Wide Area Networks - Learning Module

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Leased Lines: Dedicated Point-to-Point Connectivity

The Gold Standard of Private Connectivity

When an organization requires absolutely guaranteed bandwidth between two points—with no sharing, no contention, no variability—the answer is a leased line. Also known as dedicated lines, private circuits, or point-to-point circuits, leased lines represent the most straightforward WAN connectivity model: a telecommunications carrier provisions a permanent, dedicated communication channel exclusively for your use.

Unlike shared network services (MPLS VPNs, internet, or Frame Relay), leased lines provide complete isolation. Your traffic never competes with other customers' traffic. The bandwidth you pay for is exclusively and continuously available. This simplicity and predictability command a premium price, but for certain applications—financial trading systems, medical records transmission, utility grid control, military command networks—the requirements justify the cost.

This page provides comprehensive coverage of leased line technology, from fundamental concepts through practical deployment considerations.

What You Will Master

By completing this page, you will understand leased line architecture, provisioning processes, pricing models, and appropriate use cases. You'll learn to distinguish between different leased line technologies, evaluate carrier offerings, and determine when leased lines are the right solution versus shared network alternatives.

Leased Line Fundamentals

A leased line is a dedicated telecommunications circuit between two fixed locations, provided by a carrier for exclusive use by a single customer. The term "leased" indicates that the customer pays ongoing rental fees for continuous access to the circuit, rather than purchasing the physical infrastructure.

Core Characteristics:

1. Point-to-Point Topology Leased lines connect exactly two endpoints. Unlike switched services (where a single circuit can reach multiple destinations), a leased line is permanently connected between two specific locations. To connect three sites with point-to-point circuits, you need three separate circuits (forming a triangle).

2. Dedicated Bandwidth The rated bandwidth is entirely available to the customer at all times. A 100 Mbps leased line provides 100 Mbps 24/7/365—not "up to 100 Mbps" or "100 Mbps CIR with burst." This is the defining distinction from shared services.

3. Symmetric Throughput Most leased lines provide identical bandwidth in both directions (symmetric). Upload speed equals download speed. This differs from asymmetric consumer services like DSL or cable.

4. Always-On Connectivity No dial-up or connection establishment is required. The circuit is permanent; data can be transmitted at any time without setup delay.

Leased Line Physical Architecture

•Local Loop (Last Mile): The connection from customer premises to the carrier's nearest Point of Presence (POP). May be copper, fiber, or microwave depending on distance and capacity.
•Demarcation Point (Demarc): The physical boundary between carrier-owned and customer-owned equipment. Typically a network interface device (NID) or smart jack at the customer premises.
•CPE (Customer Premises Equipment): Routers, CSU/DSU devices, or media converters on the customer side of the demarc. Customer-owned or carrier-provided.
•Carrier Backbone Transit: For long-distance circuits, traffic transits the carrier's backbone network. The customer sees an end-to-end circuit; the carrier may use various transport technologies internally.
•Inter-carrier Handoffs: Very long circuits may involve multiple carriers, with handoffs at carrier interconnection points.

How Leased Lines Differ from Switched Services:

Aspect	Leased Line	Switched Service (MPLS/Internet)
Topology	Point-to-point fixed	Any-to-any or hub-spoke
Bandwidth Model	Dedicated, guaranteed	Shared (with CIR/burst)
Other Customer Traffic	None—complete isolation	Shared infrastructure
Flexibility	None—endpoints are fixed	Connect new sites easily
Scalability	Add new circuits	Increase virtual bandwidth
Cost Model	Linear with distance/speed	Based on ports and CIR

Virtual vs. Physical Leased Lines

Modern 'leased lines' may be physically implemented as dedicated wavelengths on shared fiber (virtual), dedicated fiber pairs (physical), or even TDM time slots on shared transmission systems. The customer experience is identical—dedicated bandwidth—but the underlying implementation affects cost, lead time, and failure modes.

Types of Leased Lines

Leased lines are available in various technologies and capacities, each suited to different requirements and budgets:

TDM-Based Leased Lines:

Traditional leased lines based on Time Division Multiplexing (TDM) carrier systems:

T1/DS1 (1.544 Mbps)

The foundational North American leased line
24 × 64 Kbps channels or clear channel
Delivered over 2-pair copper (short distance) or fiber
Still widely available and commonly used
Typical pricing: $200-600/month

T3/DS3 (44.736 Mbps)

Equivalent to 28 T1 circuits
Delivered over coaxial cable or fiber
Higher bandwidth, proportionally lower cost per Mbps
Typical pricing: $3,000-10,000/month

E1 (2.048 Mbps) — European equivalent of T1 E3 (34.368 Mbps) — European equivalent of T3

TDM-Based Leased Line Hierarchy
Designation	Region	Bandwidth	Voice Channels	Typical Cost Range
Fractional T1	NA	64-768 Kbps	1-12	$100-300/mo
T1/DS1	NA	1.544 Mbps	24	$200-600/mo
T3/DS3	NA	44.736 Mbps	672	$3,000-10,000/mo
Fractional E1	EU/Intl	64 Kbps - 1.5 Mbps	1-23	€100-250/mo
E1	EU/Intl	2.048 Mbps	30	€200-500/mo
E3	EU/Intl	34.368 Mbps	512	€2,000-8,000/mo

Ethernet-Based Leased Lines:

Modern leased lines increasingly use Ethernet, providing:

Simple, familiar interface (standard Ethernet ports)
Flexible bandwidth increments (not locked to TDM rates)
Lower cost per Mbps than equivalent TDM
Easy speed upgrades without hardware changes

Ethernet Leased Line Options:

Service Type	Bandwidth Range	Typical Interface	Use Case
Ethernet First Mile (EFM)	2-35 Mbps	RJ-45 100Base-T	SMB, branch office
Fiber Ethernet	10 Mbps - 10 Gbps	1GbE/10GbE SFP	Corporate, data center
Wavelength Service	10G - 400G	10GbE/100GbE	Data center interconnect

SONET/SDH-Based Leased Lines:

For very high bandwidth requirements, optical leased lines capacity:

Level	Bandwidth	Typical Use
OC-3/STM-1	155 Mbps	Enterprise backbone
OC-12/STM-4	622 Mbps	Large enterprise, ISP
OC-48/STM-16	2.5 Gbps	Carrier, data center
OC-192/STM-64	10 Gbps	Major backbone routes
OC-768/STM-256	40 Gbps	Core infrastructure

Choosing the Right Type

For new installations, Ethernet leased lines typically offer the best value—more bandwidth per dollar with simpler interfaces. T1/E1 lines remain relevant for legacy equipment compatibility, locations without fiber access, or where existing circuits already exist. Optical wavelengths suit extreme bandwidth requirements where no sharing is acceptable.

Leased Line Provisioning Process

Provisioning a leased line involves significant coordination between customer, carrier, and potentially multiple underlying infrastructure providers. Understanding this process is essential for realistic project planning.

Provisioning Timeline Factors:

Site Survey: Carrier assesses physical feasibility of serving location
Network Design: Carrier determines routing, equipment, and capacity
Construction: If new fiber or facilities required (can add months)
Equipment Ordering: CSU/DSUs, optical equipment, routers
Installation: Physical installation at customer site
Testing: Carrier tests circuit end-to-end
Customer Acceptance: Joint testing with customer equipment

Typical Leased Line Provisioning Timelines
Circuit Type	On-Net Location	Near-Net Location	Off-Net Location
T1/E1	5-15 business days	15-30 business days	30-90 days
Ethernet (10-100 Mbps)	10-20 business days	30-45 business days	45-120 days
Ethernet (1 Gbps+)	15-30 business days	45-60 business days	60-180 days
Wavelength (10G+)	30-60 business days	60-90 business days	90-365 days

Understanding Location Classification:

On-Net: Building already has carrier fiber/equipment. Fastest, cheapest installation.

Near-Net: Carrier fiber passes close to building. May require short lateral construction.

Off-Net: No carrier infrastructure nearby. Requires significant construction or third-party facilities.

The Site Survey Process:

Before quoting a leased line, carriers typically conduct site surveys:

Fiber Availability Check: Does carrier fiber reach the building or nearby?
Building Access Assessment: Is there existing carrier presence? Are there entrance facilities?
Riser/Pathway Evaluation: Can cable reach the customer suite?
Power Requirements: Is adequate power available?
Regulatory/Permit Review: Any special requirements for installation?

Construction Scenarios:

If the carrier lacks infrastructure at the location:

Lateral Construction: Running fiber from street to building entrance

Typically 1,000-10,000+ USD (highly variable)
30-90 days additional lead time
May require street permits, boring, aerial construction

Building Entrance Construction: Installing conduit/fiber within building

Requires landlord permission
May involve riser cores, ceiling plenum work
5,000-50,000+ USD depending on complexity

Shared Tenant Services: Using building's existing telecommunications infrastructure

Faster but may limit carrier choice
Monthly fees to building owner

Plan for the Unexpected

Construction-related delays are the primary cause of leased line projects missing deadlines. Underground conditions, permit delays, building access issues, and contractor availability can extend timelines significantly. Always include contingency time—especially for critical circuits. Consider ordering months before actual need.

Leased Line Pricing and Economics

Leased line pricing is driven by several factors, understanding which enables effective negotiation and appropriate technology selection.

Primary Pricing Factors:

Leased Line Cost Components

•Bandwidth: Higher capacity circuits cost more, though cost-per-Mbps decreases at higher rates. A 1 Gbps circuit typically costs 10-30x a 10 Mbps circuit, not 100x.
•Distance: Longer circuits require more infrastructure and may cross multiple carrier networks. Inter-LATA, interstate, and international circuits cost significantly more.
•Location: Major metro areas have competitive carrier presence and lower pricing. Rural or remote locations command significant premiums.
•Construction Charges: Non-recurring costs for building entrance, lateral construction, or special installations. Can exceed annual circuit cost.
•Term Commitment: Longer contracts (3-5 years) receive lower monthly rates. Month-to-month costs 20-50% more than multi-year terms.
•SLA Level: Higher availability guarantees (99.99% vs 99.9%) and faster repair commitments cost more.
•Diversity Requirements: Path-diverse circuits for redundancy may cost 1.5-2x a single circuit.
•Equipment Options: CPE can be customer-provided or carrier-provided (with monthly rental).

Pricing Structure Examples:

Non-Recurring Charges (NRC):

Installation fee: $500 - $5,000+
Construction charges: Variable (can be substantial)
Equipment charges: $0 - $10,000+ if customer-purchased

Monthly Recurring Charges (MRC):

Sample Leased Line Monthly Pricing (US Major Metro)
Circuit Type	Local (same city)	Regional (100-500 mi)	Long-Haul (cross-country)
T1 (1.5 Mbps)	$200-400	$400-800	$800-1,500
10 Mbps Ethernet	$300-600	$600-1,200	$1,200-2,500
100 Mbps Ethernet	$500-1,200	$1,200-3,000	$3,000-8,000
1 Gbps Ethernet	$1,000-3,000	$3,000-8,000	$8,000-25,000
10 Gbps Wavelength	$5,000-15,000	$15,000-40,000	$40,000-100,000

Cost-Per-Mbps Analysis:

Leased line economics improve dramatically at higher capacities:

Capacity	Monthly Cost	Cost per Mbps
T1 (1.5 Mbps)	$400	$266.67
10 Mbps	$600	$60.00
100 Mbps	$1,500	$15.00
1 Gbps	$4,000	$4.00
10 Gbps	$20,000	$2.00

This 100:1 improvement in cost efficiency explains why organizations consolidate to fewer, larger circuits when possible.

Negotiation Strategies:

Bundle Circuits: Committing multiple circuits to one carrier improves leverage
Long-Term Contracts: 3-5 year terms significantly reduce monthly rates
Competitive Bids: Always obtain quotes from multiple carriers
Off-Peak Timing: Late fiscal year or slow periods may yield better deals
Flexibility on Features: Accepting slightly longer repair SLAs can reduce cost

Total Cost of Ownership

When comparing leased lines to alternatives, include: monthly recurring charges × contract term, non-recurring installation costs, CPE equipment (purchase or rental), internal management effort, and opportunity cost of long provisioning times. Sometimes a higher-MRC service with faster provisioning offers better total value.

Service Level Agreements for Leased Lines

Leased line contracts include Service Level Agreements (SLAs) that define carrier obligations for availability, performance, and repair response. Understanding SLAs is essential for matching service commitments to business requirements.

Key SLA Metrics:

Leased Line SLA Components

•Availability Guarantee: Percentage of time circuit is operational. Typically 99.9% (8.76 hours/year downtime) to 99.99% (52.6 minutes/year). Higher availability = higher cost.
•Mean Time To Repair (MTTR): Carrier's commitment for restoration after outage is reported. Typically 4-8 hours for standard circuits, 2-4 hours for premium.
•Time To Respond (TTR): How quickly carrier acknowledges trouble report, assigns technicians, and begins work. Typically 15-60 minutes.
•Latency Guarantee: Maximum one-way or round-trip delay. Important for real-time applications. May specify p99 or mean latency.
•Jitter Guarantee: Maximum latency variation. Critical for voice/video. Typically <5ms for premium services.
•Packet Loss Guarantee: Maximum acceptable packet loss rate. Typically <0.1% for dedicated circuits.
•Scheduled Maintenance Windows: When carrier may perform maintenance affecting service. Typically overnight/weekend hours.

Understanding Availability Calculations:

SLA Level	Monthly Downtime	Yearly Downtime	Typical Service Level
99.0%	7.3 hours	3.65 days	Entry-level
99.5%	3.65 hours	1.83 days	Standard
99.9%	43.8 minutes	8.76 hours	Business
99.95%	21.9 minutes	4.38 hours	Premium
99.99%	4.38 minutes	52.6 minutes	High-availability
99.999%	26.3 seconds	5.26 minutes	Carrier grade

SLA Credit Mechanisms:

When carriers fail to meet SLAs, customers receive credits:

Example Credit Structure:

99.9% SLA missed (actual 99.8%): 10% credit on monthly fee
99.9% SLA missed (actual 99.5%): 20% credit
99.9% SLA missed (actual 99.0%): 50% credit
Extended outage (>24 hours): Pro-rated credit for affected period

The Credit Reality:

Carrier SLA credits rarely compensate for actual business losses:

A $5,000/month circuit with 99.9% SLA experiences 2-hour outage
Customer receives perhaps $250-500 credit
If that circuit supports $1M/hour trading operations, loss = $2M
Credit covers 0.025% of actual loss

This asymmetry means SLA credits are a carrier commitment/incentive mechanism, not insurance. Organizations must implement redundancy rather than relying on SLA compensation.

SLA Fine Print

Read SLA exclusions carefully. Common exclusions: scheduled maintenance windows, customer-caused outages, force majeure (natural disasters), third-party damage (fiber cuts by contractors), and regulatory/government actions. These exclusions may apply during precisely the situations when you most need the circuit.

Leased Line Redundancy and Diversity

For mission-critical connectivity, a single leased line—regardless of its SLA—represents a single point of failure. Achieving true high availability requires redundant circuits with appropriate path diversity.

Levels of Diversity:

Diversity Implementation Levels

•No Diversity: Single circuit only. Any failure causes complete outage. MTTR = circuit restoration time.
•Equipment Diversity: Redundant CPE on same circuit. Protects against customer equipment failure. Doesn't help if circuit fails.
•Port Diversity: Two circuits from same carrier to same POP. Protects against port/card failures at carrier. Doesn't protect against POP failure.
•Route Diversity: Two circuits taking physically separate paths. Protects against cable cuts and most failures. Specify different entrance facilities, conduits, and backbone routes.
•Carrier Diversity: Circuits from different carriers. Protects against carrier-wide failures. Most expensive but most resilient.
•Technology Diversity: Different transport technologies (e.g., fiber + microwave + satellite). Protects against technology-specific failures.

Achieving True Path Diversity:

Ordering two circuits from the same carrier doesn't guarantee diversity. To achieve genuine path diversity:

Physical Entrance Requirements:

Circuits enter building from different directions
Different entrance conduits/pathways
Different building risers to customer space

External Path Requirements:

Different last-mile facilities (separate poles or conduits)
Different carrier central offices
Different backbone routes across the network
No shared fiber sheaths or cable bundles

Documentation and Verification:

Request diversity verification letter from carrier
Obtain path diagrams showing physical routing
Verify no common failure points (shared bridges, tunnels, rights-of-way)

Common Diversity Failures:

Even with "diverse" circuits, failures can affect both:

Circuits share entrance conduit but take different streets
Circuits take different streets but share a bridge crossing
Circuits enter different buildings that share fiber to the same carrier POP
Circuits use different carriers whose networks share backbone facilities

Diverse: Protected

•Different building entrances
•Different carrier POPs
•Different backbone paths
•Different carriers
•Different technologies
•Verified/documented diversity

False Diversity: Vulnerable

•Same conduit, different cables
•Different streets, same bridge
•Different carriers, shared backbone
•Diverse paths, shared building entrance
•Unverified carrier claims
•Documentation without site audit

Diversity Testing

Don't trust diversity—test it. After both circuits are installed, physically trace paths where possible and request carrier path diagrams. Consider periodic failover testing: intentionally disable one circuit and verify the other sustains operations. Discovery during a real outage is too late.

Leased Line Use Cases and Alternatives

Leased lines command premium pricing, so appropriate use case selection is essential. Understanding when leased lines are justified—and when alternatives serve better—ensures optimal WAN investment.

Ideal Use Cases for Leased Lines:

Scenarios Favoring Leased Lines

•Data Center Interconnection: Connecting production data centers requires guaranteed bandwidth, low latency, and absolute reliability. Leased lines (or wavelength services) are standard.
•Financial Trading Systems: Microseconds matter. Dedicated low-latency circuits between trading venues are essential for competitive execution. Shared services add unacceptable jitter.
•Healthcare Data Transmission: Medical imaging (PACS), real-time monitoring, and regulated data transmission often require dedicated, auditable connectivity.
•Industrial Control Systems: SCADA, utility grid control, and manufacturing systems demand deterministic latency and availability that shared networks cannot guarantee.
•Mission-Critical ERP/SAP: Organizations running critical business processes on centralized ERP systems need guaranteed connectivity to headquarters.
•Regulatory Compliance: Some regulations (HIPAA, PCI-DSS, financial services) may require or favor dedicated, non-shared connectivity for certain data types.
•Legacy Technology Integration: Systems requiring specific protocols (TDM voice, legacy SNA) may need TDM leased lines for compatibility.

When Alternatives May Be Better:

Scenario	Better Alternative	Why
Many small branch offices	MPLS VPN or SD-WAN	Lower cost, faster provisioning, centralized management
Cloud-primary workloads	Direct cloud connect + internet	Cloud-native access, lower latency to SaaS
Variable bandwidth needs	Burstable MPLS or SD-WAN	Pay for usage, not peak capacity
International connectivity	Internet VPN or MPLS	Leased line pricing prohibitive at distance
Temporary/project sites	4G/5G or satellite	Rapid deployment without construction
Backup connectivity	Internet VPN	Cost-effective redundancy

Leased Line Decision Matrix
Requirement	Importance	Leased Line Fit
Guaranteed bandwidth	Critical	Excellent—dedicated by design
Low/predictable latency	Critical	Excellent—no contention
High availability (99.99%+)	Critical	Good—with diversity
Regulatory compliance	Required	Excellent—isolated, auditable
Lowest possible cost	Primary	Poor—premium pricing
Rapid deployment (<1 week)	Critical	Poor—weeks to months
Flexibility (add/remove sites)	High	Poor—fixed point-to-point
Direct cloud access	High	Medium—requires backhauling

The Hybrid Approach

Most enterprise WANs combine leased lines for critical paths (headquarters-data center, data center-data center) with MPLS or SD-WAN for broader connectivity. This tiered approach applies premium investment where requirements demand it while using cost-effective solutions elsewhere.

Summary: Leased Lines

We've comprehensively examined leased lines—the dedicated point-to-point circuits that provide the highest assurance of bandwidth, performance, and isolation in WAN connectivity.

Key Takeaways

•Dedicated means dedicated: Leased lines provide exclusive bandwidth with no sharing—guaranteed capacity available 24/7.
•Multiple technology options: TDM (T1/T3/E1/E3), Ethernet, and wavelength services serve different capacity requirements and price points.
•Provisioning takes time: Weeks to months depending on location and capacity. Plan well ahead of need.
•Pricing reflects distance and speed: Cost-per-Mbps improves dramatically at higher capacities. Long-distance and international circuits command significant premiums.
•SLAs have limitations: Credits don't cover business losses. Design for redundancy rather than relying on SLA compensation.
•True diversity requires verification: Don't assume circuits are diverse—verify physical paths and document diversity.
•Use cases are specific: Leased lines excel for data center interconnect, ultra-low-latency requirements, and regulated environments. Other scenarios may be better served by alternatives.

Looking Ahead:

The next page examines WAN providers—the telecommunications carriers that deliver leased lines, MPLS, and other WAN services. Understanding the carrier landscape, evaluating provider capabilities, and managing carrier relationships are essential skills for enterprise network architects.

Page Complete

You now possess comprehensive knowledge of leased line technology—from fundamental concepts through provisioning, pricing, SLAs, and diversity considerations. This understanding enables informed decisions about when dedicated circuits are justified and how to specify, procure, and manage them effectively.