Broadband providers ‘must diversify to keep SMEs’

2 Mar 2007

In order to sustain SME (small to medium-sized enterprise) spend in the months and years ahead, broadband providers must diversify into providing value-added services like managed services and other bundled offerings, said research firm Analysis.

A European survey by Analysys showed that while expenditures by SMEs 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 €4bn 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,” said 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.”

Analysys said that broadband managed services are already in strong demand and 65pc prefer to buy their telecoms services from a single provider rather than from multiple providers.

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.

The report suggested that even very small broadband providers have the opportunity to generate extra revenues by delivering broadband managed services to SMEs.

The survey shows that a substantial percentage of SMEs would be willing to buy managed services from their broadband providers, even if the services are sourced from third-party providers.

By John Kennedy