Large telecom operators are yet again eyeing the small and mid-sized business (SMB) service market to reclaim their long-lost glory. During the last 5-6 years, the SMB segment has become a major growth driver for the cable MSOs (multi service operators) and regional communications service providers, who sidelined telecom operators using high-speed metro Ethernet link over the traditional T1 and DSL link.
Meanwhile, significant improvement in the business data and video traffic is expected to act as a future growth catalyst for the overall telecom industry. Various industry researches estimate that the SMB segment may offer a market opportunity of $20 -$30 billion in the long-run. This massive market opportunity may encourage telecom giants to restructure their SMB market strategy.
AT&T Inc. (T) is rapidly expanding its fiber-based U-verse network and has announced a new high-speed asymmetric 25 Mbps service for $50 per month to all SMBs located within its U-Verse footprint. Meanwhile, Verizon Communications Inc. (VZ), which is rolling out its fiber-based FiOS Internet service, has decided to offer a free SpeedMatch for SMBs who opt for the FiOS service.
On the other hand, cable TV behemoth Comcast Corp. (CMCSA) and leading integrated Internet service provider Level 3 Communications Inc. (LVLT) have significantly expanded its footprint in the U.S. metro Ethernet market. These companies offer faster and cheaper Internet access to business enterprises than the legacy T1 and DSL services offered by telecom operators.
The services include: (1) point-to-point Ethernet Private Line (2) point-to-multipoint Ethernet Virtual Private Line (3) multipoint-to-multipoint Ethernet Network Service and (4) Ethernet Dedicated Internet Access.
The metro Ethernet market is rapidly developing as a number of small and mid-sized business enterprises still depend on traditional T1 or DSL link for network connectivity. We believe that telecom operators will now take more interest to capture a sizable chunk of this market in the near future.
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