IDC: Enterprise broadband down, services up

Average enterprise broadband spending has decreased significantly in the last 12 months and Australian businesses are spending more on IP services this year, compared to 2003, according to an IDC report.

The study, Australian Broadband and IP services Usage and Preferences 2004, found that on average, surveyed companies were now spending about $3500/month on broadband connections. In 2003, they spent $7600 on average per month.

IDC communications analyst, Susanna Vidal, said there were two reasons for the shift.

"Enterprises are shifting from traditional digital line subscriptions like ISDN to more IP based like ADSL or SHDSL," she said. "The costs of the traditional digital lines are usually much higher than IP based lines.

"Prices of xDSL [for example] have decreased but on the other side, the quality of network and service has increased. Companies are expecting the same or higher quality across the network and additional services on top of it."

Additionally, the dramatic difference in price was because some companies had, for example, ISDN as an expensive back-up option in addition to their main networks. With increasing quality and service, those companies now had only SHDSL.

"Companies are beginning to trust the current technology to the point where some of them don't need a backup anymore," Vidal said. "That explains the big drop. It doesn't mean that the price of ADSL has halved in a year."

The study also found that broadband access is increasingly becoming a commodity and that service providers have to offer value-added services to increase their margins and retain customers.

By way of example, Vidal said that in the US, telephone companies didn't make money on providing the calls themselves but on voicemail, caller ID and other services.

"It's the same thing with the Internet", she said. "You have the connectivity, and you can add services on top of that."

Such services could include IP-VPN, IP telephony, storage and voice conferencing.

The study also made several recommendations for Australian broadband and IP service providers to allow them to capitalise on the opportunities presented by business users:

  • Compete in pricing for broadband access, while maintaining high quality of service/network and customer service and upsell IP services;

  • Provide innovative IP services targeted at different vertical markets, educate companies not only on the cost saving advantages of these technologies, but on the potential productivity gains;

  • Present case studies/best practices to your prospect customers that could really demonstrate these productivity increases and/or cost savings;

  • Educate companies on the benefits of business grade DSL technologies such as SHDSL/SDSL, very-high-bit-rate Digital Subscriber Line (VDSL), and other DSL.

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