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SME broadband demand may slow: Analysys

Telcos must focus on managed services

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European telecommunications firms must up their game to keep hold of their smaller business customers, according to market analysts.

A new report issued by Analysys on Friday has urged broadband providers in particular to focus on managed services in order to sustain interest from small and medium sized enterprises (SMEs) in western Europe. Managed services are "value-added" extras which a broadband operator may offer in a bundle alongside its core product, such as managed email accounts, or business network security features.

The study assessed 184 SMEs across France, Germany and Britain. It shows that while expenditure by these companies is expected to peak in 2009, the market for managed services in this field will continue to grow beyond this point. SME spend on broadband managed services is forecasted to increase by more than €4bn in western Europe by the end of 2011.

"From 2010 onwards, downward pricing pressure is expected to outweigh take-up of new broadband access connections by SMEs in western Europe," said report author Simon Sherrington. "This will push the value of the Western European SME market for broadband access into a slow decline. In order to sustain revenue growth, providers targeting the SME sector must introduce complementary services, and provision of broadband managed services is a key area for exploitation."

The report suggests that broadband managed services are already in demand with €5.7bn spent on these services by SMEs in western Europe in 2006.

Analysys provides management consultancy and information services and has over 160 staff worldwide. The company is part of the Analysys Mason Group which has offices in Dublin, Cambridge, Edinburgh, London, Madrid, Manchester, Milan, Paris, Singapore and Washington DC.

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