In some ways, business customer revenue now has assumed a more-important role for many telcos and cable companies.
Verizon Communications in its first quarter of 2012 earned some $9.9 billion from its fixed network businesses.
Of that amount, $3.9 billion was from retail enterprise customers and $3.4 billion from consumers. About $700 million was earned from small business customers and some $1.8 billion from wholesale customers (essentially enterprise revenue).
You might therefore note that business segments represent 66 percent of fixed network revenue, while the consumer represents about 34 percent of fixed network revenue.
The cable industry likewise is looking to business services as well, especially small and mid-sized customers, as it nears saturation of its consumer market opportunities.
Moody’s Investors Service,expect that the cable industry’s revenues from business services to SMBs will reach $9 billion by 2014, up from $5.2 billion in 2011. For the most part, those gains will come at the expense of telcos, both incumbent and competitive.
At the end of fiscal 2011, the SMB segment contributed $5 billion or six percent of the $88 billion in sales generated by the cable industry. But revenue growth is expected at about a 73 percent rate from 2011 to 2014, according to Moodys.
Most competitive local exchange carriers, whether independent or owned by an incumbent local exchange carrier, also make most of their money from business customers. Also, for many service providers, mobile backhaul alone represents a key business customer opportunity, as bandwidth to support fourth generation networks and small cell deployments is required.
Some European service providers are finding the same set of opportunities. At their full-year results presentations this month, both BT Group and Vodafone highlighted small and medium-sized businesses as one of their top priorities to increase revenues, according to FT.com.
“There is a growing trend towards mobility for businesses to access all the systems in their offices from their mobile device wherever they are, which is what attracts mobile providers such as Vodafone to SMEs,” says Mike Cansfield, a telecoms analyst at IDC, the consultancy group.
Of course, for U.S. incumbents such as AT&T and Verizon, the goal in the small business market is defensive. For CLECs and cable the objective is taking market share from the tier one providers.