New Telecommunications Services Help Dealers Cut Costs
By Ted Mallires
Auto Dealer Alert, January 2006


Auto dealerships depend on telecommunications services to conduct business on a variety of fronts. From making and receiving telephone calls to specialized circuits that join multiple locations together to high-speed Internet service, these services are being affected by a new technology shift in the communications industry.  This shift focuses on assembling all forms of communication — voice, data, or video — and treating it as data packets that can be transmitted using Internet Protocol (IP). This technology has significant implications on telecommunications systems and services and may provide opportunities for dealerships to consolidate services and save money doing it.

What is Integrated Access Service?

Until recently, telephone lines and Internet access were distinctly separate services typically delivered on separate bills from different providers. A dealership may have a dozen or so telephone lines connected to the telephone system, and they may have a DSL connection to the Internet. However, because of the blending of voice services with Internet services, telecommunications carriers are now able to offer these two services together. How does it work? The carrier delivers a T1 from their network to your dealership (a T1 is equivalent to 1.54Mbps of Internet access or 24 telephone lines service). This connects your dealership to their network.  At your site they use equipment called an "Integrated Access Device" that will allow you to use the connection.  This device splits the signal to provide a connection to your telephone system in a manner it wants to see it (e.g., 10 analog lines, a T1, or an ISDN-PRI) while it provides a connection to your data network as it wants to see it for Internet access (e.g., V.35 connection to the router or 10/100Mbps connection to the LAN). The T1 shares its bandwidth for both phone calls and Internet access as it travels over the carrier’s private IP network.

Benefits of Integrated Access

This service will work with your existing telephone system and LAN equipment. Installation will cost approximately $250-$500. After that, there is a fixed monthly cost for the service, oftentimes ranging from $400-$700 per month. As a rule, local calls are free. Local toll and long distance calls will be free or low cost (approximately $0.03/minute). If the dealership organization contains multiple sites, installing this service into each site will eliminate charges for calling between sites. And of course, Internet usage is included as part of the package.

Advanced Features

This service offering is still being enhanced with new features and capabilities. One feature is the ability to "bond" multiple T1s to accommodate customers who need more than one T1 worth of telephone lines and Internet access.  Another feature is the ability to activate compression on telephone calls to squeeze 25-30 simultaneous calls instead of 12-13 calls out of a single T1.

Could Integrated Access Help My Dealership?

Generally speaking, a single integrated access T1 works well for those dealerships that require no more than 13-15 telephone lines, are using DSL service for Internet access, and are making lots of local calls. By moving to integrated access, the cost for telephone lines and the existing Internet service is replaced with a single T1, and local call charges are eliminated.

Getting Quotes

Many carriers now offer this service in several varieties, including AT&T, MCI, Sprint, Qwest, XO Communications, McLeodUSA, and others. Before getting quotes, it’s recommended to first identify the cost of your current monthly Internet access and the monthly cost of the telephone lines connected to your telephone system. Second, identify the average monthly cost for local usage. Third, identify the average monthly cost (and ideally the average per minute cost) for local toll, in-state, and out-state long distance calls.  This will provide the basis to compare integrated access quotes against current costs. 

Telephone service continues to be affected as IP-based services evolve and develop. Integrated Access is one step in the march toward delivering voice, data, and video services on a common medium much like we enjoy access to electricity today.  Dealerships need to be aware that these services are available and may help them operate more effectively. In subsequent articles we will address other methods to reduce cost and improve operations using technology and communications. For more information, contact Plante & Moran’s Ted Mallires at 800.544.0203, or e-mail ted.mallires@plantemoran.com.