There's a lot of misinformation out there with regard to types of Internet connections, so this article is intended to help sort through the noise.
Fundamentally, there are two basic types of Internet connections:
- Dedicated (geared to an enterprise - usually fiber, usually expensive - think on the order of $10,000 to install, and $500-/month)
- Shared (geared to residential / small business - typically either coax from the traditional cable company, DSL from the traditional phone company, or a shared fiber network) - usually on the order of $100-$200 to install at $100/month
Dedicated connections are great, but they're expensive and usually require a long-term contract. They come with a "service level guarantee", meaning they will guarantee your service is back up within XX hours of placing a trouble ticket, or you'll get XX percentage back of your monthly fee. The other hidden cost here is that you're essentially locked in - it's hard to negotiate better deals because the switching costs are so high.
Most of our customers end up with dual shared connections, but there are some tradeoffs:
- Switching between the connections is not instantaneous, and while Internet connections dropping isn't usually a big deal, phone calls dropping is pretty unacceptable.
- These shared connections are shared largely with residential customers, which are particularly price sensitive, speed sensitive, and fairly insensitive to short outages. The networks are designed with this in mind
What this leads to is massive "oversubscription". Like a hotel or airline that overbooks, network providers may sell dozens of "up to 200 Mbps" connections on a network that only has an aggregate 1000 Mbps of bandwidth. No customers really know or care as long as they generally get the speed they requested. Incidentally, this is true on networks inside your building as well - it is very common to have 47 1000 Mbps ports fed by a single 1000 Mbps port.
Oversubscription is fine to a point, but competition (increasingly from cellular providers) is putting a lot of pressure on Internet providers to sell higher speeds at lower costs, and that's leading to increased outages and bandwidth pressure.
Residential vs Commercial Service
As a side note to the above discussion, we sometimes get questions about the difference between residential and commercial service levels. Fundamentally, these run on the exact same networks, and aren't really any different, with a few exceptions:
- Commercial service is almost invariably more expensive because they anticipate businesses using the connections more heavily.
- Commercial service sometimes gets you better customer service & time to repair (though certainly not always)
- Commercial service usually carries no bandwidth caps, while residential service sometimes does (notably Comcast)
- Static IPs usually require commercial service. This is required for certain types of VPN connections, for hosting servers at your office, and frequently cloud-based time clock applications will restrict access to static IPs to ensure that employees aren't clocking in from home.