Telecom Services for Business by the Bundle
BY Tiare Rath
Small and mid-size businesses want more than phone lines and Internet connections from their service providers. That's why telecom companies are now offering VoIP, Web and e-mail hosting, and other services bundled together.
Bundled telecommunications services that pair not only local and long-distance voice service, but Internet access and wireless services, have become wildly popular among small and mid-size businesses.
A survey by Forrester Research, of Cambridge, Mass., found that three-quarters of North American small and mid-size businesses use some type of bundled services -- usually local voice, long-distance voice, and broadband access.
A bundle is often easier to manage through one service provider and can be cheaper for businesses. But the bundled-communications market "lacks maturity right now because it's very basic," says Michael Voellinger, vice-president of business intelligence for Destin, Fla.-based Telwares, which helps businesses manage and negotiate their telecommunications services and contracts.
More than just phone lines
Small and mid-size enterprises need more than just phone lines and Internet connections as they digitize and put their businesses online. VoIP, Web and e-mail hosting and managed security services such as data backup and firewalls are all becoming integral to businesses.
Telecom companies have the opportunity to act as the virtual CIO for small and mid-size businesses, which would increase commitments and revenue from smaller enterprises. But the telecoms "don't seem to be jumping on this train very quickly," says Sanjeev Aggarwal, vice-president of small business IT infrastructure solutions for AMI-Partners in New York.
While many of the larger telecom companies offer additional services, most are not bundled or heavily marketed to the small and mid-size business market.
Aggarwal expects telecommunications firms to see decreased revenue from local and long-distance services as businesses move to VoIP services. Telecom providers have been reluctant to push VoIP because it digs into their traditional telephony market. But they are likely to push the service more aggressively over the next several years, says AMI-Partners. The research firm predicts the VoIP market will increase from $416 million this year to $1.57 billion in 2010.
AT&T, which has 3 million small business customers, says that wireless voice and data are increasingly important for small businesses and that services such as enterprise application management, ecommerce development and hosting, and enterprise messaging and collaboration are also growing.
"These used to be only for the big guys, but AT&T has customized the applications to make them more manageable – from both technology and cost standpoints – for small business owners," John Regan, AT&T's vice president of small and mid-size business marketing wrote in an e-mail.
Qwest serves the small and mid-size market well with hosted VoIP services, Aggarwal says, but does not offer many services outside of the traditional telephony market such as security.
You may need to ask for bundled services
Because telecom providers don't bundle or promote more advanced services to businesses, customers sometimes don't know they are available. It has also been difficult for telecom companies to offer services in a uniform package because of the large number of mergers in the industry, which has distracted the telecoms from providing top-notch services, Voellinger says.
In some cases, just having bundles offered isn't going to help small businesses understand how the services can help them, says Forrester Research analyst Michele Pelino.
Telecom companies "have to educate on the value and the capabilities of these services," she says.
Businesses may be locked into multi-year contracts with bundles, so if they are looking to try out a new service through their telecommunications providers, it may be better to order it separately, Pelino adds.
It can also be difficult for telecom providers to bundle services because requirements for small and mid-size business vary so widely, Pelino maintains.
"It's not just about size at this point," she says. "It's about the needs of the company."