Guide to Business Internet Service Level Agreements (SLAs)

No doubt you've heard of Service Level Agreements (SLAs). These contracts, enforceable in a court of law, define the level of services and standards a technology solution provider (TSP) must deliver to a customer. If the TSP fails to meet these benchmarks, the provider is subject to penalties—such as service credits or prorated refunds—specified in the SLA. Today, most commonly, you’ll see SLAs in internet service provider (ISP) contracts for dedicated internet access around availability (99.9% uptime), packet loss, or jitter.

When SLAs came into widespread use in the 1990s, vendors typically customized them to individual customers. Now, with data services managed from the cloud, TSPs favor non-negotiable "blanket" SLAs that "cover" all their customers. Still, enterprise-level clients often negotiate complex SLAs with providers that commit both parties to comply with specified conditions outlined in the agreement.

Non-negotiable SLAs today reflect the shared nature of these contracted arrangements in contrast to the delivery of customized resources commonly seen a generation ago. Since a TSP guarantees a defined level of service, customers can compare service metrics and quality to the SLAs of other vendors. Customers then choose the services best suited to their needs.

Depending upon the service environment, TSPs may require a master service agreement (MSA) identifying general terms of service (ToS) in conjunction with an SLA. While an SLA designates specific service levels and performance indicators, an MSA:

• Establishes environmental preconditions to initiate service and a base level environment.

• Defines vendors, hardware, and services.

• Explicitly documents obligations and responsibilities for the TSP and the customer.

• Provides a blueprint to assure TSP profitability.

All Internet Connectivity is Not Created Equally

At the risk of stating the obvious, never expect to receive an SLA when using shared services or a shared network.

Case in point: residential ISP customers sharing bandwidth over a DOCSIS connection receive service from a local node or hub serving a community of subscribers – how a cable network is most often architected. Consequently, when broadband demand rises, subscribers may experience slower data speeds and increased latency times. Since an ISP cannot predict precise usage or demand from residential subscribers, it cannot guarantee data speeds or latency levels over a shared DOCSIS connection.

In addition to DOCSIS, most wireless service options (satellite, WiFi, LTE/5G, WiMax), DSL, and shared fiber (AT&T Fiber, Verizon FiOS, Google Fiber) share network connections.

Low-cost "business" internet available from "the cable company" is essentially rebranded home Internet service. Used by retail and other small businesses and as a fallback alternative by larger organizations, business internet is susceptible to the same fluctuations in data speed, latency, jitter, and packet loss found with residential DOCSIS access.

Also, residential/business DOCSIS service tends to be asymmetrical, meaning most of the available bandwidth is used to download data. This asymmetry can lead to performance issues with data backup, VoIP, and video conferencing—applications requiring substantial upload capabilities.

Types of Internet Connectivity Covered by SLAs

Telcos, of course, have provided SLAs for multiplexed circuits like T1s for decades. While highly reliable, a T1's 1.544 Mbps bandwidth is inadequate for today's data-heavy usage. Even a T3 (44.736 Mbps) cannot sufficiently serve the multi-user networking needs of most companies.

Thankfully, organizations can choose from many dedicated Internet connectivity options providing SLA guarantees. Fixed wireless and DIA delivered over fiber all offer a consistent quality of service (QoS) with blazing-fast, symmetrical data speeds, scalability, and very high reliability. ISPs typically guarantee 99.9% uptime and prioritize support for these services; the industry standard for guaranteed mean time to repair DIA services is 4 hours or less.

Each option has distinct advantages and disadvantages. For example, fixed wireless QoS is considered to be lower than that of DIA over fiber. Although copper DIA costs less with much quicker installation versus fiber DIA, distance affects copper performance (just like DSL). Also, copper is susceptible to electrical interference. Hence, SLAs governing these options manifest these differences.

What SLAs Cover

A business Internet SLA addresses the network performance and service level metrics a TSP (or ISP) provides to a customer. It also specifies customer eligibility qualifications for service credits or prorated refunds should the TSP fail to deliver a set standard of performance as defined by the SLA. SLA objectives or key performance indicators (KPIs) typically include:

• class of service provided, e.g., connection bandwidth, hardware and network maintenance, etc.

• performance levels for reliability and customer support

• network monitoring and usage statistics

• process for reporting network issues

• schedules for response and resolution of issues

• penalties for non-compliance with SLA requirements

The SLA establishes definitions for terms such as:

• service availability or uptime

• service outage

• service degradation

• mean time to respond

• mean time to recover

• mean time between failures

• performance standard

• “packet loss" (i.e., the total packet loss of data delivery during any month)

While many definitions are standardized among TSPs, others may be company-specific. A customer must clearly understand SLA terminology to receive optimal benefits from the agreement. Also, some target metrics (such as uptime) may be measured yearly while others (viz., incident response time) are measured quarterly. A comprehensive SLA should explicitly identify elements not covered by the agreement. For example, given the recent spate of malware intrusions and network data breaches, a TSP may deny liability by specifying that its SLA excludes responsibility for all cybersecurity incidents such as ransomware attacks affecting customers.

Seeking Remedies When an SLA Is Breached

If a TSP breaches its obligations set forth under its SLA, the agreement should provide practical and enforceable remedies. The SLA should clearly state how service level credits are calculated, any credit limitations, and termination rights for a customer if chronic delivery failures persist.

Typically, an SLA limits customer remedies to service level credits and termination rights. In other words, SLAs prescribe customers from litigating against the provider for breach of contract or damages caused by service level failures. Remember that SLAs are legal contracts. Strongly consider consulting an attorney before entering into any SLA offered by a TSP if you’re unfamiliar with the terms.

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