Project Description
Leased Line Costs
Leased line costs… how are they calculated?
The cost of a leased line is split into 2 discrete components. 1. the rental charge which is a fixed monthly or quarterly charge 2. the set up fee which is a one-off installation charge.
The most important factors affecting the charges are:
- the distance from your location to the nearest point of presence (POP) of the service provider
- the speed of service that you require eg. 10mb or 100mb
A leased line site survey will firm up these costs. Any quotes provided prior to a site survey are indicative leased line costs.


How does location affect leased line pricing?
The pricing of a leased line for your business is entirely bespoke. This is because your location, and building will be significant factors in determining the costs.
Remote areas typically pay higher installation charges and rental fees that inner city locations. This is because: 1. the location is usually further from the nearest POP 2. there is less provider competition 3. often fibre is not already installed in the building
For an inner city location a 10mb leased line should cost in the region of £200-300/month. For a remote location this could be in excess of £1000/month.
Some companies are already “on net”. This means they already have fibre installed in their building. In this circumstance leased line costs are significantly lower. This is because there’s not much work required to deliver the fibre service.
Some Companies, especially remote businesses are not as lucky. If you happen to be several miles from a data network costs to dig a fibre to your business can be very high. Often in excess of £10,000!
The vast majority of UK businesses are within a few metres of the existing UK fibre optic networks. Often the carrier will subsidise the connection in these cases.
Lower leased line speeds (2Mb to 10Mb) can often be provided over new technology such as EFM. This vastly reduces costs as the leased line will use the existing network connecting the UK’s 5600 telephone exchanges.
Will signing a longer term contract reduce my leased line costs?
There is a direct relationship between length of contract and contract cost. The longer the contract you commit to the lower the leased line costs will be.
There is a simple reason behind this. The leased line provider will amortise the installation cost of the leased line over the contract length.
If we look at a 10Mb leased line on a 3 year contract as an example. The profit in the first 18 months of a contract will cover the free installation fee offered. the next 3 months profit covers the cost of providing the free router. 8 further months of profit cover the cost of providing the service. This leaves the final 4 months rental profit at around 55% gross margin.


How does bandwidth speed affect leased line pricing?
Bandwidth affects the price for 2 main reasons:
- bandwidth is a cost to the carrier – the usage of bandwidth is a core carrier cost, so the more you use the higher your charges will be.
- bandwidth speed has a bearing on your technology options. Low speed leased lines (2mb – 10mb) can be provided over copper and ethernet as well as fibre. 100mb leased lines have to be delivered over fibre end-to-end. There’s less price competition for 100% fibre networks so they are more expensive.
If you require a high speed fibre leased line 100mb + the equipment used to deliver the service will be more expensive. This is also reflected in a higher contract cost.