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Can service providers afford to neglect small businesses in a FTTx, 4G world?

Time to Get Smart About SMB Services

Ray Le Maistre
7/14/2014
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A report published today highlights how small businesses -- in this instance, in the UK -- feel they are being short-changed in the broadband economy, either because they are not being offered decent connectivity, or they're being offered services that, when available, are often too expensive. (See Small UK Firms Left Stranded by ISPs – Report.)

The report was mostly negative about the services on offer, the pricing, the attitude of ISPs, the state of Government financial support, and so on. And that's not so surprising, given that the report was published by the Federation for Small Businesses (FSB), with all its vested interests.

But the FSB, in its detailed, 52-page report does make a decent case in many respects, especially when it comes to the dire way in which the UK government has handled broadband initiatives and funding: The UK government pays a lot of lip service to the digital economy, but often (as is the case with many governments and political parties) fails to show any true understanding of how global economic operations need to be supported or what the real needs of businesses and individuals are in the modern world.

But while some things are unlikely to change -- politicians will no doubt continue to be largely clueless about anything that doesn't directly affect them -- the capabilities of communications service providers have changed. For as long as I can recall, small businesses have felt they are not catered for by fixed and mobile operators and the local communications specialists that sell them services packages. Often that was because of the technical and operational limitations of the service providers, restricted to costly fiber rollouts and/or low-bandwidth wireless delivery platforms for the delivery of uninspiring and restrictive services packages.

But times have changed, haven't they? Fixed and wireless broadband (4G LTE, WiFi and even satellite) services are now more pervasive, the ability to sweat the installed copper tails of the fixed-line networks is now greatly enhanced by VDSL2 and new emerging standards such as G.fast, and there are many business-oriented applications that can be enabled across a vanilla broadband connection, while tiered packages of unified communications and cloud services are now more easily provisioned for all types of customers, including even the smallest of businesses. Right? RIGHT?!

In the UK, the small business market has long been the preserve of national operator BT Group plc (NYSE: BT; London: BTA): The arrival of 4G and the increasing availability of mobile-enabled data services provides a much greater opportunity for the mobile operators to launch a real challenge to the incumbent, and certainly EE , Telefónica UK Ltd. (O2), and Vodafone UK have all been making moves targeting the SMB sector lately.

The FSB report suggests that such moves will take time to make any impact, if they move the needle at all -- this isn't the first time that service providers have boasted of new, resource-heavy assaults on the SMB market. But there is still real market potential: Delivering a decent broadband connection to a remote, rural business is undoubtedly going to be a real challenge for any service provider for a long time to come, but it seems there are plenty of small businesses in urban and semi-urban areas (according to the FSB report) that are still underserved, and that's where much of the 4G LTE rollouts are focused.

In addition, the emergence of 4G is coinciding with the interest in the Internet of Things (IoT) and the potential for urban authorities to enhance their business communities by launching 'smart city' initiatives, which need broadband infrastructure as the underpinning infrastructure.

In a services industry that is constantly searching for new revenue streams, one of the oldest and potentially largest markets -- delivering tiered communications services to small and medium-sized businesses -- still looks ripe for the picking. The FSB report is all about the UK market, but this just highlights the potential that exists in many developed markets, all of which show the same trends of pressurized incumbents, enhanced, mobile broadband, growing cloud service availability, and a disgruntled business customer base.

It's time for the communications service providers to get smart too and make big money from the small business market.

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

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DHagar
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DHagar,
User Rank: Light Sabre
7/28/2014 | 1:29:28 PM
Re: Time to Get Smart About SMB Services
@calbert234, interesting points.  My comment is focused on the "partnership" that can advance connectivity (wired or wireless) through public/private collaboration, making a universal access available that can assist SMB.  If you had that infrastructure in place then private preferences (i.e., fast wired connections) can be built to serve those needs, without having to separately invest in the infrastructure costs.

Obviously, you are holding out for the best for Nigeria - that is great!

 
calbert234
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calbert234,
User Rank: Light Beer
7/28/2014 | 11:47:37 AM
Re: Time to Get Smart About SMB Services
I do not agree that mobile broadband can be a substitute for wired broadband access. The trend in both cases are very different. In the mobile world, increase in data speed, results in increase in the cost of the services while in the wired access, increase in speed often result in decrease in cost of services. In my country Nigeria, alot of people are of the opinion that mobile is a substitute for wired access and I always argue it out. Till we achieve wired broadband, I will keep up with my expensive and unreliable internet dongle. 
DHagar
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DHagar,
User Rank: Light Sabre
7/15/2014 | 3:45:05 PM
Re: Time to Get Smart About SMB Services
@FakeMitchWagner, exactly.  We need new and better models of public/private partnerships.  Local government, in particular, can play a positive role in partnering with industry, who better understands technology.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
7/15/2014 | 2:56:59 PM
Re: Time to Get Smart About SMB Services

Government not understanding technology is a problem on both sides of the Atlantic. One school of thought says, well, get government out of technology and business! But that's no answer at all. Because so much of the technology industry is a natural monopoly, government needs to be active. And it needs to be smart about 

DHagar
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DHagar,
User Rank: Light Sabre
7/14/2014 | 8:21:09 PM
Re: Time to Get Smart About SMB Services
@Ray, great insight.  They are truly missing the market opportunity in developing communications connectivity through tiered communication services, as you point out.  Cities are stepping up and developing, or partnering, to provide broadband infrastructure; so it is only a matter of time where connectivity will be a utility.  Then the markets for the developing SMB market will make sense.

You are right that the FSB is a vested voice, but the issue is of greater value to regional economic development at large.
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