Why Does Business Internet Cost More Than Residential?

Why Does Business Internet Cost More Than Residential?

The contrast in quality of the service offered by business internet solutions compared to residential alternatives is reflected in the price. Sometimes this price difference can be difficult to understand.

Fortunately, there is a simple explanation - internet access is offered via different methods that consist of wide-ranging attributes and quality of service. Below, we break down how internet access can vary between residential locations, small businesses and those requiring dedicated internet access.

1) Residential Locations

Typically priced between $25 and $150 per month, residential internet is often provided through a shared internet service such as cable or DSL. This access is managed by local cable or phone companies and is considered “best effort”. Although, homeowners may have purchased bandwidth of up to 50Mbps, the key phrase here is “up to”. 

Residential internet solutions utilize shared access methods whereas most business internet service providers use a dedicated internet solution.

The likelihood that users will actually experience this speed is slim to none. Providers anticipate that not every customer will be using their connection to its maximum capacity during every minute of the day and therefore oversubscribe the bandwidth sold.

2) Small Business

Priced between $70 and $375 per month. Small businesses with only a handful of employees can opt for shared internet access in the form of DSL or cable due to the relatively small demands in terms of usage.

However, choosing a shared solution means that businesses run the risk of sporadic or slowed service. While many cable and DSL providers brand their service as “business”, there is little difference compared to residential service.

3) Dedicated Internet Access

Priced at $200 and above per month. Dedicated internet access is exactly what is sounds like. Subscribers benefit from a direct connection to the internet service provider (ISP) ensuring there is no oversubscription or throttled speeds.

Dedicated internet access ensures that bandwidth is served directly to the subscriber and is not shared among other users.

Pricing for dedicated internet access is dependent on a variety of factors including required bandwidth, the type of dedicated service selected and the length of agreement.

Many dedicated internet access providers guarantee 99.999% uptime and support this claim with a comprehensive Service Level Agreement (SLA).

Now back to the original question - why does business internet cost more than residential solutions?

No Shared Access

Oversubscription is a common practice with DSL and cable providers. These ISPs hope that all of their customers will not be using the internet at the same time. However, should multiple users jump online at the same time, experience will suffer due to slow speeds

ISPs are typically able to manage oversubscription due to variations in usage patterns of residential and small business users. However, due to growing demand for streaming services and cloud-based applications, providers have to be more careful with how they oversubscribe users to their service.

In contrast, dedicated internet, which is available through fixed wireless or fiber connectivity, does not involve shared access or oversubscription.

If you sign a 250Mbps x 250Mbps agreement, these are the upload and download speeds that you will receive. The price is higher than shared access because the bandwidth is reserved for your use only.

Service Level Agreements

SLAs come as standard with dedicated internet access agreements. These documents tend to provide a guarantee of uptime, reliability and speed. In addition, they address what happens if an outage does occur or if the reliability guarantee is not met.

Unfortunately, residential and small business services are rarely backed by an SLA as ISPs recognize that to keep costs low, they have to deploy lower quality hardware and infrastructure that is more likely to fail or cause a service interruption. As a result, shared access providers are not willing to guarantee their cable or DSL service.

Conclusion

Having explored the basics of residential and small business internet services versus dedicated internet access, the disparity in pricing becomes more understandable. ISPs are providing two distinct types of service.

Cable and DSL are “best effort” solutions that can be suitable for those with lower bandwidth and reliability requirements, but users must be aware of their restrictions. If your business relies on the internet for critical operations, a dedicated internet solution will almost certainly be worth the additional cost.


Is your business in need of a dedicated internet solution? One Ring Networks offers fixed wireless and fiber solutions to businesses of all sizes across Georgia and Texas. Contact our team now at 404-303-9900 or sales@oneringnetworks.com to learn more about our customizable solutions.

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Sam Mountstephens

Tags: business internet, dedicated internet access

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