What is IRU (a.k.a Indefeasible Right of Use)? If you are working in the Operator, Service Provider, or Telco/Carrier networks, you probably heard this term. If you haven’t, you need to learn it.
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Service Providers use the transport network of others. This is very common, in fact, even the biggest networks use other carriers’ transport/transmission infrastructure, especially outside of their main location. For example, an operator might provide services mainly in the U.S, but want to extend its network to Europe.
Instead of setup a fully-fledged telecom environment in Europe to provide a service, let’s say to Business and Residential customers, one option is to use local carrier networks in Europe.
Indefeasible Right of Use (IRU) Is a permanent contractual agreement
That cannot be undone, between the owners of a cable and a customer of that cable system. The cable is mostly a fiber cable as fiber can carry more data than any other type of media.
Buying a fiber can be in two ways, either, Leasing or IRU (Indefeasible Rights of Use) based.
Indefeasible means ‘not capable of being voided or undone. The Customer purchases the right to use a certain amount of capacity of the fiber system for a specified number of years.
Customer who purchases IRU can lease the capacity to other companies.
Let me give you an analogy.
Think of it in this way, if you are renting an apartment, you sign a contract with the Landlord as a tenant. You cannot rent that apartment to someone else. This is similar to leasing. But if you are the landlord, you can rent it to anyone you want. This is an example of an Indefeasible Right of Use-based agreement.
Let’s have a look at the differences between Leasing and IRU-based contracts in detail. There will be some technical terms, be ready.
IRU vs. Leasing A Fiber
- IRU contracts are almost always long term such as 20 to 30 years (Cable lifetime is generally considered as 25 years)
- Leased fiber doesn’t have to be a long term contract
- The most common leased service is IPLC which is Internal Private Leased Circuits. IPLC can be a half circuit or full circuit. (I will explain the half and full circuits IPLC in a separate post)
- IPLC unlike IRU doesn’t dictate the buyers to pay the cost of fiber upfront, IPLC is not a prepaid service
- Leasing is very flexible (In terms of contract duration, speed option, etc.) but IRU can be very cost-effective
- Indefeasible Right of Use based contract gives the purchaser the right to use some capacity on a telecommunications cable system, including the right to lease that capacity to someone else
But is an Indefeasible right of use-based contract suitable for every company? Why people don’t buy if it has a cost advantage? Why bother with MPLS?
Should smaller companies purchase an IRU-based fiber?
- Smaller companies that need a leased line between, say, London and New York do not buy an IRU.
They lease capacity from a telecommunications company that themselves may lease a larger amount of capacity from another company (and so on), until at the end of the chain of contracts there is a company that has an IRU, or wholly owns a cable system. Buying an IRU compare to other types of circuits such as MPLS, Metro Ethernet and Internet is much more costly. Thus smaller companies generally don’t buy IRU capacity.