Telecoms service providers around the world are continuing to look towards smaller businesses (SMB) – the lifeblood of every economy – for enterprise revenue growth.
Their essential offering remains the same: connectivity, be it fixed or mobile. This is reflected in service providers’ investments in their core business: 5G mobile and fibre broadband. However, in a super-competitive market, connectivity continues to commoditise; it is essentially an enabler of communications with few areas of differentiation – although these can be vital if, for example, a business is in a mobile ‘not-spot’ or has limited access to broadband with sufficient speed to be useful.
SMB have choices
Robert Pritchard, GlobalData Principal Analyst in Enterprise Technology and Services, points out: ‘The vast majority of smaller businesses and owner-managers are fortunate enough to have a choice of viable, if not always 100% reliable, connectivity for both fixed and mobile services.
With that as a given, the question becomes: how do service providers differentiate? Price is an obvious choice but it’s always a tough battle – and not kind to margins. Also, how little price is an issue for most SMBs and SoHos (Small office, Home office) is largely underestimated. With communications and the calls, data, and applications being carried driving business activities, only a small proportion of the total market is totally price-focused – and this is not an attractive market segment anyway.’
‘At the other/upper end of the market lies solutions selling, including IT management and support on top of connectivity. But this is expensive to support when addressing a mass market. What has traditionally happened is solutions like cybersecurity and cloud-based services that tend to be offered first in the MNC, public sector, and corporate segments become productised and then be made available to the broader enterprise market as value-added services on top of connectivity.’
This explains why, in GlobalData’s Q2 2024 SMB Watch Newsletter, service providers’ focus has been on highlighting cybersecurity risks and their associated offerings, as well as the inevitable discussion of AI/GenAI (Artificial Intelligence/Generative Artificial Intelligence).
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By GlobalDataThese are relevant topics because they can be expressed in terms of commercial value, such as avoiding losses or damage to a corporate reputation, opening new markets, improving productivity, and enhancing customer service.
Other key, ongoing trends observed in the quarter were consolidation on the supply side (mostly in-country and focused around altnet [alternative network] fibre broadband providers); the promotion of mobile services alongside fixed services to grow share of customer wallet and improved ‘stickiness’/loyalty; and assisting SMBs in their efforts to run sustainable operations by reducing their greenhouse gas emissions.
To conclude, the key market developments of the last quarter underline the importance for telecoms service providers to move up the value chain to optimise the SMB market opportunity – but only if they continue to invest in secure and reliable infrastructure to continue to deliver more advanced, and more profitable, services.
