LONDON -- Europe's small and medium enterprises will spend almost 50% more on telecoms services in 2001, according to a new Yankee Group survey. The eight-country survey validates the shift in competitive focus to this largely untapped customer sector, and also notes key strategic challenges in bundling and branding not only for competitive service providers, but also incumbent operators seeking incremental revenue streams.

Weaning SMEs away from incumbent suppliers with more than a price argument remains the primary challenge. Fixed-line voice services still account for the bulk of annual service spend, but competitive pricing ranks lower than QoS or branding as the major reason for SMEs to remain loyal to their existing operator, indicating a significant apathy factor.

The survey, published in a new Convergent Communications Europe report, "Assessing the SME Opportunity," also found that up to a third of Europe's SMEs want to buy a combination of services from a single provider. The report's author, senior analyst Jonathan Doran, believes this proportion will increase sharply with better marketing and customer education about service options.

"There is a crying need for creative bundling and targeting of fixed voice, wireless and Internet-based services" says Doran: "Europe's SME population is growing in size and sophistication, but service providers are only now taking baby steps to reach this group."

The Yankee Group