“You are quoting a 64Kb * 64Kb for $950, but another company is offering me a 64Kb * 512Kb for $900″
This is a very common response from first time users who do not understand the difference between dedicated bandwidth (SCPC) and shared bandwidth. The question is so common that we have developed a standard answer for the new prospect.
I understand your concern about comparative costs; this question is something that we have to answer on a daily basis. The first point is to for you to find out if you are comparing the same product, many of our competitors are not selling dedicated bandwidth but instead they offer a shared bandwidth service. We like to compare this to selling a bag of apples, we quote our ten pound bag for five dollars, but our competition offers their bag for one dollar, but the problem is that they won’t tell the customer how many apples are in their bag.
On the face of it, shared bandwidth always appears to be cheaper than dedicated bandwidth, but in reality if you count the actual throughput that you receive, it is always more expensive.
A shared bandwidth hub can cost the hub operator up to half a million dollars to install at their teleport, with that much front end cost they need to get a return on that investment. The only way of recovering that cost is by charging very high rates for bandwidth.
The owners of hubs like Linkstar, iDirect, Shiron, Gilat or HNS buy bandwidth from the same satellite operators that we do, but because we have minimal overheads and can afford to sell it cheaper than they can.
After reading that statement you could look at our bandwidth prices and say ” You are quoting a 64Kb * 64Kb for $950, whereas a shared bandwidth operator is offering me a 64Kb * 512Kb for $900″ and therefore the implication is that they are much cheaper.
With a DVB (shared bandwidth) operator you are not getting a 64Kb * 512Kb circuit, you are sharing that circuit with two other users, 5 other users or in some cases 50 other users. It’s true that in the middle of the night when everybody else on your continent is asleep you will get the speed that was promised, but at all other times your circuit will be crawling along like a wounded snail.
The hub operators are not always honest about the share ratio that they are selling, but with a little education you can estimate what type of product they are offering. An indication of the share ratio is the price that you pay for a given circuit. Take the 64Kb * 512Kb that’s a total of 576 Kb, call it half a meg. The hub operator is going to recover at least $5000 for that half meg. If he quotes you $5000 for the circuit then you can be sure that you are getting an SCPC (100%) link. But if he quotes $2500 then the circuit is being shared at a 2 or 3:1 ratio. If he quotes @1250 you are being shared at a 6:1 ratio and so on.
This is a simple rule of thumb but will tell you fairly accurately what you are being offered.
If you don’t plan to run VoIP, or if you have one or two computers, you can afford to buy shared bandwidth. Downloading a file may take five times longer in middle of a business day, but if you can wait until the middle of the night then you will be very satisfied with the speed and the low cost.
VoIP is a total disaster with an oversubscribed shared bandwidth circuit, the telephone conversation becomes impossible to hear or to understand. Although some technologies are more economical with bandwidth, we like to hold a dedicated 16Kb for an active voice conversation. With this much bandwidth available the callers at each end can be certain of having a good quality telephone conversation.