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May 3, 2010
By Steve Hilton
On a recent flight to Las Vegas I began musing about the SMB communication market. According to Analysys Mason forecasts, the voice and data market in the United States for SMBs is $32.2 billion in 2010 (see chart below). That’s nothing to sneeze at.
My self-inflicted question at 36,000 feet: Which service providers are generating the most excitement in this multibillion-dollar SMB market? Since Las Vegas is the gambling capital of North America, I wondered where I’d put my money if I were a betting man. The winning hand sits with one of three industry players — the incumbent telcos like AT&T Inc. and Verizon Communications Inc.; the CLECs like XO Communications Inc. and DeltaCom; or the cable operators like Time Warner Cable Business Class, Comcast Corp. and Cox Communications Inc..
The excitement is coming from the cable operators, hands-down.
Proof Point No. 1 – The cable operators are adding solutions to complete their portfolios. Cable operators were formerly stymied in SMB markets due to lack of solution depth and breath, but look at a company like Time Warner Cable Business Class. Its Ethernet offering is coming on strong. Across their five regions they offer point-to-point or point-to-multi-point configurations at varying tiers of bandwidth. SLAs focused on availability, latency/repair and mean-time-to-repair (MTTR) provide the much required guarantees for enterprises running critical applications across an Ethernet backbone.
Its marketing of the solution is straightforward and aimed at business decision-makers, not technologists. And all throughout there is an emphasis on doing the right thing for a customer to make sure satisfaction stays high.
Comcast also offers compelling solutions across their regions. If you haven’t looked recently, it is focusing on Ethernet network services, dedicated Internet and private line, as well as a newer mobile Internet offering called High-Speed 2go, a 4G/3G mobile broadband USB stick for employees’ laptops. In addition, it completed the CIMCO CLEC acquisition to bolster its strength in services and support to SMBs.
Proof Point No. 2 – Cable operators are building indirect channel programs. Take Time Warner Cable Business Class again. It has shown tremendous initiative over the past two years in assembling a group of master agents that want to see the cableco succeed. I attended a recent master agent event with Time Warner Cable Business Class and was heartened to hear the outpouring of support — and constructive feedback — from these master agents.
Building an indirect channel is a long process requiring lots of effort and focus. With national and regional staff and a standardized approach, Time Warner Cable Business Class has convinced indirect partners that it supports agents for the long term with attractive incentives, co-op funds and a commitment to improvement. Show me the large telco with this current level of steadfastness and ongoing support.
Proof Point No. 3 – Cable operators’ business services staff have a passion that pervades their SMB organizations. When I talk with employees at Cox Communications they evoke confidence — and a confidence built on solid marketing intelligence, segment awareness and technology solution design.
A spirit of customer intimacy and care filters from the executive suites to the worker bees in their organizations. Cox, Comcast, Time Warner Cable, Cablevision — each evinces its own sense of can-do attitude. It’s a refreshing change from the sleep-inducing monotony I often hear from the U.S. incumbent LECs and CLECs when they speak about SMB markets these days.
Proof Point No. 4 – While showing passion in their beliefs, the cable operators are executing on their strategies with strong business acumen. I shouldn’t be surprised since many of the employees in these organization have decades of experience in business-to-business marketing and sales.
The local and regional marketing required to successfully implement these types of SMB strategies are a strong suit for the cable operators. The cable operators are picking their battles wisely and carefully selecting target SMB segments matched to their product offerings, tariff structures and support services. They are carefully tracking progress and replacing their bets as needed.
Do the cable operators have areas for improvements? As my wife would say readily when speaking about me, “of course.” Sometimes the tactics of these same local marketing organizations work at odds with corporate strategy. Sometimes internal systems and processes — or lack thereof — hamper solution rollout and important customer feedback loops. And for most cable operators the relative inexperience in large enterprise sales and a relentless focus on residential markets can make it difficult to compete for internal resources.
If I were a betting man or an SMB business owner or an agent looking for an alternative supplier, I’d look to the cable operators for a new level of commitment to and excitement about SMB markets.
Steve Hilton is the lead analyst for the Enterprise Solutions Program at Analysys Mason, which explores the needs of the enterprise, small business and SOHO ecosystems. He has 17 years of experience in technology and communications marketing. Prior to joining Analysys Mason, Hilton spent six years managing the enterprise and SMB team at Yankee Group. He also has held senior positions at Lucent Technologies, TDS and Cambridge Strategic Management Group (CSMG). He has a bachelor’s degree in economics from the University of Chicago and a master’s degree in marketing from Northwestern University’s Kellogg School of Management.
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