Telco SLA Parameters and Penalties

Wednesday, June 23, 2010

Bozidar Spirovski

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Communication links provided by Telco providers are critical to most businesses. And as any network admin will tell you, these links tend to have outages, ranging from small interruptions up to massive breakdowns that can last for days.

When such interruptions occur, businesses suffer, but unless the provider has serious contractual obligations, there is little effort on their side to improve service or correct issues.

That is why businesses need a good Service Level Agreement (SLA).

Usually, the preparation of the SLA is dreaded by most, since it is full of numbers and parameters on which the client must decide what is acceptable, and whose values may be difficult to measure.

SLA Parameters

A good SLA is not necessarily loaded with a lot of numbers. You need to work with 2-3 parameters which are important to you.

Here are the most frequent SLA parameters, with their acceptable values:

  • Availability - more then 99% for internet, more then 99.5% for corporate data links
  • Packet Loss - less then 0.4% for internet, less then 0.2% for corporate data links
  • Jitter - less then 15ms for internet, less then 5ms for corporate data links

SLA Penalties

And you need penalties which will hurt the provider. Penalties are the big stick in the SLA.
Here are the penalties that you want:

  • small breach of SLA - 25% to 33% of monthly fee
  • large breach of SLA - 50% to 100% of monthly fee
Be aware that no provider will create an SLA that will eat much of it's profits. The commited provider can be identified by the type of Service Level Agreement (SLA) that it's prepared to sign without special negotiations.

Here are three different levels of SLA's - not so much by the metrics and parameters, but quite different in terms of penalties
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