Phone providers eyeing small biz: Competition heats up to serve growing companies

It seems that, in the phone world, everybody loves small businesses these days.

AT&T, central Indiana’s primary landline provider, is highlighting small-business offerings in its recently re-branded Cingular stores throughout the region.

Cable company Comcast, meanwhile, is rolling out its small-business phone options over local lines and Bright House Networks plans to get in the game within a year.

Then there are the scrappy, independent providers such as locally based Indiana Telephone Co. Inc., which have expanded their offerings to include phone systems built on a backbone of cable lines, T-1 lines or wireless networks.

Industry insiders say the stepped-up attention being paid to small-business customers stems from three things: improved technology, industry deregulation and a growing realization that there’s big money to be made catering to growing businesses.

Competitors have been targeting residential phone customers for some time, but now they’re eying the burgeoning small-business community, too.

It’s a smart bet. Based on current pricing, telecom companies make about $39 a month for each residential high-speed Internet subscriber, according to a study released in April by New Jersey-based Insight Research Corp. For small businesses, the per-subscriber revenue is about double that.

Telecommunications companies make the most money when they convince clients to “bundle” services, buying phone service, Internet access, voice mail, television access and even cell phones together.

As the competition heats up, Insight found that incumbent phone companies stand to lose many of their small-business customers. Traditional phone companies nationwide could see a loss of 1.6 million small-business phone lines-and $742 million in annual revenue-this year. Researchers surveyed the current offerings in the field and projected marketshare shifts.

“Competition is already fierce between the providers of residential telephone and broadband data services, but the competition for the small-enterprise market is just beginning to heat up,” the researchers found.

To ward off the defections, traditional providers are out to make their case to small businesses. And they’re offering bundled services, too, to keep them from connecting with competitors.

“We hope not to lose one customer,” said AT&T’s Jeannie Weaver, a regional vice president of sales based in Chicago.

A new state law eliminated price controls that incumbent phone companies can charge for business lines effective July 1. Locally, that means AT&T can set its own business rates and it will implement a $3 increase in its basic business phone line rate for rural business customers-from $32 to $35. Indianapolis businesses pay about $37.75 per month for a basic phone line.

“You’re going to see a small group of customers that could see a slight increase in their bill,” Weaver admitted. “But they’ll see a great discount through our [bundled] offerings.”

For example, small businesses with at least two lines can get high-speed Internet, phone service with unlimited local and nationwide calls, a directory listing, unified messaging and a 450-minute cell phone plan for less than $185 a month.

“We’re doing things differently from a service perspective, trying to right-size them with a package that is less expensive and covers all their business needs,” she said.

Meanwhile local cable companies are launching their own small-business products. Comcast, which provides cable service in much of central Indiana, is doing a soft launch of its voice-over-Internet phone service for business, said Damon Miiller, vice president of telephony and commercial services.

He said the company is currently installing systems for businesses that need one or two lines in order to train technicians; by the end of the summer, it will be ready to install more complicated systems.

“Comcast is really ramping up in … the commercial phone service in this market,” Miiller said. “This is really new for here and we need time to train our technical staff.”

Comcast has begun training its commercial sales force. A broader rollout and advertising campaign targeted at smallbusiness owners is about two months away, Miiller said.

“There’s a great need for competition in the business arena,” Miiller said. “That universe has not had a lot of choice in the past.”

Comcast charges $59.95 per line for basic services, with discounts kicking in if a business opts for Internet and video products, too.

Bright House Networks, the cable provider within Indianapolis’ old city limits, will debut small-business options in mid-2008.

“There’s a good growth potential there and a need,” said Doug Murray, the company’s general manager of voice services. The company is still finalizing packages and pricing.

Meanwhile, a local firm that has offered alternatives for more than 20 years also is branching out with additional small-business options. Indiana Telephone leases phone lines from AT&T and resells them to small businesses, said owner William Ogle. He said his charge for a basic business phone line is about $24 a month.

Now the company is branching out to also offer bundled phone services over leased Internet lines. Indiana Telephone recently partnered with a San Diegobased company to offer its voice-over-Internet phone option, VinTalk, locally.

One recent convert is locally based Indiana Ready Mixed Concrete Association. The five-person office includes several workers who travel regularly. Executive Director Pat Kiel hopes a new voice-over-Internet system will make those laptop warriors more efficient.

Employees can use software loaded on their laptops to access office phone lines from the road.

The change also should shave the notfor-profit trade organization’s telecom costs by at least 10 percent when the company’s new system is fully set up and its land line service is canceled.

“It’s the type of technology that we need as an organization to become more efficient and it will save us some money, too,” Kiel said.

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