Leasing can bring you the latest technology

May 1, 1995
Fast-changing technology and standards in the telecommunications industry can make your equipment obsolete in a short time. You can take advantage of the latest technology in your installations, however, if you consider leasing or renting the equipment when you cannot afford to purchase new equipment.

--Barbara E. Thompson

Fast-changing technology and standards in the telecommunications industry can make your equipment obsolete in a short time. You can take advantage of the latest technology in your installations, however, if you consider leasing or renting the equipment when you cannot afford to purchase new equipment.

"The technology is changing so rapidly," explains Doug McClellan, manager of marketing communications at GE Capital Test Equipment Management Services (Norcross, GA). "Everyone wants the latest equipment but they can`t afford to go out and buy new equipment every six months or so."

In 1987, for example, Jeff Kimball, manager at Advanced Communications Inc. (Canton, MI), paid $40,000 for an optical time-domain reflectometer. "It still works well, but Laser Precision Corp. (Utica, NY) just showed me one that`s one-eighth the size and has similar features for $15,000," he says.

Converging technologies

Installers are now doing more than just cabling. They are testing, documenting and maintaining systems, and some are also systems integrators. "So many technologies are converging," says McClellan. "You have more fiber being laid, more switching gear to test, more equipment in the field, so you need more test equipment," he says. "Over the past year, we have significantly increased our telecommunications and fiber-optic test equipment inventory and the amount of test equipment we`re leasing."

For the installer of premises cabling, that equipment might be Category 5 local area network testers, time-domain reflectometers, power meters, token-ring analyzers, fault locators, OTDRs or fusion splicers.

"Right now, we`re leasing a handheld Category 5 tester," says Ed Phillips Jr., president of Tel-Comm Contracting Inc. (Manchester, ME). "It`s on a 24-month lease and we will probably buy it at the end of the lease. We`d be crazy not to--it`s about a $300 buyout."

Rich Aiello, project manager at Cablenet (Woburn, MA) says, "We lease fiber-optic testers, OTDRs and power-meter testers because the buying price is astronomical. Power meters aren`t so expensive, but are cheap to rent."

Because many of the latest testers can connect with a computer to document the cabling installation for future maintenance and troubleshooting, installers and contractors may also need to acquire computers. "We will probably lease laptops next," says Phillips, "because we really need to put a laptop in every truck. You can take a day`s worth of Category 5 testing and, with the right program, download the information into a laptop. Then you can either print it on the job or bring it back."

Leasing or renting outside-plant equipment, on the other hand, may not always be the choice for installers of premises cabling (see "Prepare for the perils of excavation," July 1994, page 30).

"When we get into conduit, we outsource the entire project," says Jeff van Horn, vice president of operations at Compu-Link (Clearwater, FL). "There`s a lot of liability in the underground digs and I would just as soon have somebody else on the tractor."

At ACI, however, where they do more outside work, Kimball leases everything, "from trenchers to vans and copiers; leasing with the option to purchase is the best way. We recently purchased a new trencher for $30,000 and it`s paying for itself all the time we`re leasing it," he says. "Equipment like that doesn`t depreciate quickly either--unlike electronic test equipment, where the technology changes so quickly."

Lease versus purchase

Leasing (or renting) equipment usually means that you can have the latest technology, but that is not the only advantage. "Rentals offer you a short-term opportunity to evaluate that new technology before making a capital commitment," says Bill Chapman, branch manager at McGrath Rentelco (Richardson, TX). You also do not have any maintenance costs for the equipment, nor equipment standing idle.

Cost is a driving factor in choosing between leasing or buying. If the equipment is needed for a short-term project and you will not need this equipment again for a long time, it is usually cheaper to lease or rent than to buy that equipment.

"Leasing or renting typically augments equipment someone already has," explains Eric Loytty, engineering services manager at Siecor Corp. (Hickory, NC). "Customers need another splicer or OTDR for a big job, or it`s an installer just starting to do fiber jobs and he doesn`t need it often enough to purchase."

Tel-Comm`s Phillips says buying is always less expensive "if you don`t have to take it out of your working capital. But when you buy," he explains, "you have to set up a depreciation schedule. If you properly structure a lease, it`s a deductible operating cost each month. For a small business, the ability to take it as a deduction simplifies life."

There are disadvantages to leasing or renting. The equipment you need might not be in stock or you may have to shop around for it. Some companies offer rentals for a minimum period only, and you may not need it for that length of time. And what if the equipment breaks down after only one hour on the job? Will the rental company replace it quickly, or will you lose time and money?

Scheduling can prevent some of these problems. Get quotations on the cost of the equipment up front so you can include it in your bid. Find a company that has an extensive inventory, with knowledgeable technical people. Check that the delivery times and replacement policy for breakdowns are compatible with your schedule. And ask if the tester comes equipped with the accessories and documentation that you will need. For more information on distributors and companies that have leasing or renting programs, see "Cabling distributors provide varied services," September 1994, page 8.

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