Benefits of being connected


5 Feb 2007

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Communications remains the most basic requirement of any small business, but as technologies converge and improve, basic choices become harder to make.

For the last few years Eircom in particular has benefited by bundling phone services with broadband, giving small firms the core portfolio of communication channels to drive their businesses.

“We still command the lion’s share of the SME [small to medium-sized enterprise] market,” said Eircom marketing director Eoin McManus. “People are staying with us because of the service we provide.”

A key selling point for Eircom is that it is a one-stop shop for communications needs. Last year’s acquisition of Meteor has added mobile to its fixed-line voice and broadband proposition and it has a managed service division which helps sweeten the offering, according to McManus.

“We have to focus on services that make broadband relevant. For example, rather than back data up on tape drives, our customers can back it up online to our data centre. We offer these kinds of services on the back of broadband.”

What Eircom doesn’t offer, however, is more specialised broadband offerings that address contention issues and the need for faster uplink speeds. McManus rebuffs the idea that this might be starting to cost them market share. “We’re providing customers with the most relevant products for their needs and we’re not seeing any massive demand for significantly higher levels of bandwidth,” he commented.

“For businesses, it’s not just about performance: it’s about working with someone that can take the pressure off them and be accountable,” he said. “We let our customers focus on growing their businesses rather than worrying about multiple suppliers.”

While many small firms now have broadband there is still an education job to be done on precisely what they should expect from the service. This is the view of Donal Hanrahan, director of business services at Magnet Business. A broadband service provider across wireless and ADSL platforms, the company’s unique selling point is around quality of service as opposed to competing in the price war that dominates the market.

Hanrahan believes the time is right for such an approach. “Businesses get broadband because they think they need to have it,” he said, “but only when they have it do they realise how it important it is to their business. That’s when they discover that things matter other than price: customer support and capacity, for example.”

With this in mind, Magnet has been developing its uncontended ADSL2+ broadband service and Symmetrical Digital Subscriber Line (SDSL) products that have the same uplink speed as the download.

According to Hanrahan, almost every Irish business is now connected to the web, though the market is still immature as to service expectations. He acknowledges that contention and synchronous services are a long way from the top of the agenda when a small firm first invests in broadband but argues that they quickly become important when customers experience the limitations of the vast majority of broadband offerings.

“We could have gone with a cheap broadband service, sell it for €9.99 and do a land grab but the primary market for us are customers who already have broadband and have experienced the problems. They know there is an issue and they can see the advantage in upgrading to a higher-value product.”

Irish Broadband is a fixed-wireless operator that has been carving out a similar niche, selling a type of service that is unavailable through standard ADSL connections. According to Orla Carroll, head of marketing, there is a growing number of businesses that are drawn to its synchronous service.

“As more businesses use broadband they realise that it’s a two-way street,” she said. “We certainly have customers who have changed over to us from DSL because they want a synchronous connection – and we’re not just talking about obvious businesses who need to send large files like graphic designers. We have a chain of stores that synchronise their systems at the end of each evening, uploading their data from multiple outlets to the same place so they can see the stock situations and the day’s takings.”

Irish Broadband has also seen growing demand for its uncontended products. “Fixed-wireless uncontended is so much cheaper than leased lines which were prohibitively expensive and never an option for most small firms,” said Carroll. “More and more customers are looking either for an uncontended or a much lower contended service. We have the facility to tailor it to any business requirement. It’s not all about 8Mb or 10Mb uncontended; we have customers who just want to know that the 2Mb they get is always there.”

Although Irish Broadband recently entered the ADSL markets through selling on Eircom’s wholesale bitstream service, its fixed-wireless offering is its core business. “We own the wireless network and have full control over it and the service level agreements we make with our customers. In the past twelve months we’ve made vast improvements and more than doubled the network size and grown the capacity,” she said.

The company has also dipped its toe in the voice market, offering its customers a voice over internet protocol (VoIP) service over the same wireless connection. A range of tariffs are available and take-up has been good, according to Carroll. “People talk about killer applications and VoIP is definitely one of them for broadband. It can deliver big savings.”

The company has predominantly focused on selling the phone service to existing customers and is cautious about pushing the product too hard on an uneducated market. “Recent surveys suggest there is an education problem in the wider market. Smaller businesses still don’t fully understand or get the benefits of VoIP but we believe that will change this year. We will be offering more bundled packages to drive uptake.”

Irish Broadband has also been upgrading its network to ensure that it will be WiMax-ready. This is a standard that enables wireless delivery of high bandwidth over large areas and has the potential to be a hugely disruptive technology encroaching not just on the fixed-line market but also on mobile networks. Some mobile phone manufacturers have already developed compatible handsets. Irish Broadband expects to launch a commercial WiMax service by the end of the year.

O2 Ireland to offer DSL?

Old certainties about the difference between fixed and mobile communications are becoming increasingly blurred. O2 has already let it be known that broadband will become a core part of its services this year, not just through rolling out HSDPA, which will speed up its mobile network, but also by becoming a DSL provider.

O2 Ireland commercial director Gerry McQuaid told siliconrepublic.com that “it would be better to move sooner rather than later to be in a position to offer bundled packages” that included fixed-line broadband. He wouldn’t give any details on how the move would be achieved. A precedent was set when O2 UK bought a small DSL broadband player last year but it remains to be seen if it will enter the Irish market through partnership or acquisition.

Eircom is already cross-selling Meteor to its customers so the onus is on mobile operators to extend their reach into the fixed-line business. “The language of fixed and mobile will disappear though services will continue to be conveyed over more than one type of technology,” said McQuaid. “It won’t be purely over the air or over the wire.”

By Ian Campbell

Pictured – Orla Carroll, head of marketing, Irish Broadband