The difference is a quality issue. Just because a highway has 16 lanes doesn't mean you can drive faster than a 4 lane. Traffic, routing, uptime, latency, support, and other factors come into play.

For example, I used to have a T1 through Epoch Networks (now Netiface). The round trip packet time from my house to a friend at Google was 48 milliseconds. Consider that light speed would be about 32 milliseconds, the actual routing time was very impressive. That same connection on my DSL (also rated at 1.5Mbps) is 117 ms.

TCP traffic is "signed for" one packet at a time, so when you are transferring something, you have dead-air while you wait for the ACKnowledgement packet to return. This is why you probably don't get the full rated speed on a DSL line (note that you can start multiple transfers to different points and probably get a total of whatever you are rated for).

In terms of uptime, our contract stated that we received a $100 credit for every hour we were "down." "Down" meant greater than 1% packet loss or greater than 85ms average backbone latency in the U.S. It also stated that they had to contact us within 20 minutes of any outage or they would pay more penalties. I recall one day that I unplugged the router to move it. Not even 10 seconds later I got a call, "Hello, this is network operations. We show your circuit is down and we don't know why yet. We show everything good up to the green box in front of your building, so we're dispatching two technicians from opposite directions to check it out." If you called NocOps, they answered the phone faster than 911, never put us on hold, and never had to transfer us. We paid $1100/month including the lease of a Cisco router.

Ultimately, the economy shifted and I can't afford that kind of phone bill anymore. I have a DSL through a 3rd party and I have peering agreements with two neighbors to trade traffic on their broadband and DSL connections (we mesh network wirelessly and QoS our own traffic higher so sharing doesn't hurt our own connectivity.)

Final thought is that the most expensive part of a T1 is the "last mile" from the phone system to your premise. You can save a lot of money by putting your servers at the phone company ("colocation"), but if you need bandwidth for office workers, that won't help.

Good luck.

RE: Why are T1 prices so ludicrous?