Efficient Way to Get Low-Cost T-1 Routers

Siemens-branded gateway lets smaller companies tap faster connections.

Efficient Networks Inc., long focused on DSL access hardware, is expanding into the T-1 access market to attract small and midsize businesses that are considering the higher-speed connections.

Efficient, a Dallas-based subsidiary of Siemens AG, this week is rolling out a T-1 access gateway that officials said is priced to open the T-1 market to companies that were turned off by the T-1 routers cost, which hasnt fallen with the declining cost of T-1 services from service providers.

"The price of T-1 services has come down—they used to be $2,000 a month, and now they are $500 a month—but the cost of T-1 routers has not come down," said Dano Ybarra, vice president and general manager of the business solutions division at Efficient.

The T-1 gateway is being branded under the Siemens name, since that is more familiar to companies beyond digital subscriber line service providers and telecommunications carriers, Ybarra said. The Siemens se5940 T1 Business Gateway is priced at $999. T-1 routers can cost thousands of dollars, analysts say.

Lower-priced offerings are compelling for enterprises and service providers, said Jon Cordova, an analyst at Infonetics Research Inc., in San Jose, Calif. Cisco Systems Inc. has dominated the field for edge routers such as T-1 gateways, holding about an 80 percent share of the market. That has kept prices relatively high, but competition from companies such as Efficient, Alcatel SA, Nortel Networks Corp., Adtran Inc. and others is helping to push down prices, Cordova said.

"Everybody wants to get in there and take a piece from Cisco," Cordova said. "There is demand for it."

Still, many enterprises, even smaller ones, could be reluctant to move away from Ciscos access equipment. Ken Morgan, network manager at builder Arthur Rutenberg Homes Inc., in Clearwater, Fla., said he would consider lower-priced equipment such as the new Efficient equipment if he were adding T-1 connections to any of his companys branch offices.

But often carriers and service providers will support only the Cisco equipment they offer. At its headquarters, Arthur Rutenberg uses Cisco hardware to connect to a T-1.

"Remember how years ago youd never lose your job buying IBM?" Morgan asked. "[Today] youd never lose your job for buying Cisco."

Despite hurdles, the Siemens se5940 is gaining traction with some service providers, which make up a part of Efficients main sales channel along with VARs and distributors. ISP DSL.net Inc., of New Haven, Conn., plans to add the gateway as one of its choices for access equipment to its T-1 offering.

The ISP added T-1 service in January as more of its business customers began requesting it because of limitations with DSL, said Art Cuomo, director of sales engineering.

Part of the attraction was the features included in the gateway beyond basic T-1 connectivity. The Siemens se5940 supports leased-line, asynchronous transfer mode and frame relay varieties of T-1s. The gateway combines a router; firewall; VPN (virtual private network); and an eight-port, 10/100M-bps Ethernet switch.

Optional features include a V.90 modem for dial-backup capabilities, a higher-grade stateful firewall and a dedicated encryption processor to speed VPN performance.

"For customers that need more robust features like VPN and dial backup, the Efficient router gives you a lot of value for the money," Cuomo said. "For somebody that wants a good, quality piece of [customer premise equipment] that doesnt want to, or cant, afford to go the Cisco route, this is a great alternative."

Along with its move into the T-1 access space, Efficient this week also beefed up its DSL offerings. It is announcing the availability of the 5930 ADSL Business Gateway for $699, which combines a router, firewall, VPN, eight-port 10/100M-bps Ethernet switch and V.90 modem for dial backup within an ADSL (asymmetrical DSL) modem.