Private Networks

Many companies, depending on their size and need, create or build their own networks. These networks are usually justified on the basis of cost, availability of lines and facilities, and special need. Often, a mix of technologies are used, such as private microwave, satellite communications, fiberoptics, and infrared transmission. The initial and the ongoing costs of private ownership can be quite expensive.

Because the costs for a private network must be borne by the end user, oftentimes the telecommunications department managers are under pressure to cross subsidize the costs in other ways. Many companies with a private network have been subjected to criticisms from end users that the costs are higher than the public-switched network costs. Individual sites or departments, therefore, begin reducing their own use old the private facilities. This increases the burden on remaining users, who then foot the bill for lightly used networks.

Still others, who have built their own networks, have stated that they are amassing huge savings. When placed in a position of defending their networks, they can produce statistics of the savings reaped on a company-wide basis. If, however, they have a problem with underutilization, they can sell off some of their excess capacity.

This gives these organizations a little breathing room. Collections, maintenance, and administration costs tend to increase when reselling takes place. There is no single best answer here; each organization must look at its needs, availability, costs, and services before deciding which network to use.