The costs and differences of these popular broadband Internet offerings are a consideration for small businesses, but none more than the need for speed.
For most small business technology applications, price is the top consideration. But when considering high-speed or broadband Internet service, that top consideration needs to be speed.
That’s because slower broadband access will likely cost more money in the long run in the form of lost productivity. So, for a small business owner, the question of whether cable is faster than DSL is a salient one. The answer?
It depends. Cable firms advertise speeds of up to 6 megabits per second (Mbps), but to quote a well-known auto ad disclaimer, actual speeds may vary. Because cable relies on shared bandwidth technology, if a lot of users are on at once in the immediate area, they will slow the connection. Average speeds for the telcos’ broadband rival to cable, digital subscriber line (DSL) service, go as high as 1.5 Mbps, but that rate tends to be steadier since bandwidth isn’t shared outside the office. Actual speeds, of course, vary from minute to minute for both.
Small business traditionally preferred DSL
More small businesses have traditionally gone for DSL. This year, 35 percent of businesses with fewer than 500 employees will have DSL versus 25 percent for cable, according to The Yankee Group, a Boston research firm. (The rest of the pie is divided by dial-up, “none” or T-1, the latter of which can be DSL or cable.) That’s changing. Over the last three or four years, many cable firms have begun targeting small businesses. “The cable companies are doing a smashup job talking about speed, speed, speed,” said Yankee Group director Steve Hilton. “It’s worked.”
In response, telcos have slashed rates for DSL. Covad, a DSL provider based in San Jose, Calif., dropped its prices 30 percent over the last 18 months. Cable companies haven’t responded to the price war, so they tend to be more expensive. Covad’s DSL starts at around $50.
Hilton says $90 a month is around the average a small business can expect to pay for either cable or DSL. Companies typically waive a set-up fee in return for a year or more contract.
Many upgrade to T-1
The question for many fast-growing businesses is whether DSL or cable broadband service is fast and/or reliable enough. Many companies opt for the more expensive and robust T-1 service, which telcos and cable firms both provide. David McMorrow, vice president of sales for Covad, says his technicians can repair a busted T-1 line in about four hours, versus 12 to 18 hours to fix a standard DSL connection. “Businesses can’t tolerate their Internet connection being down,” Hilton says.
Your business will pay for the better service, though. T-1 averages around $400 a month. But it guarantees small businesses consistent speeds of 1.5 Mbps and up.
Thermal Dynamics, an Ontario, Calif., firm that makes oil coolers and power steering coolers for General Motors’ Hummer and Ford’s Mustang, respectively, bonds three T-1s to get an average speed of 4.5 Mpbs. The firm, which has about 300 U.S. employees, pays about $1,200 a month, which includes on-call support from Los Angeles T-1 provider TierZero.
Hanns Schweis, IT director at Thermal Dynamics, says it’s worth the extra expense. In three years, the network only went down once and that was Verizon’s fault, not TierZero’s. Plus, the connection is fast. “Speed was a big issue,” he says. Jim Gurol, vice president of sales for TierZero, says small firms want fast pipes, too. “If their business relies on the Internet, they’ll spring for it,” he says. “We’ve got Web consultants that run a one- or two-man shop that use it."