Every sector of the tech industry has its dinosaurs. In computing, it’s the mainframe. In software, it’s the perpetual license. And in connectivity, it’s the copper-based T1 line. What do all these things have in common? They’re still widely used by millions of businesses across the globe. And in the case of customers using AT&T’s T1 lines, that’s a bit of a problem.
T1 access, also known as Digital Signal 1 (DS1), was first developed by AT&T Bell Laboratories in the early 1960s and has been a staple of voice and data networking ever since. While the actual payload (voice, data, number of channels) may vary, the underlying line speed is always 1.544 Mbps. Multiple T1s can be bonded together to create line speeds in multiples of 1.544 Mbps, such as 3.088 Mbps, 4.632 Mbps, 6.176 Mbps, etc. Like other legacy technologies, T1 access remains a viable option. It may be outdated compared to current network technologies, but it’s still a source of reliable, always-on, dedicated bandwidth.
In July 2019, the FCC issued a deregulation order that significantly impacts T1 access. As a result, many carriers are phasing out T1 lines in favor of more modern, next-generation transport technology services. It’s worth noting that the FCC’s decision does not mandate the retirement of T1 lines – but it does hasten the natural migration to next gen services that has been underway for some time. Carriers now have the leverage to charge customers more for T1 access and many are starting to feel the cost impact as their telecom contracts expire and renew.
That brings us back to AT&T. If your business uses AT&T for T1 access, you should prepare now for a serious spike in AT&T T1 pricing on your next contract renewal. It’s likely you’ll be paying as much as 3x more for this service over the term of your next agreement.
How Big Will the AT&T T1 Price Increase Be?
Enterprise customers that have T1 or NxT1 access lines in their network can expect to see increases of 150% to 300% or more at their next renewal. In other words, a DS1 that costs less than $200 today might cost $350 to $600 on your next renewal. In addition to the increase, customers can expect a very short grace period, if any, from AT&T. If AT&T extends the current contracted rate, it will only be for six months before the first increase. After that, expect to be burdened with the complete increase.
AT&T is showing very little willingness to make concessions, even for the largest customers. This may change as the market stabilizes, but for now, AT&T has valid concerns about the cost of out-of-region access lines.
What Are My Options?
Enterprise customers with significant T1 and NxT1 access lines need to immediately begin technology transformation projects. This includes migrating all T1 access to cable or fiber optic media, regardless of transport technology (MPLS, internet, broadband, etc.). If your current AT&T agreement doesn’t expire for a while, be sure to secure competitive T1 pricing from AT&T now so you are paying the best price possible while you strategize and execute a transition to other services.
Be aware that AT&T may not offer the most competitive pricing for non-T1 services. In some cases, AT&T’s next-gen services will be more expensive than what customers are paying for T1 access today (and only somewhat less costly than AT&T T1 pricing post-increase). This makes the case for introducing competitive providers to the mix. In any situation where competitive bidding takes place, be sure to perform IT price benchmark analysis and carrier contract optimization on all quotes to ensure two things:
- You’re paying the lowest possible price for all services
- Your carrier contract business terms are optimized, including credits, discounts, revenue commitments, etc.
If you’re a customer of AT&T’s T1 services, NPI can provide guidance and decision support as you explore your options, including cost analysis, IT price benchmarking and negotiation support. Contact us to learn more.
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