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benchmark-it.co.uk benchmark-it performance This new 311-page report profiles and compares 35 key providers of telecoms and related services to UK SME customers. The report includes the following: • Expert market analysis and forecasts • Profiles of 35 carriers • Verdict • Summary (strategy and recent activities) • Network & Portfolio • Management (revenues, reputation and promotion) • Compares them in terms of: • Network • Portfolio • Revenue • SME focus 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 35 suppliers • Independent market analysis and comparisons • Gives customers time to concentrate on analysing implications and to formulate action plans Key conclusions: • UK SMEs are seeing the benefits of increasing competition for their business, a growing broadband footprint and new value-added services • Although fixed voice revenues are falling, other services are making up the difference to keep the market valued at about £6.9 billion per annum • Mobile service providers are making a significant push into the segment. It is early days yet, but they cannot be ignored Pricing is £995 for a corporate licence (intranet licence). benchmark-it performance ...
Informations
| Publié par | Phiom |
| Nombre de lectures | 18 |
| Langue | English |
Extrait
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benchmark-it
performance
This new 311-page report profiles and compares 35 key providers of telecoms
and related services to UK SME customers.
The report includes the following:
•
Expert market analysis and forecasts
•
Profiles of 35 carriers
•
Verdict
•
Summary (strategy and recent activities)
•
Network & Portfolio
•
Management (revenues, reputation and promotion)
•
Compares them in terms of:
•
Network
•
Portfolio
•
Revenue
•
SME focus
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 35 suppliers
•
Independent market analysis and comparisons
•
Gives customers time to concentrate on analysing implications and to
formulate action plans
Key conclusions:
•
UK SMEs are seeing the benefits of increasing competition for their
business, a growing broadband footprint and new value-added services
•
Although fixed voice revenues are falling, other services are making up the
difference to keep the market valued at about £6.9 billion per annum
•
Mobile service providers are making a significant push into the segment.
It is early days yet, but they cannot be ignored
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Data to end April ‘04
©
benchmark-it.co.uk.
All rights reserved.
For reproduction rights contact info@benchmark-it.co.uk.
Opinions reflect judgement at the time and are subject to change.
Pricing is £995 for a corporate licence (intranet licence).
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TABLE OF CONTENTS
Executive Summary
P
a
g
e
3
Market Analysis
P
a
g
e
4
Check-list From The Last Report
P
a
g
e
8
Benchmarked Suppliers
P
a
g
e
1
0
Alternative Networks
P
a
g
e
1
1
BT
P
a
g
e
1
9
Bulldog Communications
P
a
g
e
4
6
Business Serve
P
a
g
e
5
4
Cable & Wireless
P
a
g
e
6
0
Claranet
P
a
g
e
7
1
Cobweb
P
a
g
e
8
2
COLT
P
a
g
e
8
7
Easynet
P
a
g
e
9
6
Energis
Page 106
Gamma Telecom
Page 114
Kingston Communications
Page 120
MCI
Page 133
Mistral Internet
Page 142
Nildram
Page 151
ntl
Page 160
O2 UK
Page 170
One.Tel
Page 178
Orange
Page 184
Phoenix Call
Page 190
PIPEX
Page 195
PlusNet
Page 203
Rackspace
Page 208
Redstone
Page 214
Star Internet
Page 223
Symphony
Page 231
Telco Global
Page 235
Telewest
Page 240
Telstra UK
Page 251
THUS
Page 258
Tiscali
Page 271
T-Mobile UK
Page 280
VIA NET.WORKS
Page 286
Vodafone UK
Page 296
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Your Communications
Page 302
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Executive Summary
UK SMEs are increasingly seeing the joint benefits of growing competition for their
business and the expanding footprint of broadband services, complemented by an ever
wider choice of value-added service capabilities.
The fact that the full range of communications services providers - from incumbent
BT, to cable operators ntl and Telewest, to the UK’s alternative network operators, to
a wide range of Internet/Application Service Providers, to the hundreds of resellers
and all the major mobile service providers – is targeting this segment means that the
market is becoming highly competitive.
With BT’s share of the market for calls by
business customers now reported to be below 50% and the overall value of the fixed
voice market shrinking by 8% in the last year, only those service providers operating
efficiently and at or near a profit can expect to survive in the long term.
On the bright side, we believe the value of the total market to be more or less flat as
new SMEs are created and new communications products made available – the
obvious example being broadband.
There also appears to be no let up as yet in
customers’ continued appetite for broadband and for the ever faster speeds being
made available.
There have also been early signs of two key developments in the market:
First, a return of investment community confidence has shifted the acquisition market
away from opportunistic predation by a few players with cash towards a more
‘normal’ market where decisions are being made on the basis of commercial and
strategic necessity.
Part of what is driving this is the feeling that it is time for service
providers to establish a level of critical mass for survival – the best example of it
recently has been the acquisition of Eurocall, a major reseller with a substantial
customer and revenue base, by Your Communications.
Next is the increasing focus of mobile service providers on developing their
propositions for the SME segment.
Historically obsessed by subscriber numbers and
ARPU, they have moved through a phase of discounted bundled minutes to capture
market share towards developing better articulated, segmented customer propositions
that deliver real business benefits.
It is still early days but such developments cannot
be ignored as they have big, wealthy parents and the shift in power from fixed
communications towards mobile communications appears inexorable.
These developments are generally good news for UK SMEs, although they may be
tempered to an extent by some turmoil as certain service providers get consumed or
try to digest acquisitions.
As ever, it will be the levels of service that customers
experience on a day-to-day basis that will largely determine success or failure for
service providers.
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Market Analysis
Market Size
In our report in April 2003 we estimated the value of the market for supplying
telecoms and related services to the UK SME segment at about £6.9 billion, based on
the assumptions in the table below:
# of employees
# of companies
Average annual
spend
Value
10-250
110,000
£20,000
£2.2bn
2-9
313,000
£4,000
£1.25bn
Owner/managers
1,373,000
£1,200
£1.65bn
Non-VAT
registered
1,500,000
£1,200
£1.8bn
Given the most recent figures from the Office of National Statistics that show there
are 3.8 million SMEs in the UK (see below), we see no reason to change this broad
assessment as declines in the traditional voice market are likely to be compensated for
overall by the growth of the broadband market and the continued expansion of
mobile.
•
There were an estimated 3.8 million business enterprises in the UK at the start
of 2002, an increase of 1.4% on the start of 2001 (ONS);
•
99.1% of these were small (0-49 employees);
•
27,000 were medium-sized (50-249 employees);
•
7,000 were large (250 or more employees);
•
The number of businesses with no employees (i.e. sole proprietorships,
partnerships comprising only the self-employed owner-manager, and
companies comprising only an employee director) was 2.6 million;
•
At the start of 2002, SMEs accounted for more than half of the business
turnover and employment in the UK;
•
The estimated combined turnover of the 3.8 million business enterprises was
£2,200 billion.
Small enterprises accounted for 37% of this and medium-sized
ones 15%.
Table: UK SME statistics (Office of National Statistics’ most recent figures).
These numbers are broadly backed up by recent estimates by the new UK regulator,
Ofcom (see table on next page) – its estimate of a market value of £12 billion for
PSTN/ISDN services in the UK would fit as an assumed share of this of 40% for
business calls would equate to £4.8 billion of a total £6.9 billion for SMEs and SoHos,
with the rest being made up of mobile services, broadband, Internet access and other
advanced communications products.
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Ofcom also estimated that BT’s overall share of the UK market is about 71%, with a
share of revenues of 70.6% in the fourth quarter of 2003 and a call share of 62.3%.
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Ofcom also estimated that BT’s share of the business market (calls) fell to below 50%
for the first time at the end of 2003.
UK calls market:
£ billions
2002
2003
Change
Total revenues
12.6
12.0
-5%
Of which access
4.6
4.6
0%
Of which calls
8.0
7.4
-8%
Residential revenues
7.1
6.8
-3%
Of which access
2.6
2.6
0%
Of which calls
4.5
4.3
-5%
Business revenues
5.4
4.9
-8%
Of which access
2.0
2.0
-1%
Of which calls
3.3
2.9
-12%
Ofcom’s estimates of UK market share by revenues are as follows:
Q4 2002
Q4 2003
BT
62.5%
59.8%
ntl/Telewest
14.8%
14.5%
Other direct access operators
9.0%
9.0%
Indirect access operators
13.7%
16.6%
In monetary terms this equates to the following:
£ millions
Q4 2002
Q4 2003
BT
3,375
2,930
ntl/Telewest
799
711
Other direct access operators
486
441
Indirect access operators
740
813
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Check-list From The Last Report
•
The voice market is in decline – research by Ofcom indicates that the business
voice market shrank by 8% between 2002 and 2003;
•
IP telephony is too immature to have a material impact on the market – we are
starting to see the first signs of IP telephony moving from a niche application
towards broader acceptance amongst SMEs, although the technology is still at
the early adopter phase;
•
The market will continue to consolidate - since the last report (November
2003) the following deals have taken place:
o
Your Communications has acquired Eurocall;
o
Gamma telecom has acquired Uniworld;
o
PIPEX has acquired Host Europe;
o
Telstra has acquired Cable Telecom;
o
VIA NET.WORKS has acquired Amen.
•
Broadband portfolios will be rationalised – the focus amongst service
providers has been on providing greater clarity on what broadband products
suit which customers and away from an over-proliferation of products;
•
Broadband speeds will increase and prices will remain flat – speeds have been
increased, notably by cable companies, and prices have broadly been steady,
although new low-cost products have also been introduced;
•
SMEs will continue to get greater access to corporate segment functionality –
this has been most notable in the continued growing availability and take-up of
IP VPN products;
•
Mobile service providers will continue to sharpen their focus on the SME
segment – not too long ago it could be said that mobile players didn’t know
their ARPU from their elbow when it came to business customers, but all the
major mobile operators now are actively targeting the SME segment.
It is
early days and the propositions are often based on minute bundles, but there
are signs that they are developing devices and applications that are more
focused on enhancing business effectiveness and efficiency;
•
Carrier Pre-Selection will be the key voice weapon versus BT and the
incumbent will continue to lose share – a brief look at alternative providers’
portfolios and the Ofcom research illustrates that this holds true and CPS will
continue to be a thorn in BT’s side for the foreseeable future;
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•
The low end of the SME segment will be targeted by utility companies – there
may not have been much noise, but this is turning out to be the case.
British
Gas (under Centrica Business Services) is a good example;
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Benchmarked Suppliers
Player
Player
Type
Fixed
Voice
Mobile
Data/
Internet
Revenues
SME
Revenues
SME
Focus
Alternative
Networks
Reseller
Yes
Yes
Yes
£35m
£35m
Yes
BT
Incumbent
Yes
Yes
Yes
£18.7bn
£2.7bn
Dedicated
teams
Bulldog
ISP
No
No
Yes
N/A
N/A
Part
Business Serve
Reseller
Yes
No
Yes
£8.1m
N/A
Key
Cable
&
Wireless
Altnet
Yes
No
Yes
£4.4bn
£450m
Indirect
Claranet
ISP
No
No
Yes
£70m
N/A
Key
Cobweb
ASP
No
No
Yes
£4m
N/A
Indirect
COLT
Altnet
Yes
No
Yes
£1.2bn
N/A
Niche
Easynet
ISP
No
No
Yes
£116m
N/A
Key
Energis
Altnet
Yes
No
Yes
£770m
N/A
Indirect
Gamma
Telecom
Wholesale
voice
Yes
No
No
£37m
N/A
Indirect
Kingston
Altnet
Yes
Yes
Yes
£315m
N/A
Key
MCI
Altnet
Yes
No
Yes
£15bn
N/A
Key
Mistral
ISP
No
No
Yes
£5.7m
£5.7m
Yes
Nildram
ISP
No
No
Yes
N/A
N/A
Key
ntl
Cable
operator
Yes
No
Yes
£2.2bn
N/A
Key
O2 UK
Mobile SP
No
Yes
Yes
£4.9bn
N/A
Key
One.Tel
Reseller
Yes
Yes
Yes
£178m
N/A
Key
Orange
Mobile SP
No
Yes
Yes
£5.8bn
N/A
Key
Phoenix Call
Reseller
Yes
Yes
Yes
N/A
N/A
Part
PIPEX
ISP
No
No
Yes
£35.2m
N/A
Key
PlusNet
ISP
No
No
Yes
£15.4m
N/A
Part
Rackspace
Hosting
SP
No
No
Yes
£38.6m
N/A
Part
Redstone
Reseller
Yes
Yes
Yes
£68.2m
N/A
Primary
Star Internet
ISP
No
No
Yes
£23.5m
N/A
Key
Symphony
Reseller
Yes
Yes
Yes
£19.7m
£19.7m
Yes
Telco Global
Reseller
Yes
Yes
Yes
£232m
N/A
Part
Telewest
Cable
operator
Yes
No
Yes
£1.4bn
N/A
Key
Telstra UK
Altnet
Yes
Yes
Yes
£8.4bn
N/A
Key
THUS
Altnet
Yes
No
Yes
£332m
N/A
Key
Tiscali UK
ISP
Yes
No
Yes
£128m
N/A
Key
T-Mobile UK
Mobile SP
No
Yes
Yes
£2.9bn
N/A
Key
VIA
NET.WORKS
ISP
Yes
No
Yes
£13.4m
£13.4m
Yes
Vodafone UK
Mobile SP
Yes
Yes
Yes
£4bn
N/A
Key
Your
Communications
Altnet
Yes
Yes
Yes
£185.6m
N/A
Key
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SAMPLE PAGE
Kingston Communications
Verdict: Kingston continues (and looks set to continue) to serve a combination of
larger SMEs and corporates nationwide and the full range of customers within its
franchise area.
With a relatively small base of customers and an improving financial
position, it would do well to emulate the strategy of nearby Your Communications and
buy a reseller with a significant customer base with which to load its network.
Summary
Having started providing services in 1904, Kingston Communications has been
building a range of business opportunities outside of its original East Yorkshire
franchise, developing media and content services, at the same time as expanding its
national geographical coverage.
“As well as maintaining East Yorkshire’s entire telecommunications infrastructure,
we now offer businesses throughout the UK the advantages of a comprehensive
communications portfolio: voice, data, Internet and mobile connectivity; contact
centres and a range of managed services; broadband over satellite and a specialist
directory publishing unit.
While expanding our product and services portfolio, we have also continued to extend
and develop our vision.
Long viewed as efficient, friendly and down to earth, we’re
now also gaining an ever-growing reputation for our responsiveness, flexibility and
true customer-focused expertise.”
With a new CEO in place since November 2003, the company has been focusing on
reducing costs and enabling “smarter” customer delivery, with the goal of
simultaneously improving its relationships with customers and moving towards
profitability.
Rumours have persisted that Kingston could retreat from its non-franchise area
business by selling its Business Division to another service provider, but to date the
company has denied that it sees any reason to do so.
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SAMPLE PAGE
Network Reach:
Highlights of the Telewest network include:
•
60 telephony switches;
•
18 analogue head-ends;
•
60,000km of fibre and coaxial cable;
•
A nationwide IP network consisting of 13 ATM switches and 54 IP routers;
•
Average of 6.6 lines per business customer account;
•
69,269 business accounts (down from 73,746 a year earlier) as at 31
st
December 2003;
•
Annualised revenue per business customer account of £3,227 (up from £3,114
a yea ago);
•
414,609 blueyonder broadband subscribers (31
st
December 2003);
•
4.9 million homes in the UK passed;
•
425,000 businesses passed;
•
Major franchises in:
o
Scotland:
Cumberland;
Dumbarton;
Dundee;
Edinburgh;
Falkirk;
Glenrothes;
Motherwell;
Perth;
o
North-East:
Gateshead;
Newcastle;
o
North-West:
Blackpool;
Knowsley;
Liverpool;
Preston;
Southport;
Wigan;
o
Yorkshire:
Barnsley;
Bradford;
Doncaster;
Halifax;
Rotherham;
Sheffield;
Wakefield;
o
Birmingham & Midlands:
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Birmingham;
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SAMPLE PAGE
Portfolio:
Below, we profile the products which are most likely to appeal to the SME segment.
We follow the way in which they are presented to customers on the Web site:
“Small and medium business with 1 to 500 employees.
Products and services to suit
the nature and size of your business.”
The site is divided into six main areas:
•
BT Business Plan – see below;
•
BT and Microsoft (new partnership);
•
Products & Services – see below;
•
Billing & Payments – secure access to itemised billing information and
account control;
•
Help & Support – fault reporting and tracking, ordering; and
•
Knowledge Centre – advice on starting a business, moving premises and an
on-line magazine covering case studies and segment information.
Products & Services:
Broadband:
BT Business Broadband products are recommended for use by the following number
of users:
Number
of
computers
For
light
use
recommendation
For medium use
recommendation
For
heavy
use
recommendation
1
Single 500
Single 500
Single 1000
Single 1000
2-3
Share 500
Share 500
Network 500
Network 500
4-5
Network 500
Network 500
Network 500
6-10
Network 1000
Network 1000
Network 1000
11-14
Network 1000
Network 1000
Network 1000
15-20
Network 1000
Network 1000
Not recommended
21-30
Network 2000
Not recommended
Not recommended
Light use: Internet surfing and mainly text-based e-mail with small attachments;
Medium use: fast Internet surfing.
E-mail with large attachments.
File downloading;
Heavy use: fast Internet surfing.
Very large e-mail attachments and file downloads.
Above 10 computers a static IP configuration is recommended for optimum
performance.
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SAMPLE PAGE
Management
Revenue:
VIA’s full-year revenues for 2003 were $68.7 million (up 3.2% on 2002, but down
9.5% when foreign exchange movements are excluded) with a full-year operating loss
of $40.9 million.
The UK accounted for 35% of all revenues in 2003 ($24m or about
£13.4m).
The 2003 revenue mix was about 65% from access services and 21% from Web
hosting and Internet security sales.
At 31
st
December 2003 VIA had cash and cash equivalents of $65.8 million.
The company expects to generate revenues of $76m-$79m in 2004 with cash usage of
$22m-$25m.
SME Focus:
VIA is focused on the SME segment for its core business and says it has had success
selling IP VPNs into the retail and franchise sectors in particular.
Management Team:
At March 1
st
2004, VIA employed 454 people (down from 559 a year earlier), of
whom 153 are involved in sales and marketing.
The company’s CEO is Rhett Williams, an industry veteran.
In the UK VIA’s
Managing Director is Nick Callaghan.
•
The VIA Industry Solutions unit sells managed business communications
solutions to SMEs in target vertical market sectors (including retail,
manufacturing, IT, communications and business services).
Sales are made
both directly and through partners;
•
The VIA Express unit sells Web-based bundles primarily through an on-line
presence, telesales and reseller channels, targeting customers across all vertical
sectors;
•
The Product & Service Delivery unit develops and delivers the company’s
products.
The company has moved from a collection of locally focused operations to a single
international functional-based organization, with country managers responsible for
direct and indirect sales, revenue and other related activities.
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