What is Leased Line
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 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.
Leased lines were used to connect mainframe computers with terminals and remote sites, via IBM Systems Network Architecture (created in 1974) or DECnet (created in 1975).
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.
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 (especially 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 networks using packet switching on top of their infrastructure. Thus, a 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 then the most common application for leased line is to connect a customer to its ISP point of presence. With the changes that the Internet brought in the networking world other technologies were developed to propose alternatives 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).