benchmark-it performance

Transcription

1 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).

2 benchmark-it performance UK SME Segment Telecoms Service Providers August 2001 Author: Rob Pritchard

3 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

4 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: o Simplicity customers do not want to be confused by technology; o Reassurance they will want to know that their business will not be disrupted in any way by changing supplier; o Value it is generally accepted that a 15%-20% price differential will make a substantial proportion of customers consider switching supplier; o Added-value to sell new services, customers need to be convinced that their business efficiency will be enhanced.

5 The thirteen suppliers profiled in this report are all at interesting stages of their corporate lifecycles and success in the SME segment is key to the survival of a significant proportion of them.

6 Selected diagrams from the report: Coverage vs SME Focus BT UK Coverage Global Crossing Energis Kingston NTL Cable & Wireless Telewest WorldCom Thus RSL Com Colt Redstone Atlantic SME Focus Relative Size Of Target SMEs SME Employees Atlantic Energis BT Cable & Wireless COLT Global Crossing Kingston NTL Redstone RSL Telewest Thus WCom Players

7 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.

8 Selected pages from the report: The map below shows Telewest s UK national network and franchise areas: Dumbarton Glasgow Perth Stirling Dundee Glenrothes Edinburgh Dunbar TELEWEST NATIONAL NETWORK Uddingston Livingston Kilmarnock Greenlaw Berwick Telewest local franchises Existing Routes Dumfries Carlisle Gateshead Durham Newcastle Sunderland Planned Routes 2000 Eurobell Routes Middlesbrough York Blackpool Preston Southport Knowsley Liverpool Warrington Bradford Blackburn Huddersfield Manchester Leeds Wakefield Barnsley Sheffield Stafford Telford Long Eaton Lichfield Nottingham Wolverhampton Dudley Leicester Birmingham SmallHeath Coventry Peterborough Bromsgrove Warwick Redditch Daventry Cambridge Worcester Milton Keynes Hemel Hempstead Cheltenham Gloucester Watford Hayes Swindon Slough Reading Bristol Newbury Bracknell Trowbridge Woking Hawkfield Bath Basingstoke Andover Enfield Harringay Camden City Telehouse New Croydon Malden Crawley Chelmsford Basildon Southend Gillingham Maidstone Bude Exeter Yeovil Salisbury Southampton Portsmouth Brighton Equipment Site Plymouth Fibre Access Torquay Penzance PB/07/00

9 Selected pages from the report: Bundles Business Communications Pack bundles together telephony, Internet, FreePhone and 0845 LocalCall services on one bill. Features minclude: o Up to 30 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 departments, projects, clients and individual users

10 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 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 Nokia for DSL roll-out in Germany and the Netherlands.