A leased line is a service contract between a provider and a customer, whereby the provider agrees to deliver a symmetric telecommunications line connecting two or more locations in exchange for a monthly rent (hence the term lease). It is sometimes known as a "private circuit" or "data line" in the UK. Unlike traditional PSTN lines it does not have a telephone number, each side of the line being permanently connected to the other. Leased lines can be used for telephone, data or Internet services. Some are ringdown services, and some connect to PBXes.
Typically, leased lines are used by businesses to connect geographically distant offices. Unlike dial-up connections, a leased line is always active. The fee for the connection is a fixed monthly rate. The primary factors affecting the monthly fee are distance between end points and the speed of the circuit. Because the connection does not carry anybody else's communications, the carrier can assure a given level of quality.
An Internet leased line is a premium internet connectivity product, delivered over fiber normally, which is dedicated and provides uncontended, symmetrical speeds, full-duplex. It is also known as an ethernet leased line, DIA line, data circuit or private circuit.
For example, a T-1 channel can be leased, and provides a maximum transmission speed of 1.544 Mbit/s. The user can divide the connection into different lines for multiplexing data and voice communication, or use the channel for one data circuit. Leased lines, as opposed to DSL, are being used by companies and individuals for Internet access because they afford faster data transfer rates and are cost-effective for heavy users of the Internet.
Leased lines services (or private line services) became digital in the 1970s with the conversion of the Bell backbone network from analog to digital circuits. This conversion allowed AT&T to offer Dataphone Digital Services (later re-branded digital data services) that started the deployment of ISDN and T1 lines to customer premises to connect.
With the extension of digital services in the 1980s leased lines were used to connect customer premises to Frame Relay or ATM networks. Access data rates increased from the original T1 option up to T3 circuits.
In the 1990s with the advances of the Internet, leased lines were also used to connect customer premises to ISP Point of Presence whilst the following decade saw a convergence of the aforementioned services (frame relay, ATM, Internet for businesses) with the MPLS integrated offerings.
Access data rates also evolved dramatically to speeds of up to 10Gbit/s in the early 21st century with the Internet boom and increased offering in long-haul optical networks or Metropolitan Area Networks.
Here is a review of the leased line applications in Network designs over time:
Site to site data connectivity 
Terminating a leased line with two routers can extend network capabilities across sites. Leased lines were first used in the 1970s by enterprise with proprietary protocols such as IBM System Network Architecture and Digital Equipment DECnet, and with TCP/IP in University and Research networks before the Internet became widely available. Note that other Layer 3 protocols were used such as Novell IPX on enterprise networks until TCP/IP became ubiquitous in the 2000s. Today, point to point data circuits are typically provisioned as either TDM, Ethernet, or Layer 3 MPLS.
Site to site PBX connectivity 
Terminating a leased line with two PBX allowed customers to by-pass PSTN for inter-site telephony. This allowed the customers to manage their own dial plan (and to use short extensions for internal telephone number) as well as to make significant savings if enough voice traffic was carried across the line (specially when the savings on the telephone bill exceeded the fixed cost of the leased line).
Site to network connectivity 
As demand grew on data network telcos started to build more advanced network using packet switching on top of their infrastructure. Thus number of telecommunication companies added ATM, Frame-relay or ISDN offerings to their services portfolio. Leased lines were used to connect the customer site to the telco network access point.
International private leased circuit 
An international private leased circuit (IPLC) functions as a point-to-point private line. IPLCs are usually time-division multiplexing (TDM) circuits that utilize the same circuit amongst many customers. The nature of TDM requires the use of a CSU/DSU and a router. Usually the router will include the CSU/DSU.
Then came the Internet (in the mid-1990s) and since the most common application for leased line is to connect a customer to its ISP point of presence. With the changes that Internet brought in the networking world other technologies were developed to propose alternative to frame-relay or ATM networks such as VPNs (hardware and software) and MPLS networks (that are in effect an upgrade to TCP/IP of existing ATM/frame-relay infrastructures).
In the United Kingdom 
In the U.K., leased lines are available at speeds from 64 kbit/s increasing in 64 kbit/s increments to 2.048 Mbit/s over a channelised E1 tail circuit and at speeds between 2.048 Mbit/s to 34.368 Mbit/s via channelised E3 tail circuits. The NTE will terminate the circuit and provide the requested presentation most frequently X.21 however higher speed interfaces are available such as G.703 or 10baseT. Some ISPs however use the term more loosely, defining a leased line as “any dedicated bandwidth service delivered over a leased fibre connection".
In the United States 
In the U.S., low-speed leased lines (56 kbit/s and below) are usually provided using analog modems. Higher-speed leased lines are usually presented using FT1 (Fractional T1): a T1 bearer circuit with 1 to 24, 56k or 64k timeslots. Customers must manage their own network termination equipment—Channel Service Unit and Data Service Unit (CSU/DSU).
In Hong Kong 
In Hong Kong, leased lines are usually available at speeds of 64k, 128k, 256k, 512k, T1 (channelized or not) or E1 (less common). Whatever the speed, telcos usually provide the CSU/DSU and present to the customer on V.35 interface.
In India 
In India, leased lines are available at speeds of 64 kbit/s, 128 kbit/s, 256 kbit/s, 512 kbit/s, 1 Mbit/s, 2 Mbit/s, 4 Mbit/s, 8 Mbit/s, 16 Mbit/s T1(1.544 Mbit/s) or E1(2.048 Mbit/s). Customers are connected either through OFC, telephone lines ADSL, or through Wifi. Customers would have to manage their own network termination equipment, namely the Channel service unit and Data service unit. Most service providers give 99% uptime guarantee.
In Italy 
In Italy, leased lines are available at speeds of 64 kbit/s (terminated by DCE2 or DCE2plus modem) or multiple of 64 kbit/s from 128 kbit/s up to framed or unframed E1 (DCE3 modem) in digital form (PDH service, known as CDN, Circuito Diretto Numerico). Local Telephone companies also may provide CDA (Circuito Diretto Analogico), that are plain copper dry pair between two buildings, without any line termination: in the past (pre-2002) a full analog base band was provided, giving an option to customer to deploy xDSL technology between sites: nowadays everything is limited at 4 kHz of bearer channel, so the service is just a POTS connection without any setup channel.
Leased line alternatives 
Leased lines are more expensive than alternative connectivity services including (ADSL, SDSL, etc.) because they are reserved exclusively to the leaseholder. Some internet service providers have therefore developed alternative products that aim to deliver leased-line type services (Carrier Ethernet-based, zero contention, guaranteed availability), with more moderate bandwidth, over the standard UK national broadband network. While a leased line is full-duplex, most leased line alternatives provide only half-duplex or in many cases asymmetrical service.
See also 
- Microsoft Encyclopedia of Networking, Second Edition. Microsoft Press. © 2002.