Opportunity for SMB-Specific Triple and Quadruple Plays

A majority of U.S. Small and Medium Businesses prefer to purchase bundled communications solutions from a single provider. A new report from AMI-Partners, titled 2005-2006 U.S. SMB Telecommunications Market Overview and Assessment, shows that 62% of small businesses say that they prefer to buy bundled communications solutions, while for medium businesses it is 54%. Most popular is a bundle comprising of local, LD and High-speed Internet access services. The addition of wireless voice service to the bundle is also of interest. These results point towards the opportunity for service providers to introduce "Triple play", "Quadruple play" and even more comprehensive bundles that are specific to the needs of SMB customers.

The above findings were released today by New York-based AMI-Partners, a leading consulting firm that specializes in IT, Internet, telecommunications and business services market intelligence -- with a strong focus on global small and medium business (SMB) enterprises. AMI-Partners conducts the industry's most comprehensive annual tracking surveys of SMBs in more than 20 countries, including North America (U.S. and Canada); Europe (U.K., France, Germany, Czech Republic, Poland and Russia); Asia-Pacific (Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Singapore, Taiwan and Thailand); and Latin America (Mexico and Brazil).

Beyond the Residential Triple and Double Play
Many U.S. service providers across the spectrum from Incumbent Local Exchange Carriers (ILECs) and Competitive Local Exchange Carriers (CLECs) to Internet Service Providers (ISPs) and Cable Multi-System Operators (MSOs) have launched or announced compelling "triple play" and "quadruple play" bundles in the residential market. Cable companies have realized much success over the past year with consumer bundles of video, high-speed Internet access, and digital voice, with attractive discounts over individual service purchases. Going back several years, the ILECs pioneered consumer bundles of local and long distance voice, Internet access, and wireless services. Furthermore, ILECs Verizon and SBC are investing billions of dollars on fiber-to-the-home across the U.S. for the final sprint to a quadruple play that adds video. Sprint's recent joint venture announcement indicates that the MSOs are in close pursuit, giving them the ability to add wireless voice and data services.

AMI's results show that today U.S. SMBs are interested in a Triple Play bundle of voice, Internet access, and wireless voice services. Furthermore, by a large majority of 80%, Small Businesses prefer to operate their web sites out of a hosting provider's location. This suggests that a Quadruple Play bundle with the addition of web site hosting, hosted email and other data services may be of particular interest to these smaller businesses. The situation changes dramatically for MBs, who with their more substantial in-house IT resources continue to install and operate their web sites on their own premises.

Other findings of the report include:[/list][*] Technology purchasing decisions vary greatly among SMBs. In Small Businesses with 1-99 employees, the owners of the business are key decision makers of IT/Telecom-related purchases. On the other hand, for Medium Businesses with 100-999 employees, the in-house IT personnel exercise more influence on IT/Telecom-related purchases.
[*] 89% of U.S. SBs are connected to the Internet with two-thirds of them being broadband-enabled. Among MBs, Internet access has reached saturation with 91% of them being broadband-enabled. DSL lines are the most frequently used high-speed lines for SBs followed by cable and T1/fractional T1 lines. In contrast, for MBs T1/fractional T1/T3 lines are the most used, followed by DSL and cable.
[*] Almost eight in ten MBs have 'mobile' employees (who frequently travel) and 38% of them have employees availing a formal telecommuting program. The corresponding numbers for SBs are just 38% and 13%; respectively.[/list]
About AMI-Partners
AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence -- focusing on global small and medium business (SMB) enterprises. The AMI-Partners mission is to empower clients for success with the highest quality data, business planning and "go-to-market" solutions. AMI was founded in 1996 under the name of Access Media International (USA), Inc. by Andy Bose, formerly a group vice president at IDC. Since its inception, the firm has built a world-class management team, each with ten to fifteen years' experience in IT, telecom, online communications or multimedia.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last eight years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in 20 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.

For more information on AMI-Partners or our telecommunications studies, please visit www.ami-partners.com, email ask_ami@ami-partners.com or call 212-944-5100.

Contacts
AMI-Partners
Nancy Carty, 212-944-5100 ext 581
ncarty@ami-partners.com