British Telecommunications PLC (BT) has begun offering broadband access to its managed IP (Internet Protocol) VPN (virtual private network) services, allowing companies to speedily connect their smaller branch offices and remote workers at significantly lower prices than those charged for leased lines, the company said Tuesday.
While BT said that it has seen strong demand for its IP VPNs in recent months, the telecommunication firm said that it hasn't always made financial sense for companies to hook remote offices and employees directly to their networks because of the high prices associated with leased lines.
However, by offering ADSL (asymmetric digital subscriber line) access to its managed IP VPNs, BT said that it is giving companies the ability to create a unified network across their locations for prices that are approximately 50 percent less than those charged for leased line access.
BT did not disclose pricing for its new ADSL service.
Tim Johnson, principal analyst with Ovum Ltd. in London, said that the offering represents an important move by BT, and shows that it is willing to cannibalize its own highly-profitable leased line services to offer companies a cheaper option.
"This offering shows that BT is a bit more awake than its low-cost competitors believed and that it is willing to sacrifice its revenues to go after this niche of the market," he said.
Johnson believes that ADSL access to IP VPNs will be a big draw for many firms that are looking to save costs on their leased lines or who have not yet connected their remote workers and offices because of the high costs.
"Only people who are really fussy or who are running absolutely mission-critical applications will stick with leased lines," Johnson said.
The advantage of leased lines, Johnson said, is that they offer service line agreements that guarantees service levels, but most firms will be happy to gain access via ADSL for lower costs.
The ADSL option is being offered with BT's equIP managed WAN service and metroVPN regional service for county and city-based organizations, BT said.
The service will be available through BT exchanges which have been DSL-enabled and will offer downstream speeds of 256 kbps, 512kbps,1Mbps and 2Mbps.
The new offering comes as part of BT's larger broadband push, which has become a major focus for the company in recent months. Just Monday, for example, it introduced a bundled broadband service with Yahoo Inc.
Additionally, BT has been speeding up the upgrades of its exchanges to offer high-speed service, thanks to new technologies that make the upgrades cheaper. The company already has 1 million wholesale broadband users, and hopes to add an additional 4 million by 2006.