https://www.channelfutures.com/wp-content/themes/channelfutures_child/assets/images/logo/footer-new-logo.png
  • Home
  • Technologies
    • Back
    • SDN/SD-WAN
    • Cloud
    • RMM/PSA
    • Security
    • Telephony/UC/Collaboration
    • Cable
    • Mobility & Wireless
    • Fiber/Ethernet
    • Data Centers
    • Backup & Disaster Recovery
    • IoT
    • Desktop
    • Artificial Intelligence
    • Analytics
  • Strategy
    • Back
    • Mergers and Acquisitions
    • Channel Research
    • Business Models
    • Distribution
    • Technology Solutions Brokerages
    • Sales & Marketing
    • Best Practices
    • Vertical Markets
    • Regulation & Compliance
  • MSP 501
    • Back
    • 2022 MSP 501 Rankings
    • 2022 NextGen 101 Rankings
  • Intelligence
    • Back
    • Galleries
    • Podcasts
    • From the Industry
    • Reports/Digital Issues
    • Webinars
    • White Papers
  • Channel Futures TV
  • EMEA
  • Channel Chatter
    • Back
    • People on the Move
    • New/Changing Channel Programs
    • New Products & Services
    • Industry Honors
  • Resources
    • Back
    • Advisory Boards
    • Industry Organizations
    • Our Sponsors
    • Advertise
    • 2023 Editorial Calendar
  • Awards
    • Back
    • 2022 MSP 501
    • Channel Influencers
    • Circle of Excellence
    • DE&I 101
    • Technology Advisor 101 (TA 101)
  • Events
    • Back
    • 2023 Call for Speakers
    • CP Conference & Expo
    • MSP Summit
    • Channel Partners Europe
    • Channel Partners Event Coverage
    • Webinars
    • Industry Events
  • About Us
  • DE&I
Channel Futures
  • NEWSLETTER
  • Home
  • Technologies
    • Back
    • SDN/SD-WAN
    • Cloud
    • RMM/PSA
    • Security
    • Telephony/UC/Collaboration
    • Cable
    • Mobility & Wireless
    • Fiber/Ethernet
    • Data Centers
    • Backup & Disaster Recovery
    • IoT
    • Desktop
    • Artificial Intelligence
    • Analytics
  • Strategy
    • Back
    • Mergers and Acquisitions
    • Channel Research
    • Business Models
    • Distribution
    • Technology Solutions Brokerages
    • Sales & Marketing
    • Best Practices
    • Vertical Markets
    • Regulation & Compliance
  • MSP 501
    • Back
    • 2022 MSP 501 Rankings
    • 2022 NextGen 101 Rankings
  • Intelligence
    • Back
    • Galleries
    • Podcasts
    • From the Industry
    • Reports/Digital Issues
    • Webinars
    • White Papers
  • Channel Futures TV
  • EMEA
  • Channel Chatter
    • Back
    • People on the Move
    • New/Changing Channel Programs
    • New Products & Services
    • Industry Honors
  • Resources
    • Back
    • Advisory Boards
    • Industry Organizations
    • Our Sponsors
    • Advertise
    • 2023 Editorial Calendar
  • Awards
    • Back
    • 2022 MSP 501
    • Channel Influencers
    • Circle of Excellence
    • DE&I 101
    • Technology Advisor 101 (TA 101)
  • Events
    • Back
    • 2023 Call for Speakers
    • CP Conference & Expo
    • MSP Summit
    • Channel Partners Europe
    • Channel Partners Event Coverage
    • Webinars
    • Industry Events
  • About Us
  • DE&I
    • Newsletter
  • REGISTER
  • MSPs
  • VARs / SIs
  • Agents
  • Cloud Service Providers
  • Channel Partners Events
 Channel Futures

Telephony/UC/Collaboration


IP Broadband Services Put Private Lines on Critical List

  • Written by Channel
  • October 31, 1998

Posted: 11/1998

hcarrier.gif (2215 bytes)

IP Broadband Services Put Private Lines on Critical List

By Robert Rosenberg

Private lines were put on the critical list in the mid-1980s when virtual private
networks (VPNs) gave corporations an alternative to nailed-up circuits to tie their
locations together. Commercializa-tion of the Internet in the mid-1990s breathed new life
into the private-line market as companies rushed to create intranets, but the emerging
technological alternatives–Internet protocol (IP)-based broadband services, digital
subscriber line (DSL) and cable modems–means the patient is on the touch-and-go list
again.

Vital Signs

Tcarrier services were introduced by AT&T Corp. for their own internal long
distance trunking requirements in 1967 and offered to business customers 10 years later.
T1 probably would have marked the limit of what end users would demand for voice, but the
data explosion has fueled the shift to T3s, and at least a few hundred large end users’
(in addition to dozens of carriers’) lease lines.

Like the private branch exchange (PBX) in the world of customer premises equipment
(CPE), the private line has provided a solid, dependable and predictable revenue stream
for carriers. It is not very sexy, but it is a substantial business in its own right,
accounting for 7.5 percent of carriers’ total revenue.

Basic and lackluster as they may seem, private lines have become a staple of the
carrier services’ product arsenal. The private-line market, like the PBX market, is mature
and, though not growing at a rapid rate, it is not going to disappear any time soon,
either. Private-line services often are referred by carrier marketing executives as being
the steak rather than the sizzle in their product lines. They have fought hard not to
erode this product line from newer virtual voice and data services, such as VPNs and frame
relay.

The price stability of the private-line market now is threatened by the emergence of
IP-based networks for long distance services, and xDSL and cable carriers for local
services. Competitive long distance services at much lower prices are being promised to
large corporate users by new carriers, who will use the new packet-switching technologies
starting in 1999.

The Insight Research Corp., Parsippany, N.J., sees these emerging carriers competing
and driving down long distance prices over the next several years. It is not yet clear
which architecture will provide the cost and reliability users expect–one based on
intelligent networks (INs) with circuit switching or on IPs with distributed applications.

Insight predicts that as private-line prices decline due to new competition, carriers
must develop innovative new services to maintain their revenue growth. Established
carriers in both the local and long distance markets are likely to respond to these new
competitors with lower prices and innovative new services. While it is unclear which
carriers will prevail, both local and long distance rates are expected to decline,
resulting in overall benefits to end users.

There always will be those reliable customers who do not want to trust their
applications to anything other than their own dedicated private line. These customers like
stability and are highly valued by the carrier. They are analogous to residential switched
service customers who do not want to bother shopping around for the best rate and are
happy with their existing services.

Plastic Surgery

Demand for wholesale services following the shortages in T1 and T3 circuits was so
great that at least two new carriers have sprung up in the last year to join AT&T
Corp., MCI WorldCom Inc. and Sprint Communications Corp. as providers of national fiber
optic networks in the United States. Qwest Communications International Inc., Denver; IXC
Communications Inc., Austin, Texas; and other fiber-based backbone carriers rapidly are
building networks along railroad, pipeline and microwave rights-of-way.

Qwest and IXC are constructing the first new national telecom networks in the United
States since Sprint built its a decade ago. The tens of thousands of additional fiber
miles being laid across the country could end the nationwide bandwidth shortage that
caused big carriers repeatedly to raise T1, T3 and high-speed frame relay port prices in
1997. Enough capacity is now available to support a robust market for private-line
services. Insight expects the new carriers to offer new lower-priced services based on IP
technologies that will drive down the price of all private-line circuits.

icon.gif (618 bytes)
Image: Total U.S. Private-Line Market
1998 vs. 2003

Traditional carriers, such as AT&T, will be forced to match these prices to avoid
loss of market share. Plenty of network capacity will be available to offer private-line
services and competing broadband services, as well. This glut will force prices down,
thereby driving demand up. IP will play a major role in the future of all new networks.
The growth of the Internet is a clear indication of the value of IP, but it is the
corporate commitment to IP and the large corporate budgets supporting that commitment that
will reshape carrier services in favor of IP.

The high growth of the Internet by businesses explains much of the growth in demand for
T1 lines. The market for Internet service providers (ISPs) has grown exponentially from
approximately $50 million in 1994. This growth began at about the time AT&T and other
leading carriers entered the ISP market. They legitimized the market and almost all other
telecommunications companies followed suit.

Virtual private data networks (VPDNs) with guaranteed performance/bandwidth levels will
be built on IP over the next decade. By 2005, this type of network service will dominate
data transport. It still is unclear how much it may replace voice telephony, but IP will
garner the portion of voice communications that is associated with multimedia
collaboration, and that may be the fastest-growing niche of the voice market.

In the next five to 10 years, networking will move from a set of practices dominated by
leased lines to an almost complete dependency on value-added services provided by the
carrier. Plain old T1 and digital transport will give way to frame relay, asynchronous
transfer mode (ATM) and IP connections. Insight sees this migration as a key trend
impacting private lines within the next five years; however, there is insufficient data to
forecast accurately the split of revenues between traditional private line, new IP-based
services and the innovative network management and other operations support system (OSS)
services.

Prognosis

Ironically, lower pricing for private lines spurred by the pressure of competing
technologies may actually increase demand for T1, T3 and DS-0 lines, keeping U.S.
private-line revenues growing at a respectable rate of 8.8 percent annually through 2002.
Long term, Insight expects to see a marketing and/or technology fight between
circuit-based private lines and fast-packet or IP-based services. Depending on pricing,
service flexibility, availability and all other factors being equal, either one could end
up dominating the private- line marketplace.

Robert
Rosenberg is president of Insight Research Corp., a Parsippany, N.J.-based consulting firm
providing comparative market research and competitive analysis to the telecommunications
industry. Visit Insight on the web at www.insight-corp.com.

Tags: Agents Telephony/UC/Collaboration

Most Recent


  • Top 20
    Top 20 Stories in January: Avaya, Microsoft, IBM, AWS, Datto, More Layoffs
    ChatGPT cracks our list for the first time. We've also got new hires and security training. But what was No. 1?
  • Lawsuit
    Bondholders File Lawsuit Against Avaya for $125 Million
    They accuse the company of misleading investors.
  • m&a blocks
    Bluewave Buys SinglePoint from Soterra Capital, Bulks Up Louisville Footprint
    Soterra Capital, which bought SinglePoint in 2016, is keeping equity in the combined company.
  • uc
    BYOC and Partnering for Unified Communications Success: A Winning Strategy for Service Provider Growth
    Service providers can enter cloud telephony market with external voice capabilities for UCaaS platforms.

Leave a comment Cancel reply

-or-

Log in with your Channel Futures account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • Cloud Phone
    AT&T to Offer Up to 1 Million Customers Cisco Webex Calling
  • Sign a Contract
    Unisys Adds Managed UCaaS with $153 Million Unify Square Acquisition
  • Fortune 500 2021 logo
    AT&T, Microsoft, Verizon, More Tech, Telco Companies Make Latest Fortune 500
  • Telephone poles and lines
    Granite Buys Epik: Score One for Legacy Telecom

Upcoming Events

View all

Channel Partners Conference & Expo

May 1, 2023 - May 4, 2023

Channel Partners Europe

June 13, 2023 - June 14, 2023

Channel Futures Leadership Summit

October 30, 2023 - November 2, 2023

Galleries

View all

Abundant IoT, Advisors Tackle the eIoT Opportunity

February 6, 2023

Top 20 Stories in January: Avaya, Microsoft, IBM, AWS, Datto, More Layoffs

February 6, 2023

Cloud Computing News: Broadcom-VMware, Google-Anthropic, Red Hat, More

February 6, 2023

Industry Perspectives

View all

The Software Patching Problem – Solved

February 3, 2023

How to Break Through the Growth Ceiling

February 1, 2023

5 Things to Look for in a UC Partner

January 31, 2023

Webinars

View all

Next-Generation MSP Platform: The Building Blocks for Your Business

February 15, 2023

The SMB Opportunity: How to Sell and Service the SMB Market, Capture Customers and Expand Your Business

February 23, 2023

How To Boost Your Business With White-Label UCaaS

February 28, 2023

White Papers

View all

6 UCaaS Reseller Challenges and How Real World Businesses Solved Them

February 1, 2023

Frost Radar: North American UCaaS Market, 2022

February 1, 2023

The Complete Guide to White-Label UCaaS for Reseller Success

February 1, 2023

Channel Futures TV

View all

Coffee with Craig and James Episode 117: Cato Networks, Video Killed the Podcast Stars

Retired Astronaut Capt. Scott Kelly Previews His CP Expo Keynote

December 21, 2022

Fusion Connect Eyes Future with Intrado UC, Managed Network Customers

September 23, 2022

RingCentral Focused on Hybrid Work, Microsoft Teams, Other Integrations

September 23, 2022

Twitter

ChannelFutures

.@AbundantIoT is putting more focus on the enterprise, CEO Vince Bradley tells Channel Futures.… twitter.com/i/web/status/1…

February 7, 2023
ChannelFutures

January's #topstories in channel include @Avaya @GTTComm @Broadcom @awscloud @citrix @Salesforce @Datto… twitter.com/i/web/status/1…

February 6, 2023
ChannelFutures

.@Acronis announces #CyberFit partner program updates. dlvr.it/Sj2FZQ https://t.co/z7lRdIRo9R

February 6, 2023
ChannelFutures

More #Avaya trouble: Lawsuit against company by bondholders claims "massive fraud." dlvr.it/Sj2DZT https://t.co/4Q1E7JAXXf

February 6, 2023
ChannelFutures

.@DellTech adds new #APEX delivery options for #delltechnologies partners. dlvr.it/Sj29c6 https://t.co/3qEEYpnOBX

February 6, 2023
ChannelFutures

There are some familiar names in @coxbusiness and @Rapid_Scales recent partner awards. dlvr.it/Sj1zm6 https://t.co/0BuGwBrnvM

February 6, 2023
ChannelFutures

RT @Channel_Expo: We know your mind is on the #BigGame this week, but don't take your eye off the ball! #EarlyBird rates for #CPExpo & #MSP…

February 6, 2023
ChannelFutures

Learn about @bluewavetg's latest deal. dlvr.it/Sj1wrV https://t.co/NCdmJ4OFkf

February 6, 2023

MSP 501

The industry's largest and most comprehensive partner awards program.

Newsletters and Updates

Sign up for The Channel Report, Channel Futures Update, MSP 501 Newsletter and more.

Live Channel Events

Get the latest information on the next industry-leading Channel Partners event.

Galleries

Educational slide shows and images from live events.

Media Kit And Advertising

Want to reach our audience? Access our media kit.

DISCOVER MORE FROM INFORMA TECH

  • Channel Partners Events
  • Telecoms.com
  • MSP 501
  • Black Hat
  • IoT World Today
  • Omdia

WORKING WITH US

  • Contact
  • About Us
  • Advertise
  • Newsletter

FOLLOW Channel Futures ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookie Policy
  • Terms
Copyright © 2023 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X