benchmark-it
performance
This new report profiles and compares 13 key providers of telecoms services to UK SME customers.
The report includes the following:
• Profiles of 13 carriers
• Verdict
• Summary (strategy and recent activities)
• Network reach
• Portfolio
• Management (revenues, reputation and promotion)
• Compares them in terms of:
• Target customers
• Portfolio
• Focus
• Coverage
Who should buy the report?
• Operators selling telecoms services to SME customers in the UK
• Companies investing in, partnering or supplying the above
• Operators wanting to understand the impact of competition on the SME segment in a relatively mature market
Key benefits:
• Source of key information on 13 suppliers
• Independent market analysis and comparisons
• Gives customers time to concentrate on analysing implications and to formulate action plans
Key conclusions:
• The market is big – about 3.75m organizations spending £13bn on telecoms each year;
• BT still dominates the market, but developments in local loop unbundling, broadband cable roll-out and relatively low Internet penetration may change this;
• The SME segment is key to the success and survival of many operators. Pricing is £995 for a corporate licence (intranet licence).
benchmark-it
performance
UK SME Segment
Telecoms Service Providers
TABLE OF CONTENTS
Executive Summary
Page
3
Market Analysis
Page
5
Benchmarked Suppliers
Page
8
Atlantic Telecom
Page
11
BT
Page 20
Cable & Wireless
Page
38
COLT
Page 51
Energis
Page 59
Global Crossing
Page
70
Kingston Communications
Page
78
NTL
Page 85
Redstone
Page 95
RSLCom
Page
102
Telewest
Page
108
Thus
Page
119
WorldCom
Page
128
Executive Summary
The market for telecoms services to the SME segment in the UK is a significant and potentially lucrative one. Estimates vary a great deal from one information source to the next, but it would be fair to say that there are about three and three-quarters of a million SMEs in the UK, accounting for approximately £13 billion in telecoms services revenues per annum.
One of the problems in analysing this customer segment is the establishment of clear definitions – for example, Cable & Wireless defines a SME as a company that employs between ten and one thousand people, whereas Telewest’s definition is one that employs between one and 250.
To date, the success of carriers competing with BT for SME business has been limited, with the incumbent still dominating the segment, particularly at the lower end. The increasing importance of Internet services and the gradual opening up of the local loop, combined with active marketing of cable-based broadband services may wrest some market domination from BT’s hands, but there is already plenty of evidence that alternative suppliers will struggle, especially given the background of weak investor sentiment in the telecoms sector.
However the background of weak investor sentiment has had a potentially positive knock-on effect for customers in the SME segment. The need for alternative players to control costs and focus their efforts has led some to opt to target SMEs exclusively (e.g. Atlantic Telecom) and others to withdraw from the UK SME market (e.g. Global Crossing). This should result in greater clarity over who potential service providers are, combined with more customer-focused development of products and propositions.
Suppliers are gradually getting better at moving from selling branded technology as services to developing packages which are more relevant to buyers within SME organisations. Notable amongst such developments have been the bundling of fixed and mobile services, voice and Internet services and computer hardware and software with telecoms services. All such initiatives demonstrate a better understanding of the requirements of the majority of SME customers who are less sophisticated and technology-aware than their counterparts in larger corporations – often the buyer will be the managing director, finance director or office manager.
• In addressing the SME segment, suppliers need to convey four key messages:
Selected diagrams from the report:
Coverage vs SME Focus
SME Focus
UK C
overage
BT Global Crossing Redstone RSL Com Kingston Atlantic WorldCom Telewest Thus Cable & Wireless NTL Colt Energistic
Relative Size Of Target SMEs
SME Emplo
y
ees
250
500
750+
BT
Ca
ble &
W
irele
ss
COLT
Global Cros
sing
Kings
ton
NTL
L
est
Thus
om
Selected pages from the report:
NTL
Verdict: NTL is trying to take advantage of its local infrastructure and exploit the slow roll-out of DSL services in the UK by promoting its cable-based broadband services. However, the company faces significant challenges as it continues to integrate its acquisitions and control its costs as it labours under a huge debt burden.
Summary
NTL is operational in a number of markets across Europe (France, Germany, Sweden, Switzerland) but the majority of its business is as the leading cable TV company in the UK. As such it serves a diverse range of customers with a diverse portfolio of services – from Birmingham to Hessen, from delivery of MTV to 3G mobile backbone services.
NTL was largely built through a series of acquisitions in 1999/2000, the most significant of which were CWC (Cable & Wireless’s consumer division), and the Diamond, Comcast and Comtel cable TV companies.
NT has a broad range of telecoms services available to customers in its franchise areas (about two-thirds of the UK) and is increasingly developing its broadband access and Internet services - delivery of broadband to small businesses has been named as a strategic priority.
NTL’s stated target is 20% of the addressable business market by 2005 – it currently has 2.8%. This would represent a growth in revenues from £195m today to £3.9bn in four years – a not insignificant challenge.
NTL is saddled by a huge £10.9bn debt burden, as well as facing the challenges of consolidating and integrating the various networks, products, operational support systems, processes, customer databases and people from across its acquisitions. In addition, increasing co-operation with Telewest only fuels speculation that NTL will one day merge with Telewest, which in turn would lead to more integration headaches. It is a very significant management challenge to be able to manage the operational developments, handle the pressure from the investment community and continue to deliver to customers.
Selected pages from the report:
The map below shows Telewest’s UK national network and franchise areas:
Edinburgh Perth Dundee Glenrothes Dumbarton Liverpool Newcastle Gateshead Middlesbrough Leeds Bradford Wakefield Barnsley Sheffield Long Eaton Stafford Telford Wolverhampton Manchester Warrington Lichfield Dudley York Carlisle Berwick Durham Greenlaw Stirling Livingston Basingstoke Salisbury Trowbridge Bristol Cheltenham Daventry Warwick SmallHeath Milton Keynes Hemel Hempstead Watford Hayes Woking Croydon Gillingham Maidstone Basildon Chelmsford Enfield Telehouse
TELEWEST
NATIONAL
NETWORK
Bath City Redditch Huddersfield Equipment Site Fibre Access New Malden Glasgow Sunderland Telewest local franchises Cambridge Peterborough Leicester Slough Southport Knowsley Blackburn Existing Routes Coventry Birmingham Dunbar Uddingston Kilmarnock Dumfries Bromsgrove Worcester Gloucester Southend Planned Routes 2000 Nottingham Newbury Blackpool Preston Camden Harringay Bracknell Hawkfield Reading Andover Crawley Brighton Portsmouth Southampton Yeovil Exeter Plymouth Bude Swindon Eurobell RoutesBundles
• Business Communications Pack – bundles together telephony, Internet,
FreePhone and 0845 LocalCall services on one bill. Features minclude:
o Up to 30 e-mail addresses
o Free web site address or free transfer of existing web site address
o Free web site hosting
o £9.99 per month plus Internet and telephone usage
o Cross-product discount of up to 10% (but cannot be used in
conjunction with ClubLink)
o Single point of contact
o Internet access for up to 25 PC users over an ISDN line
o 60Mb of web space
o Service operational in ten days Service Level Agreements & Billing
WorldCom offers a range of SLAs, most notable of which is the 100% service availability guarantee on its UUNET network
WorldCom offers customers monthly invoices which can be sent to a central site or to individual sites. Depending on the services being used, customers can expect the following:
• Per second billing
• Usage summary
• Call itemisation available in a choice of paper, diskette and or CD-ROM (for customers spending over £1,000/month) which can be fed into a spreadsheet
• Location billing – each location summarised on a separate page
• Time of day call summaries
• Usage summary by destination
• Call analysis – including the top ten most frequently dialled numbers, longest duration and highest charge
• Itemised call details for every call, including date, time, rate, band, duration and cost
• SmartBill for Windows – bill analysis software
• Account Code Billing – management tool for customers to allocate costs to
Selected pages from the report:
Advertising & Promotion:
Atlantic has a focused promotion strategy, supporting events and organisations in locations where it has operations, together with some which address a wider audience. Atlantic is the Official Communications Sponsor of the XVII Commonwealth Games, to be held in Manchester in July 2002. It will also provide the Games with voice, data and Internet services.
Atlantic also sponsors the Stewart Racing Formula 3 team.
The company sponsors the Grampian Enterprise Trust Network which supports the development of SMEs in the Grampian region.
Atlantic also supports “Connect” – an organisation which helps technology companies initiate, develop and expand their business in Scotland.
The M2 Atlantic Event Programme is a joint effort between Atlantic and Manchester City Council for three years of live events in Manchester.
Atlantic also supports the Dynamic Earth visitor attraction in Edinburgh. Reputation:
Atlantic has the advantage when it comes to rolling out DSL in the UK of having already done so in Germany and the Netherlands so it stands to benefit from these experiences when compared with some other UK DSL players.
When recruiting sales agents, Atlantic claims it has a reputation for “lower costs, flexible packages and better service.”
Partnerships:
• Marconi owns 19% of Atlantic
• Atlantic bought a 6.4% stake in hosting partner Host Europe for £2.5m
• Norweb for duct space in Manchester
• Metromedia Fiber Network and AboveNet UK for dark fibre across Europe
