News
Dialing up a solution
Few ATMs operate on lease lines these days, thanks to the advent of the dial-up connectivity solution.
January 24, 2002
The first dial-up ATMs were an industry innovation, providing a new way to connect that cut costs dramatically for ATM operators.
Today, most off-premise ATMs operate with dial-up service.
Switching an ATM from lease line to dial-up communication is a proven money saver. Off-premise operators enjoy the immediate bottom-line impact of reduced costs that come with using a standard telephone line, and, some claim, it also improves communications stability.
But how much can the operator really save after paying the cost of conversion? And how long will the ATM be out of service during the switch? The answers are surprising, with both the savings and down time lower than expected.
The cost of conversion, an average of $600, includes the cost of the modem, its installation and any fine-tuning of a particular ATM's software. According to Kent Phillips, director of business development at Dallas-based PSINet, higher-volume orders will reduce costs per ATM.
"It is (expensive) when you're doing a number of sites, but with larger roll-outs you can typically negotiate a lower price for that kind of service," Phillips said.
Down time is minimal, with most switches done in a matter of hours, said David Howe, senior vice president of ATM services division at Lynk Systems, Inc., in Atlanta.
"It takes about an hour," he said, as long as the terminal and the new modem are compatible. "If there are major changes to the software or the terminal, that may require a little more time. But it's not down days, it's down hours at the most."
Bob Nemens, senior marketing manager for Diebold Global Marketing in Dayton, Ohio, said that from a hardware provider's perspective, conversions are simple because compatibility issues are usually worked out beforehand at the factory. In other words, the manufacturer knows whether a modem will work in the field before someone attempts to install it, and that reduces terminal downtime. Also, more often than ever, ATM manufacturers are producing machines with modems built in.
A Brief Interruption
During the switch, the ATM is taken offline, a modem is installed into a secure portion of the ATM's cabinet, and then it's connected to a standard phone line. Installers then instruct the ATM to go back online using an access key (a sequence of numbers entered into the machine by two technicians) that allows it to contact the network via the public phone system. Once contacted, the host itself replies with a new key that it generates secretly, and from then on, that ATM will conduct all future transactions using that key.
Once operating again, both the ATM and any hosts it contacts "believe" a lease line still exists between them, allowing the same operation enjoyed in the lease line scenario.
Recouping the Cost
While ATM operators do have to absorb conversion charges up front, it doesn't take long to make that money back through reduced communications costs, experts say. Howe, and others, said the break-even on a conversion could be met in a matter of months, depending on the cost of the lease line being replaced.
The conversion provides another advantage. It extends the life of terminals used exclusively for lease line connections. Instead of spending thousands on replacement equipment, operators instead spend just hundreds to keep a machine that's getting the job done for them.
But considering that some ATMs could offer upgraded capability such as full-motion video in the near future, some owners may choose to switch to upgraded machines anyway. Other, however, want basic cash-dispensing ATMs with dial-up capability.
AmStar Systems' Dick Adams believes these upgrades aren't yet being accepted in the market.
He said that lower cost ATMs commonly used by off-premise operators are simply set up to dispense cash, and don't need high-tech graphics capabilities. Also, the majority of these same machines aren't PC-based and don't utilize graphics.
"They have to get the communications horsepower inside the machine to support full-motion video graphics, and they have to have the network that is able to download those graphics," said Adams, the company's executive vice president of sales and marketing. "The industry just is not there right now."
Mike Roerick, executive vice president of network operations for Amstar, based in Dallas, said that a minimum of a 56k modem would have to be in place at the terminal to download the large graphics files needed for video. And even then, he added, downloading would have to be done at off hours when there's little activity.
"So an ATM with a dial-up is not going away soon. And when you really look at it, all you're doing is moving a transaction with a couple hundred bytes of data. So you don't need a lot of heavy speed. It's those other things that people want to do-like video advertising-that will lead manufacturers to consider new designs."
Roerick also pointed out that the real benefit of simple dial-up machines shouldn't be overlooked; they have allowed ATMs to go where no operator with a limited budget could place a lease line before. This is chiefly important, he said, because installation at remote locations is the industry's primary frontier for growth.
"With the dial-up modem, we found we could now reach places like truck stops," said Roerick. "We were now able to deploy ATMs in locations that, for others using lease lines, was too costly. That business is still out there."
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