Verizon adds mid-tier offer for SMB Internet

Verizon Business is launching a new managed router service for small to mid-sized businesses in part to be better prepared for cable competitors with an offering that is more price-competitive. Patrick Sullivan, director of product marketing for SMB at Verizon Business (NYSE:VZ) , said today that the new Verizon Managed Router Solution will fill a gap in Verizon’s SMB Internet product line that cable might have been able to exploit.

“The cable companies are formidable competitors,” Sullivan said. “If we didn’t launch the managed router, we would be offering products at two ends of the spectrum, but we don’t feel that is going to allow us to meet all of SMB needs.  We identified a gap and launched this product to fill that in, and allow us to better compete with cable companies.”

Verizon previously offered Internet access services as a fully managed offering, either via T-1s or Ethernet for the high end of the market looking for total management with strict Service Level Agreements or as plain Internet service with no management, and a router that is shipped directly to the customer. The new Manager Router Solution fits in between, offering a Cisco router and secure dedicated Internet access at speeds ranging from T1 to 50-megabit-per-second Ethernet, along with proactive monitoring, premium maintenance and installation service.

“A lot of times we see cable companies compete on price,” Sullivan said. “The managed Internet access service may be priced out of the market for some SMBs and with the new Managed IT router service; we can be more price competitive. We intend to compete head-to-head with cable and win the Internet market for SMBs.”

For example, Sullivan said, a typical managed Internet Access Service at T-1 speeds could cost $400 to $450 a month, while the dropped-shipped router product is only $60 to $70 a month. Managed Router service would typically come in around $110 to $150. The advantage to SMBs is that they don’t have to have an IT staff to handle management of the router, Sullivan said.

“If you want a piece of equipment and some level of management but you can’t afford comprehensive managed solutions, this is an in-between solution that will be marketable and in-demand,” Sullivan said.

The new service is the latest in a series of enhancement Verizon Business is rolling out for small to mid-sized businesses including a new portal with applications and features designed for SMBs.

Verizon Business is seeing a steady uptick in bandwidth demand from the SMB space, as medical practitioners transmit more digital images, retails handle more electronic transactions and Web sales and everyone uses more video and rich media, Sullivan said. Two years ago, most of the direct Internet access was DS-1 based or a 10 Megabit Ethernet link, he said, whereas today at least a third is multiple T1s, a DS-3 or 50 Meg Ethernet.

“People are using net conferencing in higher rates and we are seeing customers doing off-site archiving of records, that generates additional bandwidth needs,” Sullivan said. Along with managed Internet access, SMBs are also increasingly drawn to managed security and business continuity services, he said.