T1 Line Connection Saves Money

How does a T1 line save money?

Let's say you have a small business that is characterized by:

15 Voice phone lines
Internet connection to stay in contact with customers / vendors

A T1 line is equivalent to 24 normal phone lines. These lines can handle 24 "concurrent" calls. That is, 24 people can use the phone simultaneously.
All these calls go through your own "switchboard" or PBX. This switchboard connects a call on one of the 24 T1 channels with a line going to a phone in your business.
You may, in fact, have 40 or 60 people in your organization with phones. Depending on their utilization of external lines, you may find that a single T1 line more than satisfies their needs for outside calls.

Your current monthly telecom costs are approximately:

Item Monthly Cost

15 voice lines @ $35 $525

1 SDSL high speed Internet line $230

4,000 minutes of long distance @ 0.07/minute $280

TOTAL $1,035

Your total monthly telecom costs are $1,035.

Will a T1 line connection save you money?

The monthly cost for the "local loop", the actual T1 line, depends on how far you are from your local exchange carrier's facilities. Local loop charges might range from $400 per month to $1,000 per month.

For my location, the monthly cost of a T1 line is $768.50. This is for an "integrated line" containing both voice and data channels.

This monthly price includes:

10,000 local minutes
4,000 long distance minutes
512Kb dedicated Internet

On a monthly basis, this saves $266.50.

In addition, any extra long distance minutes are typically 10 to 40% cheaper than you could get from a phone company.

One Time Installation and Setup Costs

For the vendor selected, a one time installation fee for the local loop (the actual T1 line) is $999.

In addition, you would need to obtain a PBX or private branch exchange.

The PBX is essentially a specialized computer with a T1 card. This allows the T1 line to be plugged in and phone lines to go to your office workers.

The PBX has specialized software that can offer a variety of features. Some of these features include:

Internal calling
Voice mail
Caller ID
Paging
Intercom

A PBX typically costs between $1,000 and $2,000. Let's figure a middle-of-the-road model at $1,500.

Your costs for installation ($999) and a PBX ($1,500) is $2,499.

With a monthly operational savings of $266.50, the conversion to a T1 line would have an approximate 10 month payback. After that, you would save nearly 25% on your telecom costs.

You can probably see that the more regular phone lines you have, the more $35 per month charges you can eliminate.
A business with 40 phones could reduce telecom costs considerably with a single T1 line (which allows for 24 simultaneous calls).
In addition, the less expensive the "local loop" is, the more your savings will be.
It also pays to determine your local loop costs. You can see those cost estimates for your location in only 2 seconds. Simply fill out the form below:
T1 Line short form

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