50-30-05 A Guide to Network Access and Pricing Previous screen Options Nathan J. Muller Payoff When shopping for services, not only do communications managers have more network access options from which to choose, but more attractive pricing plans as well. Introduction The rate at which net network services are being introduced and price revisions are issued is due as much to the easing of regulatory constraints as to advances in communications technology. Many of the new ways of accessing services can improve networking efficiency. New pricing plans can provide services more economically to users. For the purposes of this article, the different types of access available to users are categorized as basic access, consolidated access, alternate access, and special access. Basic Access Basic access entails the establishment of a physical connection from the customer premises to a local Central Office port. The connection can be dialed up as needed or provided to the user with a dedicated facility, such as a T1 line. Dial-Up Connections In the case of a dial-up connection, once an idle port is seized, the user has access to a variety of services and associated call-handling features provided by the within its Local Access and Transport Area. If the voice or data call is destined for a location outside the local access and transport area (LATA), the local exchange carrier (LEC) hands it off to a designated interexchange carrier's Point Of Presence, where the call is transported to the local exchange carrier (LEC) at the destination Local Access and Transport Area. The user is billed for each call, based on time and distance. With Integrated Services Digital Network, billing also takes into account the amount of used for the call. Long-distance or interexchange carrier (IXCs) are required to interface with local telephone companies using points of presence. Apoint of presence, or POP, is a serving office set up in each local access and transport area (LATA). It is the point to which the local telephone company connects its customers for long-distance dial-up and leased-line communication between local access and transport area (LATA). The local segment of a dial-up or leased-line circuit is maintained by the local exchange carrier (LEC) at each end, whereas the interLATA portion of the circuit is established and maintained by the interexchange carriers (see Exhibit 1). Billing for dial-up connections is according to time and distance. With a leased line, however, the user has full-time use of the carrier-provided facility and pays a fixed monthly fee based on distance, regardless of how much the line is actually used. End-to-End InterLATA Circuit Previous screen Bandwidth on Demand A relatively new wrinkle in the basic access concept is called“bandwidth on demand,” in which the user dials up bandwidth in increments of 56/64K b/s to meet specific applications requirements. This can be accomplished with a customer premises device called an inverse multiplexer. In essence, inverse allows users to dial up the appropriate increment of bandwidth needed to support a given application and pay for the number of local access channels only when they are set up to transmit data, image, or video traffic. Upon completion of the transmission, the channels are taken down. This obviates the need (and high cost) for private leased lines to support temporary applications. Under the bandwidth-on-demand concept, extra switched bandwidth can be dialed up to support temporary applications, accommodate peak traffic periods, or reroute traffic from failed private lines. Advantages to this approach include:

á The immediate availability of bandwidth.

á The user pays only for bandwidth used, according to time and distance.

á The elimination of the need for standby links that customers are billed for whether fully used or not. Nynex Enterprise Services. To compete with vendors of inverse multiplexers, the regional Bell operating companies have introduced bandwidth-on-demand service of their own. New York Telephone, for example, offers Nynex Enterprise Services. Customers get up to 100M b/s of scalable, managed bandwidth within 24 hours of placing the order. The amount of bandwidth can be adjusted on a time-of- day basis or within one hour of a customer request. The service is priced 10% to 15% less than leased lines of equivalent bandwidth. Discounts are available depending on the length of contract, and there is no installation fee. The drawback is that this service requires fiber optic connections; also, the service is available only in New York State for interconnecting local sites. Although Nynex Enterprise is the first service of its kind, it is likely to be followed by similar offerings from other local telephone companies. Innovative data service offerings are the most practical way for the local exchange carrier (LEC) to compete with alternative access carrier service. Consolidated Access A relatively new access service offering consolidates multiple services over a single access line. One example of this type of access service is AT&T's Static Integrated Network Access (SINA). SINA is designed to eliminate the cost of maintaining separate access lines for private line services and switched services, because the traffic over the two types of access lines can be combined over the same Integrated Services Digital Network access line. This means that a user can access AT&T's Accunet family of private line services, Software Defined Data Network (SDDN), and Accunet Switched Digital Services over a single access line instead of having to pay a separate access charge for each type of service Previous screen (see Exhibit 2).

Consolidated Access With integrated services digital network (ISDN) Primary Rate Interface service, the 23 64K-b/s B channels carry voice and data traffic to a Digital Access and Cross-connect System at an AT&T Central Office. The DACS separates switched voice from data and sends it to the carrier'sSoftware Defined Network (SDN) or Megacom services. Switched data traffic is sent to AT&T's Software Defined Data Network, while other data can be sent over AT&T's Fractional T1 offering. AT&T also provides local access to its InterSpan frame relay Service via integrated services digital network (ISDN) primary rate interface (PRI) trunks. In this way, Frame Relay traffic can be combined with AT&T's other switched and dedicated network services. AT&T's Definity G3 Private Branch eXchange is equipped to support SINA. In combination with the PBX's nxDS0 capability, customers can size bandwidth and access, through the same local access line, a variety of services that support LAN traffic. US Sprint and MCI offer similar integrated network access services. Sprint uses integrated services digital network (ISDN) Primary Rate Interface to support access to dedicated and switched voice and data services; first, users must purchase an integrated access controller, which is a network hub that includes special software. The new service offering is targeted at small and midsize sites, many of which have been unable to cost-justify integrated services digital network (ISDN) primary rate interface (PRI) for conventional voice and data applications. Alternate Access Alternate access, also know as “bypass,” entails the use of facilities from a carrier other than an Local Exchange Carrier to get direct connections to the long-distance facilities and services of interexchange carrier or value-added network providers. These alternate access carriers include regional teleports and metropolitan fiber companies, some of which compete directly with the local telephone companies by providing businesses with the means to bypass the local exchange and same money on local access lines and usage charges. Typically, alternate access carriers offer service in major cities, where traffic volumes are greatest and, consequently, where businesses are hardest hit with high local exchange charges. Teleports. A broad array of services, ranging from Fractional T1 to Synchronous Optical NEtwork Transport Broadbank transmission, are offered by alternative access carriers. Teleport Communications-New York, for example, offers Fractional T1 services as well as DS-0 and sub-DS-0 services to business customers in New York City and northern New Jersey. Through the use of intelligent T1 multiplexers and Digital Access and Cross-connect System systems, the company provides bandwidth in any multiple of 56/64K b/s. It also offers continuous quality monitoring and extensive remote diagnostic capabilities from its network control center, as well as line changes and reconfigurations that are computer- controlled through a Digital Access and Cross-connect System. Some teleports offer sophisticated leading-edge services. Teleport Chicago, a subsidiary of the NY-based Teleport Communications, has a Synchronous Optical NEtwork Transport-based fiber network that allows long- distance carriers and businesses in Chicago to transmit data at Previous screen speeds of 150M b/s and above. Advantage Customers. Among the advantages of alternative access carriers are:

á They offer less expensive and more reliable access service and solve problems faster than the local exchange carrier (LEC).

á They offer advanced network protection capabilities, mostly in the form of dual fiber rings. When one ring fails, the other is activated automatically to handle the traffic load without any loss of customer data.

á Some disaster recovery firms have cooperative arrangements with alternative access carriers whereby bandwidth is made available to customers during emergencies when private communications systems may be knocked out. In some states, the public utility commissions have mandated that the local telephone companies provide local connections to the alternative access carriers, so they can more easily serve business customers. The Federal Communications Commission has ordered the regional Bell operating companies to open up their Central Office to the equipment of alternative access carriers seeking to provide leased-line access services, and to allow competitors into the local central office for purposes of routing switched traffic to long-distance networks. These decisions signal that the local exchange monopoly is going to be dismantled sooner than most industry analysts expected. Although there is still industry disagreement on whether tariffed equipment collocation applies to end users as well as alternative access carriers, some local exchange carrier (LEC) and interexchange carriers provide collocation arrangements for users on an individual case basis. Aside from convenience, these arrangements can allow better quality communications by reducing the potential for impairments in the transport of information over various lines and interfaces that would otherwise be required. Special Access Special access entails the provision of customer connections to Local Exchange Carrier or interexchange carrier services on an individual case basis. This type of access is used in two situations:

á When proprietary technologies are involved to support requested services.

á When the local exchange carrier (LEC) does not offer a service but will honor a customer request. T3 Services. T3 is an example of a service that is supported with proprietary technologies. The absence of an optical standard for DS-3 signaling severely restricts users' ability to mix and match different manufacturers' equipment end to end. Therefore, T3 services generally require the customer to negotiate the type of optical interfaces to be placed in the various local exchange carrier (LEC) and interexchange carrier serving offices. In contrast to the ubiquitous T1 service, T3 requires special construction of the local channels at each end— from the Customer Premises Equipment to the long-distance carrier's POP. These special construction costs vary, depending on the Regional Bell operating company. Dark Fiber. Previous screen Another example of special access is the concept of “dark fiber,” an arrangement whereby users set up and maintain their own fiber optic networks over unused carrier facilities. local exchange carrier (LEC) are required by the Federal Communications Commission to provide—and, in come cases, maintain—fiber links for users that supply the equipment needed to power and send traffic over links. Dark fiber, which is less expensive than such fiber-based services as T3 and provides users with greater control, is used in campus environments or clusters of sites within a metropolitan area. An advantage of dark fiber is that the user can determine the level of service simply by the type of equipment installed at each end. For example, dark fiber can be used as a 100M-b/s FDDI backbone or a 155M-b/s Synchronous Optical NEtwork Transport link. The local exchange carrier (LEC) had been installing dark fiber as the foundation for future high-speed point-to-point links in private user networks and offering it on a contract basis, and they are required to file formaltariff for the service. However, in not owning the facility, the local exchange carrier (LEC) have no control over what services are delivered over dark fiber pipes; without control, they cannot maximize revenues. As a consequence, the local exchange carrier (LEC) hope to move into the more lucrative T3 market. They must, however, according to the FCC, continue to offer dark fiber, on the grounds that ceasing dark fiber services would discontinue, reduce, or impair service to a community. Fractional T1. Although offered by the major long-distance carriers, Fractional T1 is an example of an access service that is not widely supported by the local exchange carrier (LEC) but can be obtained on an individual case basis. Fractional T1 entails the provision and use of bandwidth in 64K b/s (DS-0) increments up to 768K b/s without incurring the expense of an entire T1 facility, much of which may go unused. Fractional T1 requires the use of customer premises equipment (e.g., an intelligent Channel Service Unit or multiplexer) that is capable of packaging the DS-0s into the bandwidth increment required to support a given application. For example, six DS-0s can be bundled to support videoconferencing at 384K b/s. The local exchange carrier (LEC) routes this bandwidth increment to its destination using a digital cross-connect system located at the local Central Office. Discount Pricing for Local Access Not only do customer have more access options from which to choose, but more attractive pricing plans as well. Historically, the price of local access at each end of a long-distance circuit consumed an inordinately large portion of the total cost. Often the price of local access amounted to half the price of a private line. Today, the interexchange carrier have greatly improved the ways in which they manage their access infrastructures. The resulting lower costs are passed on to customers in the form of discounts on local access. This, in turn, has spawned a new competitive arena for the top three long- distance carriers—MCI, AT&T and US Sprint. MCI's Access Pricing Plan MCI, for example, offers its Access Pricing Plan, under which customers receive discounts on local access in exchange for long-term service contracts. The plan offers discounts of 5%, 10%,and 20% on each dedicated access line for a one-, two-, and three- year access contract, respectively. The discounts apply to channelized T1 links that access a Previous screen variety of MCI services, including Vision, Virtual Network, 800 and Prism services, voice-grade private lines, and frame relay. Customers that pay $550 a month per T1 access line at both ends of a long-haul link can cut that cost by 20% to$440 a month by contracting for the service for three years. A one-year contract will lower the cost to $522.50 a month, which represents a 5% savings. In response to AT&T offerings (discussed in the next section), MCI added a four- year contract option with a 22% discount and a five-year option with a 24% discount. MCI's plan also includes a so-called coterminous option, which gives users the flexibility to order additional T1 lines midway through a contract and still receive the maximum discount. MCI charges users 50% of the nondiscounted monthly rate for access multiplied by the number of months remaining in the contract. The termination charges are:

á One month for a one-year plan.

á Two months for a two-year plan.

á Six months for a three-year plan.

á Eight months for a four-year plan.

á Ten months for a five-year plan. MCI allows customers to relocate within a Local Access and Transport Area and move their T1access links without penalty. MCI users can upgrade a T1 access line to T3 without an upgrade charge. AT&T's Access Value Plan Under AT&T's Access Value Plan, customers save as much as 24% on access charges by committing to a five-year contract. The discounts apply to all Accunet T1.5 local access channels, including those used to connect to AT&T's Accunet Switched Digital Services, Digital Data Service, InterSpan Frame Relay Service, Megacom, Megacom 800, and Software Defined Network services. For example, a one-mile T1 access link from New York Telephone costs $492 a month. Under this plan, the same circuit would be priced as follows:

Length of Contract Discount Price One year 5% $467.40 Two years 10% $442.80 Three years 20% $393.60 Four years 22% $383.76 Five years 24% $373.90

A five-mile dedicated access link from Ameritech in Chicago would cost $506.80 a month. Under the Access Value Plan, it would cost from $481.46 to as little as $385.17, depending on contract length. AT&T's termination charge is 50% of the nondiscounted monthly rate multiplied by the number of months left on the customer's plan. The Customer Perspective Previous screen The dilemma for customers is that in committing to long-term contracts with the interexchange carrier, they might lock themselves out of greater discounts from the Local Exchange Carrier. One advantage for the customer, however, is that purchasing local access lines from the interexchange carrier is simpler with a single point of contact. Moreover, the interexchange carriers bears the responsibility for ordering, installing, and troubleshooting the lines. Unless the discount offered by the local exchange carrier (LEC) is large enough to make assuming these responsibilities worthwhile, purchasing local access lines from interexchange carriers may be worth the slightly higher cost. Enhanced Local Services Local exchange carriers are also beginning to enhance their private line services to give customers more control. Using software developed by Bellcore called FlexCom/linc, Pacific Bell is providing customers with time-of-day and real-time routing control. Instead of having to give PacBell 24-hour notice for line reconfigurations, customers can do it by themselves at their own discretion or program the reconfiguration to occur by time-of-day. Southwestern Bell offers a Transport Resource Management (TRM) service with which customers can remotely manage their own private line networks remotely through a workstation linked to a Central Office-based intelligent D4 channel bank. The service includ es a subrate multiplexing feature, so users can send multiple signals at different speeds inside a single 64K b/s circuit, and a voice compression capability that permits transmission of 44 voice calls on a single T1 line. Customers can also set up and control “private” frame relay networks using a central office-based Frame Relay switch. The service package includes analog, digital data, and voice bridging features and three fault- recovery options. Conclusion From both a technology and service perspective, the public network is undergoing what can only be described as a radical makeover. More access options are available, and Local Exchange Carrier are giving users more control over service provisioning and circuit reconfigurations. These developments benefit users in a variety of ways, such by reducing the lag time between order requests and order fulfillment for services and associated features. The new capabilities not only add value to local services and help wean customers from dealing with theinterexchange carrier for local access lines, but also position the local exchange carrier (LEC) strategically to withstand for growing onslaught of competition from alternative access carriers. The price of access services, which has always comprised an inordinate amount of the end-to-end circuit charge, will be greatly reduced in the near future. Author Biographies Nathan J. Muller Nathan J. Muller is an independent consultant in Huntsville AL, specializing in advanced technology marketing and education. During his 20 years in the industry, he has written extensively on many aspects of computers and communications. He has published eight books and hundreds of technical articles, and has held numerous technical and marketing positions with such companies as Control Data Corp., Planning Research Corp., Cable & Communications, ITT Telecom, and General DataComm Inc. He holds an MA Previous screen in social and organizational behavior from George Washington University.