Telecom service providers emerge as key SMB cloud players

NEW YORK, USA: As many traditional small and medium business (SMB) channel partners make the transition to the Cloud services model, telecommunication service providers (telecoms) are making a strong bid for the SMB Cloud share, beyond their traditional voice and data service offerings.

Facing the continuing prospect of declining average revenue per seat (ARPU) and increasing churn, telecoms see the SMB Cloud as an opportunity for sustained revenue growth and customer loyalty.

At the same time, many SMBs are open to expanding their relationships with telecoms beyond traditional voice and data services. According to an upcoming study by AMI-Partners, 38 percent of US SMBs say they are willing to purchase IT products and services (including hardware and software) from telecommunications service providers.

A key driver behind SMB interest in purchasing IT products & services from telecoms is the rapid growth of mobile applications. “SMBs with multiple branches and greater smartphone penetration are more likely to expand their relationship with telecoms,” according to Yuki Uehara, senior Cloud Analyst with AMI.

This growing interest suggests significant opportunities for communication service providers to be one-stop ICT partners, and to reshape the ecosystem of ICT products and services in the global SMB space.

This poses a significant challenge to traditional SMB channel partners, as telecoms bring greater scale, resources and price flexibility. According to AMI’s study, SMBs are attracted to telecoms’ abilities to offer superior customer service, flexible billing, and “one neck to choke” for all IT and communications issues. “This ‘one-stop-shopping’ model, coupled with attractive bundling, pricing and services options, will put pressure on traditional resellers to evolve their business models,” says Ms. Uehara.

Leading players such as AT&T, Verizon and Qwest are increasing their Cloud service portfolio from hosted VoIP, hosted email, and conferencing services, to high-end business applications and managed services.

Most SMBs already have an account with a communication service provider for communication services; adding cloud applications through the existing account significantly lowers the hurdle for SMBs to adopt new services than looking for a new service provider. Communication service providers may be the comprehensive ICT partners in the coming age of Cloud computing.