The cable industry has been feasting on small to mid-sized businesses, driving up business service revenue by touting multi-gigabit Ethernet speeds that leave DSL and traditional T-1 services in the dust. There are now signs AT&T and Verizon are fighting back, using their own fiber-based business services to retain and recapture key business revenues, even though neither is touting gigabit to the small biz just yet.
AT&T Inc. (NYSE: T) last week announced new high-speed service including asymmetric 25Mbit/s service as cheaply as $50 a month to businesses located in its expanding footprint of fiber-fed buildings. Yesterday, Verizon Communications Inc. (NYSE: VZ) rolled out SpeedMatch, an instant free upgrade to symmetric services for companies buying its FiOS Internet service, which is also fiber-based. (See AT&T Launches New Business Fiber Service and Verizon Boosts Upload Speeds for SMBs.)
Both companies say the services are designed for the changing needs of SMBs, but it seems clear they are also hoping to more effectively compete with cable, where companies such as Comcast Corp. (Nasdaq: CMCSA, CMCSK) are recording record revenues in the business space, largely targeting the SMBs who are within their regional footprint, and with competitive carriers. It's notable that the biggest gains in retail Ethernet port market share this year were recorded by Comcast and Level 3 Communications Inc. (NYSE: LVLT). (See Comcast, Level 3 Flex Ethernet Muscles.)
In an interview with Light Reading, Tom Hughes, AT&T VP-Small Business Product Management, insists AT&T isn't trying to catch up to cable but to compete more effectively in a space that has long been competitive, but is now changing.
"Our customers have said they need more bandwidth," Hughes says. "What we are finding in the SMB space is that they are more virtual now than they have been in the past. They want to be able to mobilize their business and when they are in the office, they want to connect to cloud services -- they go to the cloud rather than keeping things on their desktops."
Cloud services require more bandwidth and, in particular, more symmetrical bandwidth, an area in which DSL services are weak.
Hughes sees SMBs also trying to share more data within their companies and with their suppliers and customers, another thing which drives the need for better upload bandwidth. AT&T's new services, which today top out at 300 Mbit/s but will extend to 1 gigabit in the near future, include options for both asymmetric and symmetric services, as well as both best-effort and managed services, he notes.
One thing that hasn't changed about the smaller business market is sensitivity to price and a focus on value, Hughes says. But he does see SMBs looking for technology solutions partners and believes AT&T can step up to that job. That solutions partner space is also crowded, including value-added resellers in addition to competitive carriers and cable companies.
Where AT&T intends to differentiate itself, Hughes says, is in providing a solutions package that includes things such as videoconferencing and mobility services, along with its AT&T Tech Support 360, an IT service described here, that lets smaller businesses outsource their IT support.
"Many smaller businesses don't have or can't afford the level of IT expertise they need," Hughes says. "This is one of the ways we can be a solutions provider, and give them all this on one bill."
This is AT&T's first new business service announced as part of its Fiber-to-the-Building Program which in turn is part of Project Velocity (because everything at AT&T is part of one project or another). Right now, the services are only available in limited markets including Austin and San Antonio, Texas; Detroit; Indianapolis; Sacramento and Orlando, but new markets are being added as new buildings are lit with fiber.
Verizon is phasing in its SpeedMatch symmetric service over the next few weeks but all Verizon FiOS business customers will receive it, and have to do nothing to make that process happen, the company says.
— Carol Wilson, Editor-at-Large, Light Reading