What is the Cost of MPLS Network?

Hidden and not-so-hidden costs of MPLS networkCompleting the Picture – Understanding the Cost of MPLS
For quite some time now, Multi-Protocol Label Switching (MPLS) has been the dominant form of network transport for much of the world for inter-office communication links carrying real-time traffic. MPLS is an efficient method of WAN networking that enables the use of different transport layer methods such as Ethernet and Frame Relay within the same network, without the need for heavy packet inspection or re-encapsulation. However, MPLS comes with its caveats.

Like any good network manager knows, there’s more to deciding on the right type of network for your business than simply the preferred technology – cost is also a major, if not the major, factor in deciding which type of network to utilize. While MPLS was an excellent choice of network from a technical point of view, it’s critical to also understand the cost of MPLS, and how that should factor into your decision to compare MPLS over some more modern approaches where MPLS can be part of a larger Software Defined WAN network strategy.

Cost Elements of MPLS
Regardless of the market, MPLS pricing is generally based on the same general components, such as:

  • Port Type – As mentioned above, MPLS networks can be provisioned over different underlying transport. But those different transport types often have different costs.
  • Port Speed – This is what most people are referring to when they say ‘bandwidth’, and it refers to the size of the port and pipe at a given location.
  • Local Loop – This is perhaps the most location-dependent aspect of the pricing for any given MPLS network, and the most variable. The local-loop charge is for the local connectivity between the MPLS switches for a given carrier, and the location(s) in question which require the service.

MPLS Rates Compared
The cost of MPLS can vary widely based on carrier, discount levels, volume commitments, and other factors. For example, in the United States, the general rate for a DS-1/T-1 MPLS circuit will come with a list rate of anywhere from $750 to $1000 per month – that is $585 per Mbps, compared to $2-$10 for standard Broadband Internet lines. In other words MPLS is 100 times more expensive per Mega bit delivered compared to other business class connectivity options.

Further, geography plays an important role, as well as a given carrier’s ability to provide service within that geography. If a given carrier doesn’t have a strong presence in a given geography, they’ll usually work with another provider to complete their quote, which can also affect their price to you significantly.

Playing the Game
Before entering into any contract, consider utilizing a third-party company to gather a range of quotes from a number of different carriers, and work with them to drive the right deal for your needs. There is now a cottage industry of companies that do nothing but advise clients on ways to optimize their network spend and get more cost-effective use out of their networks. 

But more importantly, also investigate a multi-carrier WAN architecture option to work around a single point of failure with a single MPLS network. In most cases, you can blend a low rate MPLS network and high bit rate broadband lines, as long as you have a Software Defined WAN Orchestrator.

Whatever strategy you employ, it’s very important to seek out a large range of quotes prior to making any decision. Telecommunication providers can have greatly differing pricing and levels of service, and networks are difficult to migrate once in place. Because of this, it’s critical to take the time to fully evaluate different providers, pricing options, network designs and WAN Orchestrators before making a final decision.

Cahit Akin, CEO, Mushroom Networks, Inc. 

Mushroom Networks is the provider of SD-WAN (Software Defined WAN) and NFV solutions capable of Broadband Bonding that enables self-healing WAN networks that route around network problems such as latency, jitter and packet loss.



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