Why is business quality internet so much more expensive than home internet?

This is a question we at Orbital are faced with on occasion, particularly as our sister company ‘Vfast’ sell residential connections at a much cheaper rate than our first business package. But there is a very good reason for this!

So what is the difference between the 2 primary categories of customers seeking an internet connection? (residential and business)

Let’s start by highlighting the three major types of internet access: residential, small business and dedicated internet access.

? Residential (pricing between ￡10 and ￡120 per month) – Commonly referred to as broadband internet, these services are offered by various companies hence the broad difference in pricing scale. The service is considered shared and ‘best-effort’ in terms of speed and reliability.

? Small Business (pricing between ￡50 and ￡500 per month) – Also commonly referred to as broadband internet or ADSL, these services are similar to residential. The largest difference comes in the fact that it’s a step above ‘best-effort’ speed and reliability and includes services like a static IP, service level agreement and less oversubscribed nature of its availability. We’ll discuss these in more detail below.

? Dedicated Internet Access (Fibre Leased Line) or 1:1 contention (pricing at ￡500 and above, most often in the thousands of pounds per month) – One of the purest forms of internet access, Dedicated Internet Access is a direct connection to the Internet Service Provider (ISP) you purchase from. Your internet access is provided on a dedicated line unlike Residential or Small Business services and comes with a 99.99%+ reliability and a suite of sophisticated features to improve business efficiency.

An example of a dedicated internet access service with an Orbital Fibre Leased Line:

Now back to the question at hand… Why is business internet so much more expensive than what I purchase at home?

No Oversubscription (Contention)

Over subscription is a common practice in the Internet service business for residential and small business customers. Most ISP’s make a gamble that not all of their customers will be using the internet at the same time. It is not uncommon for other ISP’s to oversubscribe their residential or small business customer base 30x or even 50x. This is something Orbital simply don’t do. As we have fewer customers than the likes of Sky and BT we can ensure we keep our contention as low as possible which is why Orbital sell our packages based on contention unlike other providers who try to hide its existence!

Other ISPs are effectively able to manage over subscription because of the differing daily usage patterns of residential and small business users. While you’re at work, you aren’t using the internet at home and vice versa. Here’s a chart that breaks down data transfer during peak hours:

Because residential and small business services have the potential to experience high contention ratios, you end up sharing the internet access with the people in your general vicinity. That means that as more people in your vicinity start to use the internet with the same provider, you many notice your speeds decrease. To work out what speeds you are guaranteed on ‘up to’ packages you need to divide the speed by the contention ratio. For example, 10Mb on a 20:1 contention ratio will guarantee you 2Mb Although this isn’t written in stone as there are a lot of variables meaning most will see more than this. Of course if in your area there are less than 20 other people sharing the connection you get a bigger slice of the speeds for no extra cost.

When you purchase Dedicated Internet Access, your connection is ‘pure’ in the sense that it comes with no oversubscription. If you pay for 100Mbps / 100Mbps, you receive it, guaranteed. You pay a premium because the entire amount of bandwidth is exclusively yours to use as you’d like. Dedicated Internet Access also comes with a Service Level Agreement (SLA). At Orbital ALL of our business packages come with SLA’s and other benefits.

Service Level Agreements (SLAs)

Another large factor in the increased price of dedicated internet access versus residential or is the Service Level Agreement (SLA). SLAs not only provide a guarantee of up time, reliability and speed, but they also address what happens if that guarantee of reliability is not met.

No one likes it when their internet goes down, but unfortunately for residential customers SLAs are often not included. These services are often called ‘best effort’. This is simply because residential connections have such high competition the need to provide it cheaper is increasing. Therefore, more connections must be sold to compensate for this. This of course leads to the over subscription we mentioned earlier.

You can find more information about Orbital Net products and services at www.orbital.net

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Orbital Dedicated Internet Access Services: