Broadband, bundles lure SMBs

TRASH TALK

• THE RAP ON INCUMBENTS: The big guys — AT&T, Qwest and Verizon — can't give SMBs the attention they deserve because they are too focused at the high end of the market, where the big bucks are. Incumbent products for SMBs are souped-up consumer offerings, such as best-effort DSL, or dumbed-down enterprise products such as legacy T-1 and frame relay services that are expensive and inflexible. Incumbents are slow to roll out new integrated IP services and Ethernet to SMBs because they will cannibalize existing revenues.
• INCUMBENTS BITE BACK: “We specialize in small/medium business — we have 6000 employees just dedicated to that market,” said Mike McLaughlin, director of strategic business marketing for Verizon Business. “We have been seeing competition since the '90s; they come at us left and right. But eight out of 10 losses that we have ever incurred to them, they come back to us. Our service, the value proposition to increase productivity in their business — we pretty much have it all.”
• THE RAP ON CLECS: The problem these folks have is that they often don't own or control the physical facilities needed to reach deep into markets or to reach every location of a business. In the post-bubble era, CLECs also were considered riskier business, as many of them either went through bankruptcy or flirted with it. The many acquisitions of the 2004-07 period may have made some customers gun-shy as well.
• CLECS RESPOND: The surviving CLECs believe they are stronger than ever, and for many, consolidation has given them a broader footprint. “I think that consumers and SMBs are getting more knowledgeable — know more, demand more, ask what can you offer me as opposed to pick a package,” said Jim Delis, president of sales for XO Communications. “Our SMB customers have been pleased with the services we offer, and we can give them a better bundle at a better price than anyone else.”
• THE RAP ON CABLE: Cable companies are mainly peddling consumer-grade services to very small businesses, especially small office and home office customers, and not delivering the quality of service that businesses expect, say their competitors. Their voice and data offerings aren't fully integrated, and the bundled pricing plans are a gimmick that won't last.
• CABLE COMPANIES FIGHT BACK: Cox has been serving businesses since the 1990s and has a separate business division, something other cable companies now have as well. “One advantage that we have is that we control our own networks and facilities, end-to-end,” said Kristine Faulkner, vice president of product development and management for Cox Business. Cox and other cable companies have embraced new Ethernet services, joining the Metro Ethernet Forum and meeting its requirements. Time Warner Cable already announced MEF-14 compliance comparable to that of AT&T and Verizon, and Cox is expected to confirm its MEF-14 compliance this month.