Broadband providers must diversify to sustain SME spend

1 min read
Broadband providers must look to broadband managed services to sustain small and medium-sized enterprise (SME) spend in Western Europe according to a new report, Strategies for Selling More to SMEs: analysis of demand for broadband managed services and service bundles, published by Analysys, the global advisers on telecoms, IT and media.

Underpinned by a survey of 184 SMEs across France, Germany and the UK, the report shows that while expenditure by SMEs (businesses with 10-500 employees) on broadband access is expected to peak in 2009, the market for broadband managed services is set for a period of robust growth. SME spend on broadband managed services is forecast to increase by more than EUR4 billion in Western Europe by the end of 2011.

"From 2010 onwards, downward pricing pressure is expected to outweigh take-up of new broadband access connections by SMEs in Western Europe," says the report's author, Simon Sherrington. "This will push the value of the Western European SME market for broadband access into a slow decline. In order to sustain revenue growth, providers targeting the SME sector must introduce complementary services, and provision of broadband managed services is a key area for exploitation."

Key findings from the new report include:

- Broadband managed services (services enabled by, and partially or entirely delivered over, a broadband connection) are already in strong demand. Western European SMEs spent EUR5.7 billion on such services in 2006.

- Among SMEs, 65% prefer to buy their telecoms services from a single provider rather than from multiple suppliers. This means that broadband providers with the right portfolio of bundled and non-bundled services have the opportunity to increase the amount they sell to each SME customer.

- Even very small broadband providers have the opportunity to generate extra revenue by delivering broadband managed services to SMEs. The survey results show that a substantial percentage of SMEs would be willing to buy managed services from their broadband providers, ever if the services are sourced from third-party suppliers.

The report analyses current and future usage of, and spend on, a range of broadband managed services: IP Centrex, IP PBX, other VoIP services, IP VPNs, Web-site hosting, email, Internet security, data storage, desktop management, software as a service, Web conferencing, and surveillance. It gauges SMEs' willingness to buy managed services from broadband providers and considers whether SMEs prefer to buy services individually or in bundles.