not had a single outage where both cable and FIOS were out at the same time. Dynamic DNS and several other tools like “NetInteligence” allow me to sleep at night. What’s better it the whole solution with the purchase of a $4000 server cost me less than a year of T1.

    Monthly T1 in my area 600 * 12 = 7200
    Server, Router, etc $???

    Nitix Server *1 4000
    Monthly Cable 85 * 12 = 1020
    Monthly FIOS 60 * 12 = 720
    Complete Package 5740

    * = Nitix Server is available as a software only purchase for about $600 runs on most hardware.

  • docsharp01

    This is a good post about T1 internet service because broadband communications is the future of internet technology.
    http://www.1-satellite-tv-facts.com/T1-Internet-Service.html

  • andrenym00

    I ordered a T1 Connection for my home but Isp wasn’t able to complete install for service?

  • docsharp01

    I found T1 to be too expensive for my needs. Therefore, I ordered DSL high speed internet service which was much cheaper.