May 2009 IT Business Consulting Newsletter

Evaluate Communications Circuits to Reduce Your Operating Expenses

By Tom K

Every company has significant monthly operating expenses tied to their external communications circuits – Internet, Remote Office connectivity, and Telecomm. Is your company using the most efficient, economical circuits to support your business? Let’s take a look!

Internet Access

We’ve found that many companies are still using T1 circuits to connect to the Internet. There was a time when T1’s were the only game in town for “high speed” Internet access. But in today’s world, T1’s are an expensive solution ($600 - $1000/mo), and are rather slow (1.5 Mb). If you are using this type of connection, consider switching to Cable, DSL, or FIOS.

Cable and DSL offer speeds from 5 Mb to 16 Mb for about $100/mo. FIOS (where available) can offer speeds up to 20 Mb for about $160/mo. For more bandwidth & increased reliability, consider load balancing two of these circuits as discussed in last month’s newsletter Improving the Reliability & Speed of Your Business Internet Connection. This could increase your bandwidth 15x, while reducing your monthly cost by 400%. We did this at one client last month, providing an annual savings of $7200.

Remote Offices

Many companies are also using point-to-point T1’s and/or Frame Relay circuits to inter-connect their Remote Offices. Again, these circuits are expensive and relatively slow. Replacing these circuits with Internet based VPNs(Virtual Private Networks) can provide improved performance while significantly reducing costs. The VPN creates a secure point-to-point tunnel through the Internet, between your office firewalls. Most firewalls have VPN capabilities built in. If yours don’t, replacements would cost between $200 and $600 depending on required features.

We switched a client with three remote sites from dedicated T1 circuits to in February. We replaced their three 1.5 Mb T1’s ($2200/mo) with three 16 Mb Cable circuits ($360/mo), and added (load balanced) a 10 Mb DSL circuit ($90/mo) to the main office’s existing 16 Mb Cable circuit for additional speed and redundancy. There was a very noticeable improvement in remote office access to main office resources, as well as Internet access from all four offices. We realized an annual savings of $21,000 (with a capital cost of $914 for the required firewalls).


Most small businesses use analog POTS (Plain Old Telephone Service) phone lines, often in “hunt groups” where multiple lines are attached to one phone number. We recommend you analyze your usage to determine if you really need all the lines you are paying for. As Internet bookings increase, call volume can decrease, so we’ve found that we can often remove a line or two ($30 - $80/mo) without affecting service.

Review your phone bill to ensure you are actually using all the lines that were dedicated to Fax machines and modems. We often find that these devices have been retired, but the now unused phone lines are still live. Also, consider a server based “Fax from the desktop” solution. Not only will this increase productivity (no more walking to the Fax machine), but it will eliminate the need (and cost) for multiple Fax lines.

If you use more than ten analog POTS lines, have your phone circuit provider (Verizon, Embarq, AT&T) work up a quote for upgrading to a digital PRI (Primary Rate Interface) trunk circuit. If your phone system can accommodate a PRI, this type of circuit can be more cost effective and better quality than POTS circuits.

Finally, review your Long Distance volume and per minute charges. There are many 3rd party solutions available that often provide much better rates than your local provider. Even if you’d rather not switch, we’ve found that once we have competitive rate information in hand, we can usually induce the current provider to renegotiate its rates.

If you have any questions concerning this article, would like more detail, or have any suggestions for future articles, feel free to contact me at, or via my cell 443.310.5110.