Dedicated private lines : Consolidate circuits, Volume and term discounts, Update pricing

Consolidate circuits
When numerous data circuits terminate at the same customer location, it is possible to consolidate the smaller circuits into one large circuit, especially in the case of point-to-point circuits. As previously explained, the first leg of a dedicated private line is the local loop. In many cases, a business can consolidate its various local loops into one circuit with greater bandwidth.

For example, a manufacturer in Marietta, Georgia, was expanding into other states. When a new facility was opened, a new 56-Kbps dedicated private line was installed from the Georgia office to the new facility. The cost of each 56-Kbps line was based on the local loop charges in Marietta, the IEX mileage, and the local loop charges at the new location (see Figure 1). The Marietta local loop charge was $150 on each of the five lines. In total, the business paid $750 for 280 Kbps of bandwidth.


Figure 1: A company in Marietta, Georgia, has five data lines connecting to remote sites in other states.

When the company had five dedicated 56-Kbps lines, the BellSouth account manager helped it cut its cost. The business consolidated all of the traffic from the five data lines onto a single T-1 data line that gave the business four times more bandwidth at a cost of only $350 per month (see Figure 2).


Figure 2: Five local loops are replaced with a single T-1 connection.

In another example, a pharmaceutical research facility in Wisconsin paid more than $10,000 for a dozen T-1s used for voice and data. The telecom manager cut the cost in half by consolidating all of the T-1s onto a single T-3.

Volume and term discounts
Dedicated line charges are nonfluctuating charges, so volume discounts usually do not apply. Data services are more subject to term discounts. The simplest way to cut the cost of data services is to sign a term agreement with the carrier. Unlike other telecom services, data term agreements can be as long as 7 years. Table 16.1 shows how data circuit discounts are often structured.


Table 1: Typical Monthly Pricing for Data Circuits

Update pricing
The tariffs filed with state and federal regulatory bodies describe carriers’ service offerings and detail pricing information. From time to time, carriers update their tariffs. Prices usually go up, but sometimes they go down. The phone companies also might add a short-term promotion, to stimulate sales activity.

Once or twice a year, you should contact your carrier and find out the latest pricing for the services they currently use. If the new pricing is lower than your current pricing, ask the carrier to upgrade you to the latest offering. Carriers always say “this pricing is only available for new customers, not existing customers.” Sometimes, however, a sympathetic account manager will implement the new low pricing anyway. It helps if the customer has some leverage in the negotiations.

LATTIS.PRO

Some consultants use LATTIS.PRO to check circuit pricing. The software instantly tells you prices for circuits throughout North America. The prices will be broken down according to each circuit element. LATTIS, which is a fee-based service, is located on the Internet at www.triquad.com/lattis.html.

Add promotions to the account
Consider the following example: A Sacramento, California, publisher had a dedicated T-1 line connecting to a marketing office in Phoenix, Arizona. The T-1 was provided by Qwest and cost $1,365 each month. The publisher learned from a friend that Qwest was waiving local loop charges in Sacramento for all new orders for dedicated T-1s. Armed with this information, the publisher approached Qwest and requested the promotion.

The publisher’s long-distance contract with Qwest was about to expire. The account executive did not want to lose the account, so he added the promotion to the publisher’s T-1 bill. Waiving the local loop charges saved the business $185 per month.