In November I blogged about T1’s Expiration Date, but predicting the death of T1s and the rise of the new age of Ethernet in the First Mile over copper without a strong economic case would be neither credible nor complete. The economic case for the end customer and carriers must be factored into the discussion.

For end customers – enterprises in this case – value is derived from the applications that rely on multiple factors, including service availability and the available bandwidth, not the underlying network alone. The underlying elements, which enable delivery of these applications, become a component of operational cost. A carrier’s inherent need to increase – and even maintain – customer penetration while focusing on the immediate bottom line has highlighted the compelling economic case for selecting the most cost-effective method of delivering increased bandwidth. In most cases that involves replacing legacy T1s, or the equivalent E1s outside North America, with the most cost-effective alternative.

While the actual numbers vary between and even within countries, the drivers that deliver the savings are similar. One of the drivers of opex is protocol translation. Technology that leverages native Ethernet as its underlying protocol (the same protocol that is used in LANs) eliminates the need for protocol translation between LAN and WAN interfaces. Ethernet is widely understood, well proven, and has simple management and configuration tools available. Ethernet has plug ‘n’ play capabilities requiring no specific training on the part of the enterprise, which reduces IT staff costs and, therefore, opex.

From a carrier’s perspective, the drivers of operational costs are cost per bit (cost of a unit of bandwidth) of the bandwidth delivered, and the cost associated with managing the circuits delivering bandwidth. Bandwidth cost is directly proportional to speed. The complexity of management is associated with the number of circuits required to deliver the bandwidth and protocols used to deliver the bandwidth.

The cost per mbps of bandwidth delivered by T1 (or E1) for a 3mbps or 6mbps services is about 45 percent higher than available copper alternatives. For speeds above 8mbps, T1 and E1 circuits are seldom an option because of limitations on the number of circuits that can be cost effectively bonded, driven by the availability of copper pairs and the cost of network hardware required to support such configurations.

It would be problematic to suggest that, while T1s and E1s have disadvantages, the only alternative is fiber, especially when the existing copper can exceed the growing bandwidth demands. In fact, only a small fraction of businesses (less than 20 percent) have access to fiber. When compared to T1s and E1s, EFM over copper delivers to 20 times more bandwidth per copper pair, eliminating construction costs associated with laying fiber.

Let us proceed with the assumption that carrier pricing for higher bandwidth service is based on the number of loops used rather than the actual bandwidth. To illustrate further, if a carrier charged $350 for a 1.5mbps T1 service – which uses two pairs of copper – they would charge $350 for a 60mbps EFM over copper service, which uses the same number of pairs. When aggregated over the entire base of customers that currently use T1 services, the opex savings achieved can run into millions. This logic applies whether carriers are purchasing loops from incumbents or incumbents are utilizing their existing copper loops – using fewer loops to deliver equivalent service translate to lower monthly operational costs.

If one challenges the assumption – which would reflect reality – that customers are unwilling to pay more for higher bandwidth, then it is clear that the carriers will also grow their revenue. While there are opportunities to charge customers more for higher bandwidth, it is also clear that customers will not pay 20 times the price of a T1 for 20 times higher bandwidth. It is more likely that customers will pay a smaller multiple of the T1 price, which translates to much better value to the end customer when measured as dollars paid per mbps of bandwidth. Even if the carriers charged a 10 percent premium over T1 services for 20 times higher bandwidth, that would result in 10 percent revenue growth without adding a single new customer! Add to this the prospect of growing the customer base and the numbers become even more appealing.

There are two more factors that must be considered: the cost of delivering the additional bandwidth and the capital expense incurred in deploying EFM over copper services. The incremental costs for additional network bandwidth are a very small part of the overall cost of the service. With the magnitude of the savings and revenue increases, that cost becomes insignificant. With the types of savings described above, the payback period for the upfront capex, for the EFM equipment, is going to be aligned with the current economic climate – and that’s months not years.

So, to the T1s and E1s, we thank you for your service and rise to toast your legacy!

Eric Vallone, vice president of marketing at Actelis Networks, is responsible for setting the direction of the company’s product portfolio, as well introducing its products to the market. Prior to Actelis, he was with AT&T, ADTRAN, and Paradyne Networks. His areas of focus included DSLAMs, mobile backhaul, xDSL, VoIP and VoATM products, and network management solutions.

The first round of funding under the Broadband Stimulus Plan attracted more than 2,000 applications requesting almost $28 billion. With approximately $10.5 billion in matching funds committed by the applicants, these projects represent more than $38 billion in proposed broadband projects. This underscores the interest in expanded access to broadband service throughout the country. Applications came in from a diverse range of parties: large and small carriers, state, tribal, and local governments; nonprofits; anchor institutions, such as libraries, universities, community colleges, and hospitals; and public safety organizations. In the words of Vice President Joe Biden: "We're forming the tools that will fashion the work of the 21st century. We are laying the foundation for the economy of tomorrow."

This translates to five salient points for the applicants:

1. The Recovery Act mandates priority for projects that give end users a choice of providers, serve the highest proportion of rural residents that lack access, are projects of current or former RUS borrowers, and are fully funded and ready to start once Recovery Act funding is received. Applicants must maximize efficiency of use of the grants or loans available in order to achieve this objective. This translates to squeezing the most out of their existing networks, and where greenfield builds are necessary, they do smart builds not default to the newest technology.
2. The focus of the Stimulus Plan remains on providing residential services in those unserved and underserved communities. Applicants realize that providing services to residential customers, small businesses, educational institutions, and public safety agencies among others are not mutually exclusive. Applicants must choose solutions and technology that can address the multitude of requirements driven by these diverse applications today and provide a roadmap to meet the needs of the future.
3. There is also well-deserved focus on building middle mile (also referred to as second mile or backhaul) capacity that will ensure that networks can handle the bandwidth demands of the last mile. This implies that middle-mile networks (or core for that matter) should not be ignored. The weakest link dictates final service quality. Like for the last mile, the middle mile will require smart planning, not an approach which throws buzzword-driven technology at the problem. Some soul-searching on “what do I have that can be reused to deliver what I need” is imperative.
4. While the initial focus is going to be on building the networks, operational considerations should not be ignored. It is just as important to ensure that operational aspects of the network are understood and addressed when the network is built and not something that is relegated to the “will be addressed later” category.
5. For those applicants that did not get funding as part of Phase I, it is necessary to evaluate other options and consider technology and budgets that can start the process of providing the services for which they have identified the need. If there is a real and indefinable market need, other sources of funding must be explored. And, yes, there is a Phase II. Remember that Phase II and Phase III have been combined into a single phase.

The solution and technology provider chosen should have a portfolio of products that energizes your existing infrastructure (copper, existing network elements and other aspects) to enable high-bandwidth services with minimal operational costs. That same set of solutions must allow delivery of a variety of services from Ethernet in the First Mile services, to middle-mile applications for backhauling IP DSLAMs and cell towers. They must also support IP-based networks providing intelligent traffic monitoring and control applications and dedicated networks designed for use in environments like public safety agencies or educational institutions. All of this should be done, to the extent possible, on infrastructure that you already have. You can Stimulate Broadband Delivery by putting the strategies above to work! Learn more about Broadband Stimulus strategies that actually work by clicking here. 

Eric Vallone, vice president of marketing at Actelis Networks, is responsible for setting the direction of the company’s product portfolio, as well introducing its products to the market. Prior to Actelis, he was with AT&T, ADTRAN, and Paradyne Networks. His areas of focus included DSLAMs, mobile backhaul, xDSL, VoIP and VoATM products, and network management solutions.

As you likely know, T1 circuits were invented in the 1960s. Now, almost a half century later, the time has finally come to say goodbye, farewell and thanks for the help. Why? Because it’s all about speed. The bandwidth provided by these legacy TDM circuits just can’t cut it anymore, unable to meet the ever-growing needs of today’s bandwidth-hungry applications. In order to support the demands of their business customers, service providers around the world have realized they need to quickly replace legacy T1 and E1 services with new solutions that are ready for 21st century end users. With this being said, the economy – and this is just plain good business sense – begs the question for any service provider to ask: Do we need to start from scratch or can we use our existing infrastructure to meet the needs of this millennium? The answer to this question is, yes, with Ethernet in the First Mile (EFM) over copper technology. This emerging technology is now in mass deployment globally, because today’s EFM-over-copper solutions address the need for increased broadband rates, and at extremely affordable prices.

The rationale is not that T1s (or E1s) are bad. In fact, far from it; they have been a robust solution for the past 50 years. However, 1.5mbps, once considered “blazing speed” for even large enterprises, is hardly meeting the needs of SMBs or branch offices today. Without question, T1s are robust and reliable, but the label on them states “must use on or before you rely on the Internet to run your business.” For businesses that count on their network for daily operations (e.g. file sharing, cloud computing, telepresence and VoIP), the need for additional bandwidth is undeniable. A similar argument can be applied to companies providing telecom services. They rely on TDM circuits for backhauling traffic from the central office, from their mobile base stations, from DSLAMs or between PBX sites. There were issues like clock synchronization and reliability that prevented earlier migration to other solutions.

As a solution to meet 21st century requirements of savvy end-users and businesses, EFM over copper is proving to be ideal, with the potential for increased reliability while enabling the required features and additional bandwidth for new voice, data and multimedia applications. To accomplish this, innovative developers are combining Ethernet components with innovative algorithms to deliver maximum bandwidth while ensuring reliability. These algorithms can manage the interference caused by crosstalk and other sources of network outages, providing the ability to surpass T1s and E1s in performance and reliability. At the same time, these solutions are dramatically more economical to deploy and manage than the alternatives, thereby offering the quickest return on a carrier’s investment.

To sum up, while a T1 delivers just more than 1.5mbps per line (using two pairs of copper), the IEEE EFM over copper standard allows 5.7mbps per pair. Recent advancements in EFM over copper can now exceed this, providing up to 15mbps per pair or 30mbps for two pairs. This amounts to a 20X performance boost when compared to those over utilized and just plain tired T1 circuits.

With T1s expiration date now upon us, it is not surprising that we see the delivery of supercharged bandwidth over existing copper morphing the march to deliver Ethernet over copper into a stampede. I will save the economic arguments, more revenue for the carriers, lower operational costs and better value to the end customers, for a later time.

Eric Vallone, vice president of marketing at Actelis Networks, is responsible for setting the direction of the company’s product portfolio, as well introducing its products to the market. Prior to Actelis, he was with AT&T, ADTRAN, and Paradyne Networks. His areas of focus included DSLAMs, mobile backhaul, xDSL, VoIP and VoATM products, and network management solutions.