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Small UK Firms Left Stranded by ISPs – Report

Ray Le Maistre

Small businesses across the UK are lacking decent and affordable broadband services, and are thus being disadvantaged by the communications service provider community, according to a new report from the Federation of Small Businesses (FSB).

The FSB claims that some rural areas in the UK lack any decent broadband service at all, and even in urban areas business users "can experience poor coverage too, and even where broadband is available the range and quality of services often fall short of what businesses require."

The report adds: "Tailored business packages offering symmetrical upload and download speeds are often prohibitively expensive, while business parks and premises have been overlooked in the roll-out of local fibre networks to residential areas. If the full potential of small business is to be harnessed and the economic benefits of broadband connectivity realised, this must change."

There are 4.5 million small businesses in the UK, according to the FSB, so that's a lot of potential customers with which national and local service providers could generate revenues, whether from simple connectivity or advanced unified and integrated communications services packages.

And the report's findings show that the UK's small businesses are increasingly reliant on broadband connectivity to fulfill their strategies: 94% "consider a reliable Internet connection critical to the success of their business," and as many as 14% "consider lack of reliable and fast broadband connectivity to be their main barrier to growth."

And here's a shocking statistic: While 12% of the UK's small businesses have a fiber broadband connection, 1%, or 45,000 small businesses, still connect to the Internet via a dial-up (yes -- dial-up!) link, according to the FSB. In total, 65% of British small businesses access broadband through a wired connection, while the remainder rely on mobile connectivity.

Satisfaction levels are not great: About 25% of small businesses are fairly or very dissatisfied, while only 15% are very satisfied with their broadband provision.

That's not very positive feedback for the 100 or so fixed broadband service providers in the UK -- led by BT Group plc (NYSE: BT; London: BTA) (30% market share), Virgin Media Inc. (Nasdaq: VMED) (21%), Sky (NYSE, London: SKY) (19%), and TalkTalk (17%) -- and the major mobile operators that are rolling out 4G LTE services -- EE , Telefónica UK Ltd. (O2), 3 , and Vodafone UK .

Not surprisingly, the FSB wants a big shake-up of the British broadband market, including higher levels of state funding, a guarantee of a minimum 10 Mbit/s to all businesses by 2018/2019 (compared with the current commitment of 2 Mbit/s), reform of broadband market regulations, and a prioritization of fiber connectivity to business parks.

The FSB has found at least one sympathetic ear in the service provider community -- Greg Mesch, CEO of alternative UK broadband network operator CityFibre , which is using funds raised from an IPO earlier this year to build out fiber access infrastructure in a number of Tier 2 cities around the UK, such as Coventry, Peterborough, and York. (See CityFibre Raises £16.5M From IPO.)

"Around the country, businesses are struggling to grow and compete, suffocated by a lack of bandwidth. Even those companies based in newly built business parks can often find themselves only able to access broadband speeds that would have residential customers on the phone to technical support," noted Mesch in a statement emailed to Light Reading. "Without access to pure fibre networks, fit for the 21st century, the UK's small businesses will be restricted from accessing a new generation of online and cloud services that offer the functionality and flexibility to help them grow. The technology and expertise is available today that allows for a quick, hassle free transformation to Gigabit Internet speeds," he added, without mentioning main rival BT or promising to meet the price demands of small businesses.

For the full 52-page FSB report, click on this link.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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User Rank: Blogger
7/14/2014 | 2:52:58 PM
Is there money in it?
The big question, as always, is whether the service providers can make money from the small business sector.

In the past, maybe not. But with online customer care, cloud services, unified comms and wireless broadband....


Time to Get Smart About SMB Services

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